Set up your Accounting Process
This early on, you probably don’t need a super advanced accounting system. However, you should look for a program that can grow and expand along with your business. QuickBooks is a popular choice, although there are plenty of other programs available, as well. The key is to establish your accounting system early on while everything is still relatively simple. That way, when things start to get more complicated further down the road, it will be easier for you to adapt.
Get your Accounts Payable System Established
Getting a handle on your cash flow right out of the gate is important. One big piece of that involves making sure that your expenses are covered. This is the time to consider how you will track your expenses and how you will go about paying them. There are a lot of different programs and systems available. You may want to seek outside advice from a professional to find a system that will work well for your business. Once the system is in place, make sure that all of your expenses are entered into it on a regular basis. You should also come up with a bill paying schedule so that you are never late with your payments.
Set up your Accounts Receivable
Along with paying your own bills, you also need to make sure that you get paid. An important part of that involves setting up your accounts receivable system. Figure out whether or not you are going to offer credit. If so, determine how collections will be handled. Outline all of your company’s policies regarding receivables, as well. This is one area where you need to be extremely attentive. You may even want to look for innovative ways to incentivize customers for paying off their invoices early. You should also establish a protocol for handling accounts that are past due.
Get Started with Financial Forecasting
When running a business, you need to know where you are heading. An important part of that involves forecasting your financial future. This process relies on information that you gather from your budget and from your projected sales. You also need to take into account your best guesses for how much each department will spend. This includes human resources, IT, legal, marketing, and any other departments or services. Try to limit your forecasting to less than three years. Anything further out than that probably won’t be very accurate. Consider revising and updating your projections once a month or whenever major changes happen with your business.
Get a Handle on Budgeting
Budgeting is all about tracking your income and expenses. Looking forward, you need to consider the money and resources required for you to achieve all of your goals. Once you have a better idea of what you need, you can then look for ways to use your existing funds to help you get where you want to go. Your budget needs to be re-evaluated regularly – especially after you achieve each goal or landmark along the way. Managing your cash effectively is extremely important at this point from a liquidity standpoint. If necessary, consider vendor financing. Always have a careful strategy in place when it comes to sales and marketing. Your goal should be to focus on high-dollar transactions that don’t cost a lot to implement.
Build a Relationship with your Bank
Choosing the right bank is important. Carefully compare your options to see which institutions offer the best rates, the best customer service, and the most flexible options. Ideally, you should look for a bank that has worked with a lot of startups in the past, including helping them find creative solutions when they need to borrow money. Never combine your business income and your personal income in the same accounts.
Avoid Spending too much Money on Staffing this early in the Game
Instead, only fill essential positions. For other roles, consider working with temporary employees, part-time workers, or outside freelancers. When searching for employees, look for people who are both flexible and creative. Make sure you have all of your ducks in a row in terms of protecting your business. This includes thinking through issues like confidentiality agreements, intellectual property rights, employment termination, and hiring papers. Even if you can’t afford to pay huge salaries, you may be able to offer other perks or bonuses to convince people to sign on. Incentivize hard work by linking compensation or rewards to specific goal posts along the way. You may also want to look into strategies for deferring compensation.
Get a Grip on Payroll
If you bring other people on board, you will need to deal with payroll. Usually, this means finding a provider who can handle it for you. The best choice will largely depend on how many people you employ and what type of compensation you provide. Make things easy by choosing a solution that deals with issues like workers’ compensation and payroll taxes for you.