Tag Archive for: entrepreneur

culture

Tips to Building a Healthy Culture That Can Grow Your Business

/in , /by

We are focused on building a long-term business. 

Heck, we are at the 11-year mark so we are learning and applying what we learn.

Without a doubt, at the foundation of that is people.

And the people need vision, clarity, values, and a mission to get behind. 

Prompts to get everyone aligned and moving in the same direction.

People also need to be supported, heard, cared for, and loved. 

Yup, you heard that right, loved.

culture

If you are building a business or organization, culture should be a top priority. You should be constantly thinking about how to shape, cultivate, and prune the culture.

Before we jump in, here are a few reflection questions for you:

  • How would you rate the culture in your organization on a scale of 1-10?
  • How do you define culture? And what does a healthy culture look like?
  • What investments are you making to nurture the culture that you are looking to build?

As for us, we let our customers rate us. We believe that the awesome service we strive to deliver is a reflection of the culture we have created. So we ask our customer.

Check out what clients are saying here.

We believe that culture can be defined as a set of attitudes, behaviors, and practices shared within an organization which gives it a distinctive identity.

And as for investments, we make lots. 

We have developed a care team, called Wrap Around, to care for our employees. We constantly clarify our mission, vision, and values and share ways the employees can participate in building culture. And we set aside time each month to just have fun together. But more on that later.

We believe that one of the single most important investments you can make in your business is in creating a healthy culture. And this is critical in supporting the growth of the business.

In this article, you will learn about: 

  1. Why culture matters
  2. Who’s responsible for creating and building a culture
  3. Key investments to make in culture
  4. Top 3 Takeaways

Let’s dive in.

Why Culture Matters

Legendary management expert Peter Drucker said that “Culture eats strategy for breakfast”.

Ain’t that the truth?

We believe that culture sets the foundation. 

It sets the tone for how your people operate, communicate, treat each other, make decisions, and treat your customers.

Want more?

It also sets the tone for how you hire, how you fire, and how you promote. It helps you identify customers, vendors, and partners that will align well with your organization.

In Built to Last, Jim Collins discovered that enduring companies have a culture that defines who they are and what they value to attract like-minded individuals to them. 

People who fit the culture know what to do because they can feel why it is important. Conversely, those that don’t fit the culture feel out of place.

Culture matters because it scales. 

It permeates every aspect of the business.

We are living proof of this.

Here are some outcomes of a healthy culture that we have experienced:

  • Lower employee turnover and higher engagement
  • Increased profitability
  • Increased job satisfaction
  • Stronger relationships built on trust
  • Less time wasted on non-sense such as gossip, here say and drama
  • Higher probability of achieving Company and Individual goals
  • Alignment and focus on the greater good

Here are some outcomes of an unhealthy culture that we have witnessed:

  • Higher employee turnover and lower engagement
  • Decreased profitability
  • Decreased job satisfaction
  • Weaker relationships 
  • More time is wasted on non-sense such as gossip, here say, and drama
  • Lower probability of achieving Company and Individual goals
  • Lack of alignment and focus on the great good. 

As you can see there are healthy outcomes related to a healthy culture.

And there are unhealthy outcomes relating to an unhealthy culture.

In our experience, this is a very important part of any organization. 

We believe that there is no silver bullet and it takes time to create, shape, and build a culture that will last.

Who is Responsible for Creating and Building Culture?

We believe that everyone has a role in creating and building culture.

From the newest team member to the most experienced team member folks will be either adding to or taking away from culture.

But the buck stops with the CEO or Visionary. 

The CEO needs to take ownership of the culture.

Sure we want to get the leadership team involved. This will help to multiply the efforts and bring the culture alive in the organization. 

A key point is that if the CEO does not create, and then support, the building of the culture someone else will.

Do you want your unhappy employee, who is not a right fit for your company, to go around and create the atmosphere in the company?

Probably not.

