finance

A Guide to Small Business Budgeting

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As a small business owner, you wear many hats – from product development to marketing, customer service, and everything in between. But one of the most important roles you play is that of a financial strategist. Budgeting is vital to the success of your business, but not everyone knows how to do it effectively. In this blog post, we will guide you through the process of small business budgeting, so you can make every penny count.

Track Your Income and Expenses

The first step to effective budgeting is knowing exactly how much money is coming in and going out of your business. Keep track of all your income sources, including sales, services, and any other revenue streams. Then, take note of every expense, no matter how small. 

Prioritise Your Expenses

After you have tracked your income and expenses, prioritise them by urgency. Start with essential expenses, such as rent, utilities, and salaries. Then, move on to things that are necessary but less critical, such as inventory or equipment purchases. Finally, consider expenses that are nice to have but not essential, such as marketing or employee perks. This will help you decide where to allocate your funds when creating your budget.

Set Realistic Goals

The main objective of your budget is to achieve your business goals. Therefore, it’s crucial to set realistic goals for your company. This might include increasing your revenue by a certain percentage, reducing expenses by a specific amount, or launching a new product line. Once you have your goals in mind, create a budget that will help you achieve them.

Review and Adjust Your Budget Regularly

A budget is not something that you simply set and forget. Your business is always evolving, and therefore so should your budget. Review your budget regularly and adjust it accordingly. This might mean cutting some expenses, increasing your revenue streams, or re-evaluating your goals.

Consider Getting Professional Help

Finally, don’t be afraid to seek help from a financial advisor or accountant. These professionals can help you create a budget that suits your business needs and goals. Additionally, they can provide you with valuable insights into financial management, tax planning, and other financial matters.

Remember, a budget is not a restriction, but rather a tool to help you grow your business and achieve your goals. If you’d like to find out more about budgeting or require any additional business support – we’d love to help! Get in touch:

T: 01903 688789 E: makeithappen@mbsmih.com

Why Cash Flow Forecasting Is Essential For SMEs

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SMEs are the backbone of any economy. They create jobs, spur innovation, and drive growth. Despite their importance, small businesses often struggle to survive. In fact, reports suggest that only 20% of SMEs make it past the first year in operation. There are many reasons why a company can fail, but one of the most prominent is a lack of cash flow. It’s the lifeblood of any business, and without it, a company will undoubtedly struggle.

A forecast can help your business avoid financial problems and keep operations running smoothly, so we’ve decided to highlight the importance and share our tips for perfecting the process.

What is cash flow forecasting?

Cash flow forecasting is the process of predicting a business’s future cash flow based on past performance and other factors. It involves analysing a business’s spending and income to determine when they will have excess and deficit cash. This analysis can be done regularly and be adjusted as needed.

The benefits of cash flow forecasting

Cash flow forecasting can be a powerful tool for SMEs. It allows business owners to plan for future cash needs and predict potential issues before they arise. It also promotes better-informed decisions about managing finances, helping to keep business running smoothly. Forecasting can also help to identify areas of inefficiency. By tracking cash flow, companies may be able to identify areas where they can cut costs or improve profitability – maximising financial management efficiency. Finally, forecasting can help SMEs get additional financing. Many lenders require businesses to provide a cash flow forecast before granting a loan. A good cash flow forecast can show lenders that the business is stable and has a good amount of cash available.

How to create an accurate cash flow forecast

Creating an accurate cash flow forecast requires careful planning and analysis. The first step is to track your business’s income and expenses. This can be done by entering all transactions into an accounting system or tracking it manually. Once the data is gathered, businesses can use software or templates to create a cash flow projection. This will provide an estimate of future cash flow based on income and expenses. It may also include other factors such as seasonal changes, pricing fluctuations, and marketing campaigns. Businesses should also consider creating a contingency plan for unexpected costs. This plan should consider sources of financing and other measures that can be taken to ensure the business stays afloat in times of cash shortages.

Top tips for creating an accurate cash flow forecast

Track income and expenses regularly: Tracking your cash flow on a regular basis will help ensure that your forecast is as accurate as possible.

Analyse changes in the market: Stay up to date on changes in the market to make sure your cash flow projections are realistic.

Include long-term expenses: Don’t forget to account for long-term expenses such as taxes or new equipment.

Look for potential sources of financing: Keeping track of potential sources of financing can help you plan for cash flow shortages.

Consider outsourcing your cash flow management: An experienced outsourcing team will save you both time and money becoming the perfect ally.

If you’d like to find out more about cash flow forecasting or require any additional business support – we’d love to help! Get in touch:T: 01903 688789 E: makeithappen@mbsmih.com

Bookkeeping Tips for SMEs

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No matter how much you try to avoid it, bookkeeping will always be an integral part of your business’s daily operations. Helping to improve your budgeting, target visualisation, and compliance with Government regulations, bookkeeping is the backbone of any well organised business. Failing to designate the necessary time and focus it needs, can quickly result in stunted business growth and progress delay. And while we can’t make it disappear, we can offer a helping hand and some of our favourite tips to help you boost your SME’s bookkeeping efficiency.

