Beware the Spreadsheet

Microsoft sought to change the world of data organization in 1982 with the release of the computer software, Multiplan. Things, however, didn’t begin as smoothly as they hoped. Lotus, one of Microsoft’s competitors at the time, beat their market share with their own program, leaving Multiplan out to dry. After countless revisions, Microsoft’s Multiplan became the game-changer known as Excel, and, without it, the world of business would not be the same. Nearly every industry uses data-rich spreadsheets in one aspect of company operations or another; however, a recent study found that up to 94% of internal spreadsheets had errors. Therefore, beware of the spreadsheet.

Spreadsheets can be useful for everything from simple budgeting to complex data analyses. Unfortunately, flawed data means flawed results, which can lead to some pretty major issues down the road. This leads accountants (or those muli-hat-wearing employees doubling as accountants) to the question, "why is so much data so flawed?"

The answer lies in self-governing internal departments lacking a check-system. This can be especially true for entrepreneurs and business owners who are managing part or all of their own company finances but don’t have the resources for someone to check their spreadsheets.

So, what’s the solution?

In any regard, proofing your spreadsheets can be an invaluably important process. However, it isn’t always easy to find someone to sort through hundreds of line items to verify their accuracy.

Taking your time and checking your information as you go is one method of ensuring accuracy. Another is blocking your data entry time and then reviewing smaller blocks of spreadsheets at a time so you don’t have to check the whole file at once. Outsourcing your books to professional accountants in Reno is another great option to ensure your books are being kept accurately. Excel changed the game of the business world forever, and for the better. Don’t let foolish mistakes keep your company from the success it deserves.

Mastering Small Business Financial Tips

Wearing all the hats it requires to keep your business operational is enough of a head-trip to have many entrepreneurs ripping at their hair. As if you didn’t already know, managing a small business is a vastly rewarding yet ridiculously tedious process. For those fighting the good fight and persevering through those day-to-day struggles, mastering small business financial tips will benefit you time and time again.

Therefore, it’s important to understand the basics of financial operations facing small businesses, which is the point of this post. While covering all of the necessary areas in small business financial literacy would take a multi-volume encyclopedia large enough to cover the first floors of the national library, Team VAST recommends filling up on the following couple of small business financial tips sooner than later.

Creating budgets may not be the most ideal way to spend your time as an exciting new entrepreneur, but it’s important. Reviewing past and present records to project future operating expenses may be tedious, but failing to forecast how much, where and when your cash is being spent creates all-out pandemonium as your company continues to grow. Don’t expect your budget to match actual spending; in fact, that nearly never happens. Yet, the knowledge of creating and comparing an expected vs. actual budget reaps copious financial benefits.

Keeping track of employee paperwork and financial paperwork (for taxes, loans, etc.) from the beginning is smart. Thoroughly understanding the documents you have on file is even smarter. Familiarizing yourself with these documents will not only build your wealth of financial legal workings but also reduce the stress associated with confusing documents. There is nothing worse than being asked for legal licensing and tax documents from the IRS and drawing a blank when it’s time to deliver.

Whether you choose to outsource your financial responsibilities or not, having a basic understanding of your small business finances and what your accountant is doing for your company is important in many more ways than one. The team at VAST has the financial knowledge and expertise to assist you throughout all stages of your entrepreneurial endeavors. Contact us today to start building your trustworthy bank of financial literacy.

When it comes to small business accounting, the virtual accounting experts at VAST have your back.

Can Your Company Afford You?

When you embark on the adventure of entrepreneurship, there will inevitably be ups and downs for you financially.  At the end of the day, you pay employees, vendors and others and then you receive a paycheck.  Therefore, there are three numbers you need to have a solid understanding of.  I call them Survival, Comfortable and Ultimate. Survival is your worst case scenario.

It is the absolute bear minimum your company needs to pay you in order for you to survive and pay your basic bills.  It is very important to note though that the time you spend in Survival mode should be minimal.  If your company cannot pay you your Survival number other than in rare instances of growth or extra investment, then the hard answer might be that your company cannot afford you.

Once you get a handle on the answer to that all important question, then there are two additional levels of entrepreneurial compensation.

