You?ve started a small business. Generating sales, tracking expenses, paying taxes?..it can all be so overwhelming. The most important way to gauge how your business is doing is to track what is going in and what is going out.
As time goes on, and your business becomes more and more complex it will be harder to stay organized. I have a template I print off every month that has a place for notes, trips taken, large equipment purchases, tax notes etc so I can keep it all straight at tax season. Have a central place where you collect receipts and statements.
Keep it separate. Keeping a separate bank account and credit card for your business will only make your life easier. When you want to withdraw money from the business just write yourself a check.
Use an accounting program. A notebook and shoebox are great if you have a few sales a year, but once you get past that you need a way to track your business performance. A tool like Outright.com or Quickbooks allows you to run reports, analyze profitability and will help with taxes.
See if you are making money! Analyze where you can improve your business. Until you have a picture of how the financials of your business look you can?t make informed decisions. You may have a great product idea but unless you have a healthy business model you won?t make a profit!
If you are serious about growing your small business make sure to apply for a federal employment identification number (FEIN). You?ll need this to hire employees, open a business bank account, among other things.
No business is immune to taxes. Make sure you get off on the right foot. If you hire employees you can use a program like Paycycle.com to manage payroll and tax paperwork.
More often than not hiring an accountant is worth the money. An accountant will be more knowledgeable about write-offs, tax regulations and required paperwork. Also do as much research as you can about small business and related taxes. Interest and penalties can add up so it?s best to get it right the first time!
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I had the opportunity recently to interview Steven Aldrich, CEO of?Outright.com.?Outright.com is a straight forward online accounting/bookkeeping system that pulls your data automatically and also helps you track your business and pay taxes.
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First of all, thank you Steven for taking the time to answer my questions. With the current Maker?s Movement there are so many DIYers out there starting new small businesses, do you think there still room for more?
There a lot of people jumping in?..a lot. The ability for potential buyers of your unique creations to find your new ideas and products just gets better and better as social networks allow for discovery. Discovery mechanisms such as Facebook and Pinterest are highlighting innovation visually, a huge boost for selling craft and art.
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When I was first starting out, my expense tracking was literally a shoe box. What are your top financial tips for a small business just starting out?
First, decide what your goals are. Whether you are a DIYer, a crafter, etc figure out what it is that you want to accomplish.? Maybe it?s to make some extra money for a vacation. Maybe you want to make enough income on the side to be able to spend more time with your family. Then translate those accomplishments into financial goals.? For example. do you want to break even or is your goal to generate an income of $1,000 in the first year? There is no wrong answer to this question but it?s important to think about why you are selling something and how much you?re willing to invest of your savings.
The next big step is moving from ?doing nothing? to tracking your revenue and expenses. There is a natural way to collect data that comes with running a business. The business owner tracks sales and revenue to figure out:
1. Who is buying?
2. What are they buying?
3. What channels are they buying through? Etsy? eBay? Craft fairs?
Then you need to ensure you have counted all of your expenses.? What are you spending money on? If you are using a shoebox you probably aren?t fully counting all of them.
Once you have all of that data in one place you have the ability to make decisions based on information versus making decisions on a gut feel. You can compare your business?s performance to your goals and adjust accordingly.? If they don?t match up you can change how you are running your business or you can change your goals.
Setting goals, tracking progress, getting feedback and then adjusting your business?..this is your secret sauce of ensuring your passion for creating unique products and services is supported by your financial results.
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Could you tell me a little about Outright?
If a new business is just starting up they might not be recording sales, distribution channels or expenses. The Outright system has the ability to move the 70% of solo entrepreneurs still using spreadsheets and manual methods to an easier way. Outright automatically imports sales and associated expenses such as listing fees and shipping fees in one place. It gives the business owner a total picture of the business and lets you see how you are doing day-to-day.? All your financial data is at your fingertips.
Also, as soon as you generate revenue, whether through PayPal or credit cards the IRS will want to know if you are making money.? If you aren?t tracking your sales and expenses correctly you might end up with a tax bill that is undeserved because you have nothing to back it up.
Outright gives the small business owner more control and confidence.? Most importantly it allows more time to be spent on creativity, marketing and distribution.
Is there any new functionality that Outright users can look forward to?
We have the new Outright Mobile application. Customers can interact with their data, edit categories, and get notifications about deposits. It?s a way for users to stay on top of how their business is doing while they are on the go. We also recently added Amazon to the list of connected data sources. More and more small business are selling through Amazon because of the huge amount of traffic it gets.
Are there any online tools you recommend for the small business?
If you are only looking to sell in an online marketplace I recommend Etsy: it?s easy to use, it generates a lot of traffic and there are the Etsy forums and community to help you become successful. Pinterest is a great tool to explore as a way of creating demand and a following. If you are looking to build your own standalone shopping cart there is Cashie.? It?s an easy way to get an ecommerce site up and running.? It also ties into Paypal and Outright. Also, it?s important to have a website or a blog.? Weebly is an easy way to build your own website.? Typepad is a great blogging platform.
And of course, Outright. We currently have 200,000 small business registered and tens of thousands are online sellers. The Bottom Line blog is full of daily tips for the small business owner. We truly want small businesses to grow and thrive.
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Thank you Steven!
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Small Business Resources:
Outright ? Online accounting/bookkeeping system
Paycycle ? Easy payroll for small business
Cashie ? Easy hosted shopping cart that can be integrated into WordPress
Big Cartel ? Another easy shopping cart system
Etsy ? A handmade marketplace
Kabbage ? Provides working capital to start up businesses
Weebly ? Easy way to build your own website
WordPress and Typepad ? Blogging Platforms
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Check these out too!
Etsy Forums ? A great resource for small business tips
Oh My Handmade Goodness ? Great tips and articles?.and it?s pretty!
Scoutie Girl ? Inspiration and innovation
Any resources you?d add to this list? Let me know!
Make sure to check out the rest of the small business series below!
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