Planning for Uncertainty in Your Small Business

June 15, 2022 by Michelle Mitchell

I can sometimes look back and remember some of the benefits that my corporate job once gave me, with the main benefit being a sense of security and certainty. It was nice to know I had a consistent paycheck coming from week-to-week. Yet I wouldn’t trade my business for that life again, and I’ll tell you why.

For one thing, entrepreneurship gives me so much flexibility. It’s what’s allowed me to create the life I had always imagined for myself. (Learn more about aligning your business with your vision here). For another, it’s possible to mitigate risk and build security as an entrepreneur. The secret? Being proactive.

You can take control of your business and do your best to insulate it from the unexpected (like a pandemic or a recession) by focusing on three crucial aspects of your business that are essential to its success. They are your health, your finances, and your clients.

Without your health, you can’t run your business to its full capacity. (Find out more about self care as a business owner here).

Many business owners have been faced with this fact during the coronavirus outbreak. When you’re sick or burnt out, you can’t deliver the same quality of services. We all know the basics of maintaining your health like eating a variety of fresh foods and staying active but there are a few particular tips to keep in mind as a business owner. For instance, you should create clear boundaries between work, life, and your clients in order to keep the balance. I would also suggest taking advantage of your open schedule and allowing yourself to take a break from time to time during the day.

Maintain your finances because cashflow is what keeps your business afloat. (Read more about maintaining your finances here).

To be diligent with your finances is to be strategic about your money moves, set aside funds for emergencies and other unexpected circumstances, and keep a budget that gives you the agility to change course at a moment’s notice. (Get the small business budgeting guide here). If your original business plan isn’t bringing in the same profits, you have to have the funds available to pivot over time.

You couldn’t maintain a business without clients so reach out to them early when there are signs of changing times.

Towards the start of lockdown, I checked in with all of my clients and evaluated where they were at. Many of them were struggling and didn’t know what to do. Thankfully, I could see more clearly from an outside perspective what changes they’d be able to make in order to keep their business going. As they continued to make profits, they were able to continue to stay on as clients.

The longest lasting entrepreneurs I know are proactive instead of reactive. Focus on maintaining your health, finances, and clients, and your business can survive anything. Something else that will help you survive, and even thrive? Working with Mitchell Consulting. Fill out our questionnaire to make sure we’re a good fit.

Know Your Numbers: 3 Quickbooks Tools to Grow Your Business

June 6, 2022June 6, 2022 by Michelle Mitchell

Know Your Numbers: 3 Quickbooks Tools to Grow Your Business

Quickbooks Online bookkeeping software is a powerful tool. I’m kind of a QuickBooks nerd and have been for as long as I’ve been an entrepreneur because I’ve seen firsthand how transformative it can be for a business. If you’re using it, you’ve probably already experienced how much easier it’s made your bookkeeping and business accounting. But, you’re probably just scratching the surface of its capabilities.

Quickbooks does more than make your bookkeeping easier. With built in Quickbooks reports and tools, you can develop a better understanding of your business finances so you can grow your business. The information that’s easily available to you within QuickBooks reports is invaluable for scaling your business. That’s because diving deeper into your data can give you guidance on how to run your small business more efficiently and effectively. Read more about digging deeper into your data here.

If you are working to get a better handle on your finances and grow your business, there are three essential tools you need to being using: the budgeting tool, projects, and the cash flow report.

Quickbooks Budgeting Tool

The Budgeting Tool helps you make decisions in your business that you can feel good about. You can spend minimally or you can leverage your debt, but no matter what, there needs to be a balance. Enter: your budget.

In QuickBooks Online Plus, you can use the budgeting tool to determine how much money you can expect to bring home after taxes and expenses. Learn that number and you can budget for everything else! You can also run reports against others to compare data and get even more in-depth information.

Quickbooks Project Tool

Quickbooks Online Plus also has a Project tool. This tool comes in handy when you’re auditing the services you offer and the way you’ve packaged them.

So what does it do? The Projects tool lets you record and view your transactions by project. From there, you can see which projects are bringing in the most revenue, which are racking up more expenses than what they’re bringing, and which projects have the highest amount of interest.

Quickbooks Cash Flow Report

Last but not least is the Quickbooks Cash Flow report, available in all versions of Quickbooks Online. This report is auto-generated from your transactions and lets you keep track of where all your money is going.

Good cash flow is a high priority for business success, especially as you’re scaling up, so you want to be able to keep track of it. Learn more about how you can improve your cash flow here. If you’ve ever looked at your bank statement and asked, “where did my money go?” this feature is for you.

