Small Business Start-Up – How Much Money Do I Need?

Money is the big question runs through all the other ones. At the outset of setting up your own business the question tends to revolve around how much money you need to start the business up, both in terms of the funding that the business itself will need, and any money that you or your family needs to survive on whilst the business is being set up and before it starts to make any money in its own right. Again this is an area that is a big reality check that a lot of people, but it comes down to planning and foresight.

If you know you’re going to need a certain amount of money, but are not yet in a position to be able to do it that is fine. It gives you an opportunity to think ahead and plan the start of your business at a given point in the future when you know you will have the funds available or be able to get funds. Do not be put off the idea of setting up or running your own business if you do not immediately have the money available to do. You can work on other areas of the setup and get things ready so that when the funding is available you will be able to go ahead and do it.

Have in mind also where you’re going to get the money from. It is probably true that you would rather risk someone else’s money rather than your own, however banks and other institutions are well aware of this and so often require you to carry a significant portion of the risk yourself as well as risking their money or in fact anyone’s money. Funding can come from either yourself, institutions such as banks or small-business banks, Angels, or anyone willing to invest in your business. Be cautious about accepting investment from family or friends, however well-meaning simply because if things do go wrong it puts a whole new dimension on those relationships that you do not want.

Think about also how you want to take the funding. Assuming you have the luxury of choice, funding can come by way of a loan, an overdraft, possible re-mortgaging or by giving some type of equity stake in the business either to a bank or to a private investor by way of a percentage share of the business itself. This is often the preferred route for many people, but obviously means you giving a way share of your business to someone else. Be clear in your own mind if this is a route you are willing to go down, and if so how much equity or capital you are willing to give to someone else and for how much money in return.

When thinking about how much money you will need either to start the business up or to live on whilst the business is developing, it will help to have an idea of how long it will take before your business or service is actually beginning to earn you money. Have in mind that different types of businesses get paid in different ways. If you are in a retail business then customers might pay you cash for the transaction, if you are in different types of service work it may well be that you get paid after a given period of time which could be anything up to ninety days. Bear in mind also that if you are in this type of service work that gets paid after a particular period of time you are likely to have a lot of hassle being paid by suppliers as well as receiving payment from customers or suppliers. There is normally a chain similar to a house buying chain where people need hang onto their money because of cash flow and are reluctant to part with it. Knowing this in advance will allow you to plan for it and plan for the level of hassle as well.

Taking money in as a service or business is not the same as making a profit. Knowing when you are likely to be getting money in as well as when you’re likely to be making a profit hugely important. Investors will want to know anticipated date and earnings. You will also need to know when you are likely to start making a profit from the business simply so that you can know when you are likely to become self-supporting in your own right.

Small Business Accounting Troubles Gets Solved With Accounting Software!

There is a lot of difference when we look at a small business and a large one. In a large one, the owner can afford to lower down the rates owing to wavering economic scale while in a small firm the profit margin is low. Hence the owner has to make sure he cuts down on all extra expenses. There should be a large degree of cost cutting to compete with other firms in the industry. In both the large and small business firms accounting plays a crucial role. Accounting costs in small business firm must be put in restraint lest it will overflow the annual budget. Thus, there is the requirement of sound small business accounting. There are clients, government agencies, tax agencies, prospective clients, creditors, banks, debtors and employees who need to study the books of accounts.

There are many ways a small business accounting services can be managed. There are some new age accounting solutions which cab be of immense help to small business firms. As, all of us know Information technology plays a vital role in our daily life so it does in professional sphere. Lots of huge tasks can be sorted out in few minutes with the help of high-tech gadgets and tools. Nowadays accounting outsourcing firms are employing specially designed accounting software that handles the bulk task with so much ease. This software helps in producing flawless accounting record without any error. Firstly, it completes the accounting work in time less than any accountant will take. Secondly, it saves the cost that would have gone in employing accounting professionals.

Accounting software are user-friendly and doesn’t require special training program to learn using them. Almost any professional can use it without any external guidance. They do not require any additional cost of hardware except the computer. The programs can be updated as and when required. There are many advantages in using the new computer software. The firm can track payment of the debtors and check the level of inventory left in the store house according to the books of accounts.

There are a few things one should consider before buying or downloading software. There are plenty of software available in the market but one should make sure that they are compatible with the system and the accounting work that is to be done. If the business is expanding then it is best to have multi user friendly software. One must always test the software of a given period before using it completely.

Most of the outsourcing firms offer various services apart from accounting outsourcing. Search engine marketing is one such important service that your firm may require in order to flourish and expand your online business. Search engine marketing, SEM increases your online visibility by directing maximum traffic towards your website. It achieve maximum business profit by employing several Internet marketing techniques like affiliate marketing, PPC, and social media optimization. These different means of Internet marketing strengthens your position in online business world and provides you an edge over the competitors.

Small Business Factoring – Remedy For Cash Flow Problems

When starting out as a business owner, no doubt you considered all the aspects of owning and operating a business. One neglected area of business ownership is cash flow. Neglected that is until the business owner realizes outstanding billed invoices are not being paid in a timely manner and ongoing operations can’t be funded since the necessary cash flow is not coming in as expected. What is the solution for a new business or one that does not have enough established credit to get a line of credit from the bank?

Small business factoring is one solution that offers quick access to cash collateralized by your own accounts receivable or outstanding invoices. First. let’s consider the situation and how cash flow problems came about in the first place. Generally, invoices are sent to customers with Net 30 terms, meaning the balance of the invoice should be paid by the customer within 30 calendar days. As many business owners know, seldom do their customers pay within a 30 day time frame with many going unpaid for sixty days or more. Odds are, your customer is experiencing the same cash flow problems as you, their vendor.

So how can small business factoring be a solution for cash flow problems which plague small and mid-size business? Invoice factoring can provide much needed cash within days rather than weeks for your business. This type of business funding is simple in methodology. For example, once a business supplies goods or a service to a customer and an invoice is generated for the total amount due, rather than sending the invoice to the customer, the invoice is sent to a factoring company.

The factoring company will take the invoice and evaluate the financial worthiness of your customer and if they meet the factoring company’s guidelines, they will send you, the business owner, a check for about eighty percent of the total value of the invoice. The other twenty percent of the outstanding invoice is held in reserve until the invoice is paid in full. Once the invoice is paid, the factoring company will send you another check for the remaining twenty percent less their fee.

The small business owner receives needed cash to operate his business within a few days allowing him to continue operating unencumbered by cash flow shortfalls. The factoring company assumes the risk of collecting the outstanding invoice and collects a fee from the total amount of the invoice. Small business factoring is an excellent solution for cash flow problems affecting your bottom line.