Separate business and personal finances

One of the most common mistakes among business owners is the mixing up of business expenses and personal income and spending. While it may seem a small overlook at the time, it is a sure way of overcomplicating your future bookkeeping duties and can actually lead to some larger issues down the line. Get a business bank account and a separate credit card before you begin any business operations. This will help to keep your finances organised and helps your business build its own credit rating.

Learn to automate

Automation can go a long way in helping you to carry out your accounts and bookkeeping operations – it’s a great time saving solution! Streamline your duties with smart accounts and payroll softwares and take time to pick the right one for you. Bookkeeping tasks you can automate include: payroll, categorizing transactions, expense management, bank reconciliation, cashflow forecasting and reporting.

Keep track of business expenses

Predicting and budgeting future business expenses is a tough job, which is why it’s imperative to track any current outgoings and keep organised records. It helps to create a clearer forecast and thus allows more room for any unexpected spendings. These records should include things such as: inventory, supplies, insurance, utilities etc. Not only will this give you a better idea of what to expect it will also make it easier to claim any business expenses when it comes to doing your taxes. Remember to always keep receipts!

Review regularly

Undoubtedly one of the most important things when it comes to measuring your business progress and making sure you’re staying on track are regular reviews. Looking back at past records and reviewing financial affairs gives a more in-depth perspective into any trends, and therefore allows you to better strategize your future plans. It also helps to establish stronger targets, boosts proactiveness, and improve responsiveness to any presented challenges.

Utilise time tracking software

Time tracking software can be a great addition to daily business operations, allowing your team to clock in and out of work using their electronic devices. It also promotes better time management and allows you and your employees to see how your time is distributed throughout the day. This will help you to gain a better understanding of your workloads as well as automatically tracking and monitoring wages and any additional overtime. Do your research and pick a tracking solution that works well with your other business software.

Stay on top of tax deadlines

Don’t back yourself into a corner when it comes to your tax deadlines. Anticipate and avoid running short by leaving finances aside for all established tax bills. Be sure to be timely and on schedule with your payments to avoid any fines and note all important deadlines in your calendar. To improve your efficiency set reminders on your chosen device, alerting you of the approaching deadlines ahead of time. When you can, try and leave room for any unforeseen mistakes and don’t leave your taxes until the last moment.

We know bookkeeping duties aren’t smooth sailing for everyone – which is why at MOMENTUM we offer various outsourcing services to help you and your business thrive. We hope you’ve found this blog insightful and encourage you to reach out should you ever find yourself needing any business support. If you’d like to find out more or have any additional queries, get in touch:

E: makeithappen@mbsmih.com   T: 01903 688789

12 Days Of Tipmas Day 11: Grow With A View To Sell Your Business

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While it may not be in your imminent plans to sell your business, selling your business later down the line can provide financial stability when you’re thinking about retirement, starting a family, or maybe when you just want a change of pace in your life. With that in mind, how would you make your business attractive to potential buyers?

Succession strategy – have a potential successor identified early on, show them what it takes to run the business and take time to mentor them so that the transition to a new owner is as smooth as possible. You could also consider whether to stay on as an advisor or to exit the business entirely.

Experienced employees – managers and staff who are staying in the company will make the transition to a new owner smoother as they have experience with the ins and outs of the company.

Financials – financial records as well as sales forecasts are important when pitching a business; buyers would like to know that the business is profitable and that going into the future it will continue to be the same. Make sure you are able to explain any previous blips in your figures to potential buyers.

Customer relationships – how diverse is your customer base? You should consider diversifying if one single client or customer accounts for over 25% of your sales – relying on only a few clients is a big risk if one of them stops using your services. Diversification takes time however, so plan to diversify early.

Future growth opportunities – which direction do you think your business will go? Buyers will want to know this too, so it would be important to share any strategies or new ideas that have not yet been implemented in your business. Where will new customers come from, and how can the business expand with any developments in technology or events?

Reputation – you need to make sure that your company reputation is great, both with your clients and employees. A company with a tainted reputation will be hard to sell, and potential buyers may have to consider rebranding if a company has a bad history.

Intellectual property – is your company adequately protecting its IPs? Having other companies copying ideas from your company and selling it as their own would cut into profits down the line, so make sure to protect your IPs. If your company has any original technologies or ideas, make sure they are protected by copyright, trademark, or patent law.

If you’d like to find out more or require any further business support, get in touch!

E: makeithappen@mbsmih.com   T: 01903 688789

12 Days Of Tipmas Day 6: Look For Grants, Loans And Other Subsidised Growth Support

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Every business has found themselves needing a little extra support at one time or another and since running a business takes a lot of time and often money, it’s no surprise that many owners opt for grants and loans to help grow their brand. While it can seem daunting at first, there are many ways in which you can acquire additional financial support- most of which are common procedures.

While each type of growth support differs from the next, many are free or funded by the government while others work through repayment options or repayment with interest. Since only the lucky few have an expendable income at hand, here are some tips on finding the right support you:

  • Create a business plan
  • Visit Government websites
  • Speak with other business owners
  • Discuss financial options with your bank
  • Check your eligibilities
  • Research start-up and small business loans

If you’d like to find out more about grants, loans and other subsidised growth support, get in touch!

E: makeithappen@mbsmih.com T: 01903 688789.