So the leadership team needs to do some groundwork in the following areas to set the baseline:

  • Define the mission
  • Define the vision
  • Define the core values

Then the leadership needs to take the following steps to build the culture:

  • Remove employees or customers that are not a core value fit
  • Provide positive feedback to employees living in the culture
  • Provide constructive feedback to employees not living in the culture
  • Bang the drum and constantly get the Mission, Vision, and core values in front of the team

At New Economy, we have a quarterly company rollout. During that meeting, we review and bang the drum on the Mission, Vision, and Core Values.

Also, we use Slack as an internal communication platform. We have a channel called core value callouts. We encourage employees to “call out” an employee and give recognition when a core value is being lived out. This helps with positive reinforcement.

There are so many different directions you can take this in.

The Company needs a Core Value Champion which is typically the CEO.

Key Investments to Make in Culture

A healthy culture takes investments.

It takes investment in time, talent, and treasures.

The more you invest, the bigger your return.

Are you willing to make investments in your organization’s culture? 

Investments in Time

We believe that building a healthy culture happens over a period of time, and it is a lifelong pursuit.

Here are some of the examples of investments that we making in time at New Economy:

  • Monthly Culture Zoom – All employees participate. This is a fun event where we create time and space to get to know each other and have fun. It is not work-related.
  • Quarterly Wrap-Around Zoom – All employees participate. We have a care team called Wrap Around. Each quarter they host an event to “wrap their arms” around the team. Our last topic of discussion is generosity in the workplace. 
  • Monthly One-On-One Zoom – All employees participate. Our first question on these is “How are you doing and how can we help?” We make these about the employees and try to remove obstacles that are preventing them from being successful.

Investments in Talent

We believe that Companies rise and fall based on leadership. As we noted above, the Leadership team has a responsibility to create a culture.

Here are some of the examples of investments that we making in talent at New Economy:

  • We have training budgets for all team members of about $1,000 per year.
  • We invite all team members to attend the Global Leadership Summit.
  • We have created a Leadership Team Oath that leaders put into
  • We have our leaders participate in coaching programs like C12, Key Players, and How to Be a Good Boss

Investments in Treasure

All we are referring to with treasure is money. Beyond developing talent and creating time for developing culture it takes monetary investments.

We have mentioned a few above in the form of the value of time through meetings and training.

Here are a few more.

  • Above we mentioned our Wrap Around team. They invest $50 per month to partner with each employee in investing in a charitable organization picked by the employee. This is $600 per year of cash donated to good causes.
  • Above we mentioned our Wrap Around team. They invest $50 per month to partner with each employee in investing in their emotional, spiritual, and physical well-being. Think gym memberships, meditation apps, and meal delivery services. This is $600 per year of cash donated to good causes.

Building a healthy culture that will last takes time.

Also, it takes investments in the form of money, talent, and more time.

But it is so worth it.

Imagine working at the place you always dreamed of working.

You can make that happen by investing in building and growing your organization’s culture.

3 Key Takeaways

At New Economy, we want to help you gain control of your finances to make smart decisions. Part of that is understanding your finances and how to drive business performance.

Here are 3 key takeaways.

  1. The CEO needs to take ownership of being the Chief Culture Officer. And he has to encourage and hold the Leadership team accountable for building and nurturing the desired culture.
  2. There are no shortcuts. Building a culture takes time and lots of work. Do the work and you will reap the rewards.
  3. Make sure you are making investments in culture. Invest in people. Invest the time in the right meetings. Invest money in the right support to help people succeed. People who buy into your culture will champion it for you.

There you have it 🙂

culture

New Economy Team Members are Experts in Accounting for Entrepreneurs

If identifying ways to decrease your taxes is not in your skill set or you want to gain control of your finances to make smart decisions to build and grow your business, New Economy is an excellent partner. 

We’ll help you get your accounting and taxes done, and done right.

Schedule a time to meet with our Founder, Jeff, and discuss how we can add value to your situation.

3 Keys to Turn Your Financial Budget into a Financial Forecast

/in , , , /by

We are coming to the end of the quarter.

