Some small business owners tend to feel flustered about accounting at times because they have not prepared or tracked their numbers accurately to know their cash flow stance. This can be a major reason as to why some businesses foreclose.
Recent studies have shown that 50 percent of small establishments fail within their first year and 95 percent close their doors before their fifth year. Additional stats have also shown that 40 percent of small businesses make a profit, 30 percent break even and 30 percent are constantly making a loss. We at WJ have compiled helpful guidelines for you.
The Right Mindset
With the right mindset combined with the right procedures is important in getting started. Here are tips you should implement.
- Know which type of business you fall into.- Whether it is a Sole Trader, Limited Liability or Corporation you must have a clear idea so you can have a proper way in tracing income and expenses (taxes, pay structure etc) efficiently and effectively.
- Separate Bank Account- regardless of which type of business you MUST have a separate bank account to correctly track a business activity.
- Record all Income and Expenses- This can be exhausting but it is worth it. Either by hard or soft copy you must document them.
- Tracing and Collecting Payment- Just like the sales process, the collection is very important.
- Manage Your Cash- When setting prices ad managing cash take your overheads into consideration (taxes, office expenses or marketing).
Do monthly checks to make sure you have fully structured the business with the procedures to avoid being swamped.
Do you still have some questions? Let us help you connect the dots!