Comfortable is a step up from Survival.

At this level, you are taking a consistent salary, saving for retirement and taking vacations.  This is your Survival number plus the cost to do those things.  Comfortable comes with a different thought pattern.  At this level, you are supporting yourself and providing for your family, but you have the luxury of making decisions.  Maybe you can't quite get to the high end of Comfortable earnings but your passion for what you are doing makes it worth it to you.  That is your decision to make.

Ultimate is the highest number you can imagine your company providing for you.  

It's tempting to say "the sky is the limit", but try to put an actual number on this.  Goals are much more attainable if they are quantified.  This is a fun number to think about as a business owner...even if you are devoted to what you are doing and not in it for the money, passion can fuel the financial success of your company faster than anything else you can inject into it making Ultimate that much more attainable!

By knowing these three numbers, you can ensure that you know first and foremost whether your company can afford you.  Then you can build these numbers into other tools to fuel your growth likes budgets, cash flows forecasts and more.

To learn more about how to calculate these three metrics and tie them into your company's financial success, check out Tanya's on demand course for entrepreneurs - The VAST:Track Guide to Startup Success. Click here to learn more.

Virtual Accounts Receivable: Managing the Mayhem

When business is good, Accounts Receivable can be your favorite report to review.

What your customers pay you is in effect the lifeblood of your company and its future. At VAST, we can make that report look even more impressive. When you sign up for our virtual accounts receivable, we take care of all the work that goes into managing it and send you a simple, easy to read report. In fact, this report is not something you only get to see say on a Wednesday at 11 a.m. Instead, you will be able to get up-to-the-minute reporting anytime you have the itch.

VAST takes care of all the less-than-fun parts of your virtual accounts receivable for you. We can even take the initiative to bill your clients for you. When they don’t respond we will help track them down on your behalf. Once their payment is received, we make haste in updating your virtual accounts receivable report promptly. When you are on the go, making your business work, you need information about your money immediately. As the partner who is interested in facilitating your success and helping you reach unimaginable heights, we work to always keep you informed.

Once a payment is received, we will also do the legwork of getting it into your bank account. By making deposits for you, often within the same day, we are removing any delays that could hold you back from making those important business decisions. It is our commitment at VAST to never hold our clients back, but to always be propelling them forward. It is this attitude, combined with the unbelievable services we offer, like our virtual accounts receivable, ahem, that makes us the ideal partner for businesses of every size and shape.

Implementing a Six-Month Budget Plan to Finish Out the Year

“No one’s ever achieved financial fitness with a January resolution that’s abandoned by February.” -Suze Orman Having a well-structured and practical budget can make all the difference for a moving-and-grooving business. With still half of the year left, there is time to get on track and reconfigure your company’s approach to money management. Creating a budget is a simple and valuable tool that will help to eliminate financial uncertainty as you finish out the year.

As you begin to develop a budget, being aware of the current industry is important because it will allow you to more accurately project revenue for the rest of the year. Design a spreadsheet to help you keep track of your business’s cost and revenue. Keeping track of how much money is coming in and how much your business is spending will help you identify where you could potentially cut costs, or where some extra funds might need to be allocated.

As you notice where your funds are going, take the time to investigate what other deals are being offered. Shopping around for different suppliers is a great way to help you cut costs. It’s not too late in the year to make these changes; in fact, making changes like this could greatly benefit your business as the year comes to a close.

If you are a small business, a six-month budget leaves room for revision and will call for you to reevaluate at the end of the year, which keeps you in touch with your business’s finances and allows you to make any necessary changes as you grow and expand.

As almost anyone will tell you, having a budget in place helps your business run more efficiently. Implementing one mid-year, or revising the one you may have started at the beginning of the year, can assist your business in achieving a successful second half of the year. By keeping track of your business’s money, you will be more prepared to handle those pesky unexpected year-end costs, and will continually be aware of where you stand, which will help you finish the year on top. Whether you are unsure where to begin, or you need help navigating the process, VAST offers the accounting and financial services to help ensure your mid-year budget writing is simple and effective. Contact us today.

References “Six Steps to a Better Business Budget.” Feb 26. 2009. Web. 24 May. 2013.