So how did your Company do?

At New Economy, we hit our measurables of revenue of $614K, gross profit of 50%, and net profit of 12%. 

Also, we hit 80% of our rocks. These are the top priorities for us in the quarter.

What did you learn?

At New Economy, we learned a lot. 

financial forecast

We learned that we need to keep making financial investments in our team members through training and growth opportunities. 

We also learned we need to increase our financial investments in marketing to help let entrepreneurs know we are here to help them gain control of their finances to make smart decisions.

But what do we do with these learnings from a financial perspective?

At New Economy, we believe you can use this information to forecast for the next quarter.

For a bit of background on creating a budget, check out our blog posting Here.

Your financial budget is set for the and will not change. 

However, your financial forecast can change based on what you have learned.

In this article, you will learn about: 

  1. The difference between a financial budget and a financial forecast
  2. When and why to update your financial forecast 
  3. Top 3 Takeaways

Let’s dive in.

The Difference Between a Financial Budget and a Financial Forecast

Most Companies, including New Economy, perform their financial budgeting towards the end of the year. 

Being a December year-end, we typically begin the process in November and wrap up in the first week of January.

The financial budget is the goalpost – think football and field goalposts. You are aiming to kick the ball through the goalposts to score. Or from a financial point of view, achieve the budget which keeps you on the path to achieving your overall goals.

You are estimating things like the investments you need to make into the business that will get allocated to hiring, marketing, and operating expenses. 

Further, you are determining your revenue goals and the direct costs to support that revenue.

It is your best guess.

You are painting the financial road map month to month to help you achieve your annual financial goals.

It’s important to note that your budget should not change.

You don’t want to move the goalposts.

We call that cheating 🙂

However, there is another very helpful tool.

It is your financial forecast. 

Your financial forecast is identical to your budget. It is set up the same way, looks the same and even works the same.

The biggest difference is you can change your financial forecast. 

In fact, at New Economy, we are constantly changing our forecast. 

But we are also continuously lining up the financial forecast against the financial budget. 

The idea is the financial forecast is updated for what is happening in the business, and in our experience that is lots of change.

At the end of the day, we hold ourselves accountable to the financial budget that was set and use the financial forecast as the real-time road map to get to the intended destination.

It’s kind of like the direction app, Waze.

You enter your destination and ways will give you the directions to get to your destination. This is like your financial budget.

However, then an accident happens. 

Waze then recalibrates and provides an alternate route. There are changes but it will still get you to the original destination. This is like your financial projection.

So, we suggest you make sure you have a financial budget.

Then modify that budget by bringing it alive based on changes or real-time information and call that your financial forecast.

In the next section, we will talk about when and why to update your financial forecast.

When and Why to Update Your Financial Forecast

When to change your forecast 

By now you should know the difference between a financial budget and a forecast.

The next question is when do we update the financial forecast?

There is a wide range of answers to this question depending on:

  • The business
  • The visibility required
  • The investment of time that’s willing to be made 

We have some customers that re-forecast weekly. 

They have built a weekly process around this and have determined that weekly forecasting gives them real-time insights that they need to manage the business.

We have some customers that re-forecast monthly or even quarterly. 

They will access real-time changes but more so look at monthly budget versus actual information. When items are on and off track, they will trigger changes to the model.

At New Economy, we re-forecast weekly. 

We have created a simple process where all the department leaders provide any material changes. It takes us about 15 minutes per week to do this and we will discuss why we do it this way in a bit.

In any case, updating on a weekly, monthly, or quarterly basis you are on the right track. 

You need to turn your budget into a forecast applying what you have learned.

Why change your forecast 

One of our taglines is we help entrepreneurs gain control of their finances to make smart decisions to build and grow their businesses.

To make smart decisions you need timely and accurate financial information like a financial forecast.

The forecast gives you the most accurate picture of how your business is performing from a financial perspective at any point in time.

