Statistics indicate 80% of small business make it through their first year, but only 55 percent make it to five. So how can you increase your chances of being among the 50 percent of businesses that make it for at least five years? With this in mind, you can improve your odds with careful planning, knowing the best method of running your business successfully and a detailed strategy.
Here are the five keys to a small business success:
1. Budget the Costs
Launching and running a small business requires a thorough accounting of costs, both financial and personal. Not creating a budget, is one of the top reasons for business failure. Therefore, make sure you have a detailed budget that includes not only startup costs but the living expenses you’ll have to take on before your business can start paying you. In addition to anticipate major equipment purchases and real estate investments so you have a realistic estimate of your needs and costs for the upcoming year.
Numbers don’t lie, they’re not emotional and they don’t make excuses. It’s best to assume it will cost more and take longer than you initially think it will. If the numbers show you are in a steep decline, take action and make changes before you crash. It’s better to overestimate the costs and be pleasantly surprised than to project an overly rosy scenario and end up bankrupt.
2. Consider Your Profit Goals
To allow your business to run successfully and earn a profit, it helps to calculate your expenses and consider your customers, goals and amount of profits you ultimately want to bring in. From there you can determine roughly what range your profit margins should be in so that you can support all of your operations and still grow your business.
3. Outsource Your Accounting
Growing a small business is physically demanding work. Nobody wants to end their day prepping books, especially when it some to payroll and tax preparation. Having a monthly accounting service on your team allows you to concentrate on your business and the daily activities of managing employees, increasing your customer base, and maximizing your profits. Smart business owner knows how to lead and when to delegate. Defining and sticking to your role provides stability for your small business. Don’t try to be the owner and the accountant. Expert monthly accounting services go beyond the numbers.
Experienced accountants can be used as a resource for strategic decisions and also provide proactive business advice for any stage of your business. In addition to providing accounting and payroll, an outsourced accountant will work with business owners to set clear goals for increasing profits. In addition, as your small business grow it can present operational challenges with the need to keep expenses in check. Accountants can identify any expense areas that are tracking above or below industry average, enabling you as the owner to make adjustments, to keep costs contained or to spend additional money in areas that could boost sales.
4. Use an Integrated Accounting System
A small business benefits from using a business-specific and integrated accounting system into its daily business practices. A good small business accounting system provides many options including appointment control, work-in-progress, point of sale accounting, daily sales reports, invoicing, customer data and history, and report capabilities that include uploading to other software systems such as QuickBooks. This king of integrated accounting software saves money, time avoids duplicate data entry and ultimately prevents those nasty tax-based headaches that occur during tax season.
5. Stay on Top of Your Taxes
Staying on top of your taxes is a full-time job and your income tax obligation needs to be on your mind year-round. Whether you’re a small business or an individual taxpayer, year-round tax planning is more than just a way to make tax preparation an easier, faster process. By keeping taxes in mind as you go through every 12-month period, you’ll be able to see where you might take specific actions early that will have impact on what you end up owing. Your budget can be a tremendous tool as you plan for the current tax year. I f you’ve never created one, an outsourced accountant can help you with this. In addition to staying ahead of the process by outsourcing your tax planning, preparation and tax filing.