According to Forbes the most common reason for early business failure is failure to keep an eye on the financial aspects of the business. It is easy to be so focused on the busy-ness of business that the bigger picture escapes at least partially. This is where working with an accountant, like Spectrum, who can guide you through your numbers, whether you are a new or established business, can pay dividends. Numbers, figures, key performance indicators, whatever you call them, your business needs them.
Income: If you aren’t earning enough to cover your regular outgoings, then it won’t long before your cash flow starts to falter. Using Spectrum’s cloud accounting experience allows you to keep track of revenues in real time. This helps to ensure you have visibility of cash flow by providing data that tells you where you are now and enables you to set reasonable expectations about what you can expect in the near and more distant future. Part of this is of course profitability. Maintaining a good profit margin is the single most important thing you can do as a business. Keeping on top of this number is critical to your success.
Expenditure: Both your fixed and variable running costs need to be tracked. Not only do these affect the profitability of your business, but they also have an impact on cash flow. This is particularly true of variable costs, which might rise due to an increase in stock levels or staff numbers, and typically outpaces the rate at which you sell your products and receive payment. Again, Spectrum’s cloud accounting solutions help you monitor outgoings, and can flag any unexpected spending. Working with Spectrum’s skilled and experienced team enables you to gain full understanding of your accounting at a level and pace that suits you. One of the main costs in many businesses is staff. Spectrum have many years of experience in payroll and can help ease the burden of running an inhouse payroll system.
Bank balance: This may sound obvious but knowing what you have in the bank at any one time will help with decisions about the first two points. It helps you plan, and it helps you stay on top of your business situation day by day. This is your most basic number.
The Unexpected: With your head down working in your business it is easy to lose track of some aspects of your finances. Working with Spectrum will mean that you have visibility of PAYE, VAT returns – and Making Tax Digital is just around the corner – Brexit may impact your business, or it may not, but with the support of an approachable, reliable and proactive accountants you have a better chance than most of keeping ahead of the game.
One of the most noteworthy aspects of the Dragon’s Den TV show is the lack of financial understanding the business owners have. The ones that impress are the ones who have the numbers at their fingertips. Spectrum can help you have those figures to hand when required. Get in touch to discuss your numbers.
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This post was written by Daisy Vowles