Having that timely and accurate financial information allows you to do the following:

  • Determine if you are on or off track to your budget
  • Identify areas of opportunity or improvement
  • Run decision-making scenarios that show the financial impact

The reason New Economy updates the forecast weekly is to have good data for our weekly Leadership Team meeting called our Level 10 meeting. 

As part of that weekly Level 10 Meeting, we review a weekly, monthly, and quarterly scorecard which has the financial data we’re measuring. 

And you guessed it, one of the sources of that data is our financial forecast.

One last thing to note on the financial forecast.

Once a month has closed, we drop the actuals into the forecast. Refer to more information on the financial close here.

For example, if we are through Q-1, the months of January, February, and March would have actual results in the financial forecast. The remaining nine months would be the projected results.  

And we continuously analyze the financial forecast against the original budget.

A financial budget and financial forecast are very powerful business tools. So don’t sleep on the importance of implementing them into your business.

3 Key Takeaways

At New Economy, we want to help you gain control of your finances to make smart decisions. Part of that is understanding your finances and how to drive business performance.

Here are 3 key takeaways.

  1. Make sure you have a budget in place. Don’t change the budget once you set it. And build the budget showing details such as monthly and by-line items.
  2. Make sure you transition your budget into a forecast. Your forecast can be updated weekly, monthly, or quarterly. It can be changed and should be compared back to the budget.
  3. Leverage these tools in your business. They are powerful tools to help you achieve your business goals.

There you have it 🙂

financial forecast

New Economy Team Members are Experts in Accounting for Entrepreneurs

If identifying ways to decrease your taxes is not in your skill set or you want to gain control of your finances to make smart decisions to build and grow your business, New Economy is an excellent partner. 

We’ll help you get your accounting and taxes done, and done right.

Schedule a time to meet with our Founder, Jeff, and discuss how we can add value to your situation.

Seeing Your Vision Through the Numbers

/in /by

We were recently asked a great question by an entrepreneur on a customer discovery call.

Their question was “ What tools should my business have in place to help me see into the future ?”

By way of background, this is a Small Business in the service industry with 18 employees and doing about $3.5M in revenue with a 15% net profit margin.

We love this question for a few different reasons.

First, it shows that the entrepreneur has a vision.

Second, the entrepreneur wants to use data to make decisions. Amazing!!!

Numbers

Lastly, the entrepreneur is placing some weight on the value that his accounting and finance team can bring to the table as it relates to painting the vision through a financial lens. Doubly Amazing!!!

To quote Gino Wickman, the founder of EOS, “Vision without traction is a hallucination”.

Ain’t that the truth?

We believe a big part of gaining traction is having a clear financial vision that can be executed on a weekly, monthly, quarterly, and annual basis.

Full disclosure, we are a Company that runs on EOS, and we happen to be data experts. 

The system has helped us to grow the Company 3x since graduating from implementation. Even if you don’t run on EOS, this post will surely help you out. 

We know firsthand as some of the thoughts and frameworks have helped us get better.

In this article, you will learn about: 

  1. Obstacles that get in the way of financial vision
  2. 2 tools to give you financial vision
  3. Top 3 Takeaways

Let’s dive in.

Obstacles That Get in the Way of Financial Vision

Believe it or not, the first obstacle that we often see is a lack of vision.

In Jim Collins’ article published in the Harvard Business Review on building your Company’s vision, he describes vision as having two parts. 

It is a 10-30-year audacious goal along with a vivid description of what it will take to achieve that goal. 

It should be inspiring, vibrant, engaging, and clearly defining the “Mountain” you are looking to climb.

At New Economy, our vision is to love Entrepreneurs into limitless possibilities.

So if you don’t have a vision, it’s time to get clear and create one.

The second obstacle we see is the entrepreneur does not have the right Team in place to support the vision. 

Here we are specifically speaking to the accounting and finance team and the value they can provide to support the vision.

There are key roles within the accounting team that have specific skills and functions. There are accountants, controllers and CFOs that can all play roles on the team but stepping into the vision requires specific skills.

Check out this blog on the key differences between roles here.