Using QuickBooks tool and reports beyond your basic bookkeeping and invoicing might seem overwhelming at first, but once you start using these features, you’ll begin to build confidence in your ability to understand your business finances and use your numbers to make decisions that grow your business.

Want more help managing your finances? Mitchell Consulting offers bookkeeping, accounting, and virtual CFO services for businesses. Complete this questionnaire to book call with us!

Consider This When Leveraging Your Debt

May 25, 2022 by Michelle Mitchell

You want to scale your business but that’s going to require a lot more money. What now? You can breathe easy because you’ve got options.

Debt in your business can be manageable, believe it or not! The key is to weigh what’s going to be most advantageous for your business and give it a good chance at growth. (Read about cultivating a growth mindset here).

That may mean a short term debt created by purchasing something on a credit card that you should be able to pay off as soon as you make your next sale. Alternatively, you may want to make a larger investment that you’ll have a plan to pay back in the long-term. Let’s dive deeper into these considerations.

Short-Term vs Long-Term

When you go to finance a venture within your business, the first thing you’ve got to consider is whether you’re taking on a short term debt or long term debt. A short term debt is one you’ll be able to pay back within 30 to 60 days, and a long term debt is paid back in the range of one to five years.

Short term debt helps you with your overall cash flow. These debts keep the cash flowing so that it can continuously make it back to you as revenue. They typically involve tapping into a line of credit, through the bank or through your credit card.

Long term debt might seem scary but it’s what’s necessary to scale your business using the tools you already have or will have in the near future. It’ll be less scary by the time you go to apply for that business loan or sell that percentage of your business because you will have to have a plan. I’ll talk more about planning as you read on. (Budgets help you plan too).

Debt vs Equity

If you’re ready to create long-term debt, you’ve got two options: accrue debt or offer equity.

Since you don’t have the money to invest, accruing debt means taking out a business loan. Your other option is to gain equity. Equity involves giving a share of your business to an outside stakeholder, who will then help fund your growth because they’re invested in your organization. With either option, you owe someone money. It just depends on who you’d rather owe.

Good timing vs bad timing

There are bad times to collect debt, like a month where business is slower than usual or when expenses are piling up. A good time to collect debt is when you can forecast your expected revenue and based on that, know that you’ll have the money to pay back that debt in no time. (An accountant can forecast this for you. Find out more about hiring an accountant here). It’s even better if the source of the debt has a high return on investment. That way, you’ll be able to pay off your debt AND make some profit!

If you choose to apply for a business loan, you not only have to forecast for yourself. You have to come prepared with data proving that you will have the profit margin to pay them back in a timely fashion. (Read more about gross profit margin here). A potential stakeholder is likely to be interested in this data as well.

Whether your debt is short-term or long, or through assets or equity, it’s all about timing. To get a timeline for smart debt creation that will help you scale your business, all you need to do is forecast when you’ll need cash and when you’ll have it.

Debt doesn’t have to be your number-one stressor. With some careful planning, your business will be skyrocketing to success!

Plan to reach your income goals by using my free Income Goal Calculator, which you can download here.

Your CFO Day Checklist

May 4, 2022 by Michelle Mitchell

You can hire all the accountants, bookkeepers, tax strategists, all the financial professionals in the world to take care of your business finances but nothing will fully exempt you from being involved. (Find out more about these financial professionals here and here.) The CEO title is a two-for-one package deal because you also need to play the role of CFO from time-to-time.

That CFO role can actually be liberating instead of scary. The easiest way to start doing that right away is to block out time for CFO Days.

A CFO Day is a day you set aside to look at your finances. You need to hold them regularly because it keeps you more consistent, less emotionally involved, and more prepared for future money moves. I know it seems like a lot, which is why I’m walking you through this CFO Day checklist.

Your primary tasks on your CFO Day can be divided into three areas: keeping track of the money going in, keeping track of the money coming out, and the overall financial position of your business. (Read about determining the financial health of your business here).

The sooner you have money in your bank account, the sooner you can make financial plans for investing and saving in your business. Keep track of the money coming in by asking these questions.

People appreciate integrity. When you’re true to your word by paying people in full and on time, you build a loyal following and staff that feels they can trust you. Keep track of the money coming out by asking these questions.

It’s always a good idea to have some sense of whether you’re headed in the right direction financially or if something needs to change. Keep track of your business’s financial status by asking these questions.

(Learn more about a simple but effective budgeting system here).

Hopefully I convinced you to schedule your first CFO Day. I guarantee that you’ll feel more consistent with your money management, it’ll become an easy part of your routine, and it’ll help you secure your business’s future through the finances.

To learn about other healthy financial habits that small business owners should adopt, read my post from the past, 3 Financial Habits That Will Help You Reach Your Goals.