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Category Archives: Accounting

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How non-financially trained people can prepare a budget in 5 easy steps

How non-financially trained people can prepare a budget in 5 easy steps
Preparing a budget is "easy" for an accountant and small business people who have some finance training. However for many it is the stuff of voodoo. But when you break it down, there is no real mystery around the preparation of a budget, it is based on your plans and intentions, costs that you can obtain from suppliers, and some judicious making of assumptions and estimates. In truth, any non-finance executive or business owner can do it if they approach the task logically. Here are 5 basic steps to take to compile your budget. 1. Tell the story of your plan first. A budget is no more than the costing of a story. Is your story one of expansion, or of reduction? Does your story include the need for more staff or capital equipment? Is your story about opening more stores? So the first step is to provide a narrative of your operational plans for the period of the budget, usually a year. If you don't have a business plan, look at your business and ask yourself what you will do within it for the year ahead. List any new initiatives, identify any areas you either want to close or reduce in size, identify your...
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Financial Understanding starts with the Chart of Accounts

Financial Understanding starts with the Chart of Accounts
We are about to discuss accounting matters.
Hey, don't click past, it really is important!
Well yes, a little boring too, but sometimes you need to get into the detail of the boring to get the information you need in order to do all the glamorous stuff like building a vibrant business. In fact often you need to get into details to make sure your product or service delivers its promise. Think of a mechanic - no point creating a culture of caring for the customer if your mechanics fail to bleed the brake valves every time. Or a lawyer who's innovative and really digs deep for the client - not proofreading and the typos will get him every time.
So, one of the crucial (boring) details in any business is the accounting. You can hire a tax accountant at the end of the year; you can hire a once a week book-keeper; you can even employ a full time accounts-person and buy an expensive accounting software system; but the decision about some detail must lie with you and while you should take some of their advice, you need to decide on some key elements of your books.
The one particular aspect I want...
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3 things ANY small business can do to grow

3 things ANY small business can do to grow
There are many small business owners reading this, and they have probably read my earlier posts on business improvement and said "that's not for me, I'm just a grinder, grinding away day to day in my small business".
I'm thinking of Dave the floor sander who did the new floorboards at my house. I'm also thinking of Adam the housepainter who did such a good job on my house and Brad the electrician who comes over anytime I call him. These are all hard working small business owners who employ anything from none to 5 people, organising their work procedures, their finances and their people as best as they can, where every day is a busy day just "doing the stuff".
If you are one of them you are probably thinking that all this "strategy advice stuff" is not for you. And yet, every time I talk to Dave, and Adam and Brad, they are always willing to talk about their latest ideas, about how they improved sales by getting a telephone answering service, about how once a year they take their staff inter-state to watch a football game as a reward and to build team spirit, about how they sit down together to...
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Recession Proof Your Business

sorry closedIs this possible – to recession-proof your business?  Well no, probably not despite the wealth of articles about how to do so appearing on the internet (about 614,000 hits on Google). However, what is possible is to secure your business as much as is possible by following a series of simple and common sense business strategies.  These strategies are no different from strategies you should employ under normal circumstances, but which application is much more acute in today’s economic climate, and with a different emphasis required.  Sadly when times are good, businesses allow themselves to get “fat” and some of these every-day disciplines are allowed to slacken. The strategies can be grouped into defensive and offensive strategies.  As you look at your business performance it is likely that you will find profit performance heading south, and with the economy looking the way it is, it is difficult not to panic and begin to tighten all the hatches.  However you can tighten too much, to the extent that your business finds it difficult to operate normally.  Hence, while it is natural to concentrate on the defensive strategies such as cutting costs,...
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