A mistake entrepreneurs often make is assuming their accountant can handle this role; in most cases, they can’t.

Numbers

In the example of the $3.5M service Company, we believe that a strong controller will be able to support the financial engineering of the vision. They do not need a CFO and an accountant or bookkeeper does not have enough experience.

Another obstacle we see is that the Right Tools are not set up.

Once you have the vision and the right financial team in place, you can then start to think about tools.

A few things we see tools lack are the following:

  • There are no forward-looking financial tools in place
  • The Financial Tools are not built to allow for the running of scenarios
  • The Financial Tools are not updated frequently enough
  • The Financial Tools are not automated where it makes sense 
  • Financial Tools are disconnected from business decisions

The tools are important. They are gauges for the business like those on the dashboard of your car. 

They tell you how you are doing financially against your goals and your scorecards which is an indicator of the financial condition of your business. 

If you’re financially healthy, great keep investing in the vision. If you are not financially healthy, stop and fix the problem. 

Great insights to have. Don’t underestimate the power of tools and their ability to paint a picture of your vision.

Summary

All of these obstacles are easily overcome by making good decisions. 

First, make sure you have a vision. Then get the right financial team in place to support that vision. Lastly, empower that financial team to implement new tools to help paint the financial picture of your vision.

Keep reading to learn about the actual tools.

2 Financial Tools to display your vision

These 2 financial tools will help you with the following relating to the financial resources needed to achieve your vision:

  • Make good decisions 
  • Have peace of mind 
  • Have confidence 

Many entrepreneurs we have met have amazing intuition or “gut”. And we believe combining that with timely and accurate data creates a pretty awesome 1-2 punch.

Here are the two tools.

Cash flow forecasting tool

The first tool is the 13-week rolling cash flow forecast. This tool is all about future-looking cash. Imagine a world where you can see cash flow out over the next 3 months into the future. 

By leveraging this tool you will have a feeling of financial security based on the ability to predict cash flow needs by:

  • Know when, where, and how your cash flow needs will occur
  • Know the best resources for meeting cash flow needs (Debt, Equity, Factoring)
  • Be prepared to meet those needs in advance
  • Set goals for building cash reserves
  • Set goals for paying down debt

And how does this relate to vision? 

We believe that cash flow is the jet fuel that allows you to chase down this vision. 

By having visibility into your detailed cash flows you are able to get a sense of if you are able to support the investments needed to achieve your vision. 

It is that simple. You will gain an understanding of your ability to invest in your vision.

Click here for a more detailed posting and to download our free cash flow tool here.

One-Year Budgeting tool

To produce cash flow, your business needs to produce a profit. In other words, when your business is profitable you will likely have cash flow.

The one-year budgeting tool is essentially your profit and loss statement budgeted out over the next 12 months into the future.

Think of your small business budget as the monthly financial roadmap to obtaining your vision.

You will gain an understanding of the overall investments needed around staffing, operating expenses, and revenue generation needed to accomplish your vision. And whether or not you will need to be profitable and produce cash flow.

Many businesses shy away from budgeting and believe it’s all “crystal ball” stuff.

In some ways it is, but it allows you to consider your vision and how you are going to fund it. 

If you are interested in learning how to create a one-year budget, check out our detailed blog post here.

Here is a pro tip for you. 

Once the budget is created things may go sideways. That is just the way it is. 

At New Economy, we lock down the budget and forecast each month. It’s a similar format but you get to get in there and play with it, unlike the budget which is set.

A forecast is applying the information we are learning and changing the budget to reflect a more accurate picture of what is happening in the business. 

But we always look back to the budget to make sure that we are heading in the direction of the original budget we set.

Summary

It takes some thought and time to put these two tools in place. 

However, they are tools that are “living and breathing” just like your business. They will become instrumental in helping you to make good decisions to build and grow your business and achieve your vision. So our advice, invest to reap the benefits.

3 Key Takeaways

Your vision is very important to your business. Equally important is to ensure you have the cash and profits to chase down your vision.

