The question isn’t, “Why did you begin a new business when you’ve never owned one before?” but “What do you need to do to keep it going successfully?”
Having expertise in a particular arena (planning meetings, photography, marketing, producing live events, or arranging travel, for instance) is an advantageous asset, but does that skill prepare you for keeping the books, mastering social media and changing technology, attracting clients, branding, or time management? While all vital components, creating and managing your revenue should be priority number one. As one attendee of the August 31 MPI ISBO CommuniTEA zoom call on Managing Your Finances for Your Small Business noted, “Revenue drives you being able to hire more services (such as an accounting firm, social media pro, or even a sales team).”
The hour-long session hosted by Meeting Professionals International’s (MPI) Independent and Small Business Owners (ISBO) monthly CommuniTEA discussion, a socially engaging casual chat, split into four breakout rooms: Winging It!, Cash Flow, Tech and Tools, and Structuring Your Finance Team. Participants chose their topic of interest and had the option to switch rooms. When breakouts ended, the entire group reconvened to share the knowledge discussed. The beauty of each monthly MPI ISBO CommuniTEA topic is no one person has all the answers, but with so many types of businesses represented, someone else may have the solution to your question.
Many of the questions in the August 31 call revolved around accounting. One former planner hired an accounting firm without realizing the day-to-day tasks aren’t covered. Another hired a CPA for filing the taxes but feels overwhelmed by daily bookkeeping yet isn’t sure how to afford that service. As you-don’t-know-what-you-don’t-know, another would like a list of questions to assist ensuring an accounting firm’s services are what is needed. Several people highly recommended reading Profit First by Mike Michalowicz.
Accounting software, such as Quick Books, is popular with many, but for others, like me, that technology would be more than my brain could muster. I use a simplified monthly bookkeeping record book, logging in all my receipts into appropriate categories for income and expenses, and I have a CPA for filing my taxes. My simplified system may not be effective for larger companies, but it did pass muster in an audit. An adjunct professor and business owner who assists third party planners with their needs said several of his clients have recommended Honeybook.Com, a client management system for invoices, tasks and more. Good system for start-ups, he said.
Hearing from others who have walked in your shoes are the meat-and-potatoes of MPI ISBO CommuniTEA’s breakout sessions, no matter the topic. These are just some of the solutions from the discussion of Managing Your Finances for Your Small Business.
Keep separate checkbooks and credit cards for your personal and business accounts. There was some disagreement whether it is necessary to have the business accounts in the business name rather than a personal name, but the essential part is to not comingle funds. One solution a couple people use is to have the card in one’s personal name but linked to the business. One business owner asked if a business credit card asked higher fees and the answer was no.
Get to know your clients. Spend time building relationships with the ones who will get you to work at your best level. Don’t take on clients who may drain your time or who may be troublesome in other ways.
One business owner uses Clockify to track her time so she can evaluate how profitable projects are or are not, as well as how efficient she is at certain tasks. The advantage is that she can see where her time is going instead of where she “thinks” it is.
One participant responded, “When you first begin a business you may take on a lot of jobs that may not be profitable, but the cash flow then isn’t the immediate priority. Expanding your customer base, getting well-known and acquiring customers are.” Once the business grows, she says you can be more discerning about which jobs merit your time and expertise and therefore, increase your cash flow. “You must be wary of spending 80% of your time earning 20% of your profit.”
Call on small business centers, find mentors, partner when multiple services are needed, and be consistent with the quality of your services.
What became clear is that whether the business is brand new or has been around for years, there is still more information the participants want to know.
How do you brand your business once it is thriving?
Virtual technology changes constantly. One business owner said it would be helpful if MPI ISBO could list resources for technology tools on finance or running a virtual program. “About the time you get comfortable with the technology, it either becomes obsolete or the features change,” she said. She added she would “love to have an ISBO resource for tools, with a couple of bullets on pros and cons, along with a rating system so we don’t all have to do our own research. How can we benefit from the research others have already done?”
Has anyone had success winning pitch contests or getting investor financing to get cash flow?
Another participant said she’d like “discussions on how others create proposals and decide on billable vs. project work. I know we have to be careful to not discuss actual pricing due to monopoly laws, but general ideas would be good to discuss.”
Other topics of interest: how to use social media better; the Art of Saying NO, and business tips for the people who went from working in the industry to now running a business.
Also discussed in the jam-packed information-shared hour discussion was a future hour to hour-and-a-half session to Meet the Experts (no formal name has yet been decided). The plan is to have one or more guest speakers and lots of Q&A. The session would most likely replace the November MPI ISBO CommuniTEA session.
The September session will be September 28 at noon ET. The topic is Business Insurance.