18663 Ventura Blvd, Suite 227Tarzana, CA 91356
FREE CONSULTATION818-436-2775
18663 Ventura Blvd, Suite 227Tarzana, CA 91356
FREE CONSULTATION818-436-2775
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Personal, Affordable Payroll Services, Bookkeeping, and Tax Processing for Small Business throughout Los Angeles County.

Right Now Is the Time To Make A Budget for Your Small Business in 2016

Many, maybe even most, small business owners, and even owners of medium size businesses with 500 employees or more find the whole budgeting thing to be anywhere from an overwhelming task to too horrifying to contemplate. There are probably three reasons for this:

1. It looks like, sounds like, and acts like accounting, and many small business owners are not good at organizing the data to create good books and/or hiring a great bookkeeper or accountant to help produce good reporting.

2. Many business owners have no idea what the advantages are to good reporting and the creation of budgets.

3. Not a small number of entrepreneurial types are intimidated by the idea of creating projections of future sales, expenses, cash flow, and the like.

 

Poor bookkeeping often leads good companies to disaster

When you are in charge of any type of activity, your chances of success drop off rapidly when you fail in key areas. In small business there are a few such areas where failure in just one can mean disaster for all the others. One of those is inadequate tracking of sales, margins, overhead, profits, taxes, payroll, and all related aspects of running the business. It is critical to create the following processes very, very early in the development of any small business:

– An accurate paper trail for every single transaction

– A ledger which keeps track of these transactions

– A set of books which accumulates these transactions into categories that make sense

– Reports that allow for analysis of aggregate transactions and methods for drilling down into the details to find out what went right and what went wrong

 

Goal setting is key to success in almost any endeavor

It is hard to imagine that anyone with the guts and drive to start their own business or to buy an existing company has somehow missed the truth about goal setting. Goal setting is a motivator and causes us to stretch, but it also allows us to quickly see breakdowns along the way in time to correct them.

For example, consider setting a goal for margins. First, you would want to know what your margins were for last year, and the year before when possible. Then you would want to know what the industry standard is. You might have some products that have much greater margins than others. It would be helpful to see those breakdowns also, and how each category contributed to the overall margin.

Once you have all those numbers, you can create a budget or plan for the following year. If you see that there is a need to increase margins, then you will want to contemplate how you can either buy better, push higher margin products, or increase prices.

 

You need fast, accurate, monthly reporting

If you have a goal of generating 40% margins and you don’t find out until February of the following year that you only had margins of 35%, you may have lost 14 months where strategic changes in sales, products, or purchasing might have boosted you up to the 40% level. 5% of even $500,000 in sales is $25,000. That is a lot to lose. $25,000 might be enough to destroy a marginal business.

But if you set the goal at 40%, then get monthly statements that accurately reflect your purchases, costs of sales, and sales, you can quickly learn of the margin shortfall and correct for it.

 

Not rocket science

So if you are part of the group described in the introduction, and have not yet set up great books, much less budgets, take heart. The process is not that hard. And it becomes much easier when you have the help of a great outside bookkeeper like ATPP. They can help you set up the books in a way that will best provide great reporting. They will generate the monthly, quarterly, and annual reports that you need to effectively manage your business. And they can help you to create smart budgeting to give you a roadmap to success.

 

Shocking how little it costs!!

Give ATPP a call today. Find out how little it costs to have your books, payroll, taxes, and even accounting prepared by their experts. Why hire an employee, buy a desk, and pay for office space when you can get it all done for a very low cost. Call ATPP at (818)436-2775 today.