Here are 3 key takeaways.

  1. Make sure you have your vision dialed in. You want everyone to know where you are taking them too. And also the role that they play in advancing towards the vision. This work takes time, patience, and lots of thought. Give it the time it needs.
  2. Make sure you have the right team in place. To produce forward-looking financial narratives that help you connect your cash resources to your vision you probably need a strong Controller on your team. They will have the right skills to help you articulate your vision in the form of a financial plan.
  3. Empower your accounting team to build and automate the right tools. There is an investment in pulling together both the 13-week rolling cash flow forecast and the 1-year budget. However, the benefits of having these tools in place far outweigh the investment.

There you have it 🙂

Numbers

New Economy Team Members are Experts in Accounting for Entrepreneurs

If identifying ways to decrease your taxes is not in your skill set or you want to gain control of your finances to make smart decisions to build and grow your business, New Economy is an excellent partner. 

We’ll help you get your accounting and taxes done, and done right.

Schedule a time to meet with our Founder, Jeff, and discuss how we can add value to your situation.

3 Ways to Boost Your Confidence in Your Small Business

/in , , , /by

How Leveraging Financial Data and Your Accounting Team Can Help.

As a growth-stage entrepreneur, you’re constantly dealing with emotional highs and lows based on the various circumstances thrown your way that are not in your control. 

We feel your pain. 

And we have learned that this can impact the confidence you have in your small business. But what really is confidence?

Here are a few definitions. 

  • It is the feeling or belief that one can rely on someone or something.
  • Or defined another way, a feeling of self-assurance arising from one’s appreciation of one’s own abilities or qualities.
  • Or the state of feeling certain about the truth of something.

Which begs the question: Do you have confidence in your small business? And can you increase that confidence in your small business using financial data and leveraging your accounting team?

At New Economy, we believe so.

Why, you ask? 

It aligns with our efforts of helping you gain control of your finances to make smart decisions to build and grow your company. 

In this article, you will learn: 

  • What types of issues might be eroding your confidence in your small business
  • What you can do to overcome these issues 
  • Three key takeaways related to improving the confidence in your small business using data

Let’s dive in.

Small Business Confidence

What Issues May be Eroding Your Confidence in Your Small Business?

There are a few important things to discuss here. 

First off, there is no silver bullet and the game of business covers a lot of ground. Therefore, we will focus on issues on the financial side of your business, which is the space that we play in. But this approach can be applied to any department such as marketing or even operations.

So what could deteriorate your confidence in your small business as it relates to the financial side of your business?

Maybe it’s people, maybe it’s process, maybe it’s technology, or maybe it’s a combination of all three. 

Let’s Talk People

Start with the Right Seats

Before we dive in, let’s discuss the seats in your accountability chart. And here is a question–Do you have a sense of the right seats and core functions needed for your business based on your stage, growth trajectory, and goals?

We believe every entrepreneurial, growth-minded company needs 3 foundational seats, each with a different set of skills and unique abilities (for more, check out our blog on the difference between an Accountant, Controller, and CFO). Here they are:

  • Bookkeeper / Accountant – They focus on tactical things like payroll, bill payment, bank reconciliation, credit card reconciliations, and invoicing and collections. This team member may have 3-5 years of experience.
  • Controller – They focus more on the output which would be things like accurate financial statements, accounting processes, managing the Bookkeeper, and working directly with the CEO or CFO. This team member may have 10-15 years of experience.
  • CFO – They focus on the business. They are a strategy partner to the CEO and they oversee everything related to accounting and finance and will get involved in budgeting, forecasting, and helping to bring plans to life. This team member may have 20+ years of experience.

Now that we have the right seats in place, you need to find the right team members and this is where people come into the picture.

Then Find the Right People to Fill Those Seats

At New Economy, we ask ourselves a few questions about placing a team member in a seat such as the ones mentioned above.

First, are they aligned with our core values at New Economy? If not, they will not be a good fit for our company, and we don’t place them. If yes, we move on to the next question.

