MikeWiddis No Comments

Debt-Crushing Habits for Small Business

Debt is such a normal state of finances that the idea of it isn’t as scary as it was a generation ago because everyone’s dealing with the same things; lease for office and manufacturing space, vehicle payments, and the business loan that helped get you off the ground.

The truth is that debt is scary, and a serious player in the success or failure of your business. Without a plan to pay your debt not just down but off you can’t get ahead. Work these debt-crushing habits into your business plan now and make a business plan to thrive rather than merely to survive.

Set a budget, stick to it, and practice tidy bookkeeping.

Budgets require so much care they’re practically living beings. You have to make adjustments based on your expenses, your income, rising prices for equipment and wages, and interest on your loans. It’s smart to set up a budget at the start of every fiscal year, and it’s wise to review it at least every quarter. Know where your money goes by tracking every single expense. Look hard at where you’re failing to stick to your budget and find out why. Don’t fix the failure by assigning a higher expenditure to the failing part of the budget unless you can cut back somewhere else or dramatically increase your income.

Pay down debt.

You’ve already got debt, that’s business. Pay it off! Pay it off at a higher rate than the minimum or else you’ll never get anywhere. You have additional bills to pay, you want to grow your business, and you want to earn a living. Hold off on incurring more debt before paying off what you already owe. You’ve got the saying, “You have to spend money to make money,” ringing in your ears, but that’s a general idea, not words to live by. Take calculated risks rather than hoping for the best. Look at your tidy books and forecast your projected income to see whether it’s worthwhile to invest in another machine or hire another employee this year or if next year is the smarter option.

Make more money.

If your income isn’t enough to cover your debt and then some, find ways to increase your business or upscale your services. Create more appealing packages, consider partnerships, find out what the needs of your clients are and fill them. Increase your rates. If you can’t make more money, scale back your expenses. Find smaller office space, use only 1 vehicle, and sell seldom-used equipment that you can rent when needed.

Save Money!

In addition to your accrued debt, you’re going to owe taxes and your accountant. You may want to give your employees a year-end bonus. You should be prepared for an emergency. Save at least 10% of your income to cover expected and unexpected expenses. How do you do that? Pay your savings account first. It’s a popular suggestion of financial consultants everywhere because it works. Make saving money a priority in your bookkeeping rather than an “if” and see if you don’t sleep better at night.

Feeling overwhelmed or uncertain about your debt? Want to know what reasonable debt is and how to tell your accounts are out of control? Book a consultation with Upside Accounting for sound advice from one small business to another. Call (226) 214-3233 from anywhere in Canada to set up an in-person, phone, or virtual appointment.

Debt Free Party!
MikeWiddis No Comments

Bookkeeping, what is it good for?

To those who miss the rich nuances in the art of bookkeeping, this chore is simply keeping track of invoices and bills in order to pay the staff and your taxes. And that’s good enough, which is perplexing to us accounting geeks because in our experience “good enough” isn’t good enough for entrepreneurs. You started your business from an idea and worked hard to build what you have now. Keep that momentum going by harnessing the powers of quality bookkeeping and turn “good enough” into dollars and sense.

Bookkeeping

Bookkeeping entails intimately tracking your income and expenses in a book called a ledger – by now we sincerely hope you’ve discovered the sanity-saving software versions. You bought an online advertising package? That goes in the ledger. You paid your employee? That goes in the ledger. Even unpaid invoices are included.

It’s the details of bookkeeping that trip most people up. The idea of noting your latest gas receipts and weekly mileage regularly sounds easy, but it’s even easier to say, “I’ll do that next week.” Say that a few times, and suddenly your fiscal year end is upon you, and you’ve got mountains of debits and credits to enter. Now your bookkeeping is a nightmare! *cue horror movie soundtrack* It doesn’t have to be like that. Take 5 to 10 minutes and balance your latest bank statement or hire a bookkeeper to come in once a month and do it for you. If it’s not obvious that investing time and maybe a bookkeeper’s wage is going to make you money, look closely at the data.

Up-to-date bookkeeping is a map of your business that provides clear navigation to success. When you can easily review the details of where you’ve been, you can plan where you’re going with accuracy to relieve stress and get excited about the future. Updated bookkeeping allows for:

Tax Planning

Know how much you’ll owe in taxes, and plan for it – we know, that one’s easy. Good bookkeeping also means you can look ahead at current and upcoming tax credits that you or your business qualify for and make plans for eligibility, like hiring and apprenticeship credits. And make sure you’re updated on the current fiscal year’s expense allowances administered by the CRA before you blow the budget wooing a new client.

Forecasting

Forecasting is an incredibly satisfying perk of bookkeeping. Use your historic financial and business information to project your upcoming year. Know when your busy season is and be prepared to hire additional staff. Know when your quiet season is and be prepared to lay staff off. Examine your upcoming projects and find out whether any of them qualify for government funding. Look at your growth to devise an expansion strategy.

Realistic Budgeting

Budgeting and Forecasting are best friends. Use your financial forecast to set a budget – a realistic budget based your own historical data. Know when it’s critical to save extra funds in order to support slow times. Use your budget to measure your real-time financial situation as the year goes on and make adjustments based on what has already happened and what your business’ history suggests will happen so that you aren’t left scrambling to pay bills or fulfill orders.

Upside Accounting can help you develop excellent bookkeeping skills and plan for the future. Never done this before? That’s okay! We’re here to help. Book a consultation today by calling (226) 214-3233.

Bookkeeping