Do they get it, want it, and have the capacity to complete the functions needed for the seat? If not, they will not be a good fit for the seat and we move on. But maybe through training and development, we can get them there. And if yes, then we place them in the seat.

So, if you don’t have the right seats, or maybe you have the right seats but the wrong person in them, you will face challenges. Chances are:

  • You are frustrated
  • your team member is frustrated and feeling burned out
  • You are not getting financial information to make smart decisions to build and grow your business

So your confidence could be down to not having the right structure and seats in your accountability chart or not having the right people sitting in those seats.

Consider stopping doing your own bookkeeping or using Tom’s uncle’s cousin who really is a party planner! Take the time to get this right. 

If you get this right, you will have an accounting and finance department that is aligned with your vision and provides useful financial data, actionable insights, and business improvements all to help you build and grow your business. This is an investment in your business that will return extraordinary results.

Let’s Talk Process

The next issue that might be eroding your confidence in your small business is the lack of process. At New Economy we are consistently reviewing our core processes, documenting them, and training others to ensure they are followed by all.

By having documented processes in your accounting and finance department you are ensuring that team members are clear on how to do things and you are mitigating the chances for errors, inefficiencies, or even fraud. Yup, we said fraud which nobody thinks about until it’s too late.

But here is the real reason the documented process is important: It will ensure that over and over again you have a procedure in place to consistently produce a desired outcome in a timely and accurate manner. 

For example:

  • Processes will support the release of timely and accurate financial statements. A process around the month’s end will allow any controller to step in and provide you with financial data that you can rely on to make great business decisions.
  • Processes will ensure that bills are paid on time for goods and services that we have received (we have seen vendors getting paid for things they should not) and that payments are going out at the right amount per the actual purchase order and invoice.
  • Processes will ensure that your business is on track to meet its annual budget. At month’s end, the actual financials can be compared to the budget to show what is on and off track. From there, you can forecast the future based on what you are learning to see how you are lining up compared to the budget. 

We prefer to rely heavily on processes. The process runs the business and the people step in to run the process. This takes time and effort but it is worth addressing in all departments in your company.

So, if your accounting team is always late with providing information, missing key information, or off on the accuracy we can see why your confidence might be down. And it may be due to a lack of processes needed to support where the business is currently at today.

A few final thoughts:

Having a documented process may not be enough. We believe that team members need to be trained in processes. Further, the process needs to be followed by all. So, you need a process to ensure that processes are being followed – yikes! 

But in the end, the process will give you the confidence that you are receiving financial information that is both timely and accurate. And this will give you insights as to how your business is performing.

Let’s Talk Technology

Remember the old days when you used to get a set of financial statements printed on ledger paper?

We don’t! And if someone handed us a set of financial statements on ledger paper our confidence would certainly drop. We’d question, in a healthy way, if we could rely on the numbers.

See, we have built New Economy from the ground up by leveraging a technology stack that allows us to provide virtual accounting and finance services worldwide. It’s faster, more efficient, more cost-effective, easier to build processes, and easier to train team members on how to use technology tools.

However, many companies’ accounting and finance departments are still struggling to adopt new technologies that will increase efficiencies, reduce errors, and allow team members to spend more time analyzing information and providing actionable insights.

The point is: Consider what technology you might be able to use to change the game and build your confidence. 

Here are some examples:

The list goes on and on. 

But the main point is that the use of technology can speed the flow of information up and assist with increasing the accuracy. Further, processes can be wrapped around these technology tools, meaning technology has an impact on increasing your confidence in your small business.

 

What Can We Do to Overcome the Issues that are Decreasing Your Confidence in Your Small Business?

The very first thing we suggest you do is step away from the day-to-day of the business. Most growth-stage entrepreneurs have too much on their plate and it’s hard to reflect and think strategically when you are in the business.

So what do you do?

Take clarity breaks. A clarity break is a regularly scheduled appointment on your calendar with yourself. You define what regular is – a half-hour daily, two hours weekly, a half-day monthly. It’s up to you. The doing of it is what matters.

Note: We like to take these in physical spaces that motivate, inspire, and encourage us. For example, I like to take my clarity breaks in my 1986 VW camper van by the ocean. Some team members like to take them at Starbucks. But the point is, get away from your regular space.

OK, so I am in my van, now what?

We would encourage you to reflect on the above and ask the following questions:

  • Do I have the right accounting and finance seats on my accountability chart?
  • Are the functions for each seat clearly defined?
  • Do I have the right team member with the right skills sitting in the seat?
  • Do I have processes supporting each function in these seats?
  • Are the processes being followed by all? Are they evolving with the business?
  • Do I have the right technology to increase productivity?

Reflecting and answering these questions will increase your confidence in your accounting and finance team and provide you with the information you need to build and grow your business such as:

  • Ways to increase profits
  • Ways to mitigate risks
  • Ways to run smoother
  • Ways to improve business insights
  • And ultimately increase business confidence

We have subscribed to this approach to help build and grow New Economy. You can do this for literally any department in your business. 

But should you want to get there quickly, consider hiring a company like New Economy that has done the hard work for you 🙂

And once you have the confidence in the back end of your business, you are ready to go and ready to grow. You have the foundation built to support the needs of your customers while capturing market share.

3 Key Takeaways Related to Improving Confidence in Your Small Business Using Data and Leveraging Your Accounting Team

If you want to improve your confidence in your small business, consider leveraging your accounting and finance team and the data they provide.

Here are three key takeaways related to improving your small business confidence:

  1. Make sure you know the needs of your business and that you have clarified the roles. Further, make sure that you have the right person with the right skill set to meet those needs by being able to perform the core functions of the role.
  2. Lean into your process and technology. Make sure that you have a documented process followed by all. Further, make sure that you are using the best-in-class technology for efficiency purposes.
  3. Take time away from the day-to-day to reflect. Think about what’s working and not working, and what next people move you need to make. This time is valuable in that it will provide new ideas and actionable insights to chase down your goals.

Small Business Confidence

New Economy Team Members are Experts in Accounting for Entrepreneurs

If your Company’s accounting and finance team is not providing data to help build your confidence in your small business, let’s talk.

New Economy makes an excellent partner because we want you to gain control of your finances to make smart decisions to build and grow your business. 

We’ll help you get your accounting done, and done right.

Schedule a time to meet with our Founder, Jeff, and discuss how we can add value to your situation.

3 Ways to Cut Business Expenses

/in , , /by

As a growth stage entrepreneur, you’re constantly thinking about ways to grow your Company. 

An important thing to consider as you grow is keeping expenses on track. We have learned that growth can suck cash and a big part of that is expense management. 

This begs the question: Do you have an expense management process in place that effectively cuts unnecessary business expenses?

At New Economy,  this is on our minds too.

Why, you ask? 

It aligns with our efforts of helping you gain control of your finances to make smart decisions to build and grow your company. 

In this article, you will learn: 

  • What an expense management process looks like
  • What types of questions to ask when identifying expenses to cut
  • How to actually cut or reduce expenses
  • 3 key takeaways related to cutting business expenses

Let’s dive in.

Cutting business expenses

What is an Expense Management Process?

There are a few important things to discuss here. 

First off, before we get into the process itself we’d like to quickly cover an important financial tool. 

Every business should have a detailed budget. The budget should be prepared monthly and be detailed by line item (Refer to our blog post on top 4 financial tools). In this case, our focus is on the expense line items. If you don’t have this in place, you should. 

Why? You are making important bets and decisions on where you need to invest your resources to achieve your goals. 

Ok, now we can move on to the process which can be achieved at a detailed operational level and at a higher financial level.

Let’s start with the detailed operational level. The benefit here is: 

  •  You are ensuring you are obtaining the proper tax deductions
  •  You are able to manage expenses
  •  You are going to get more insights to budget 
  •  You are minimizing fraud

Every business is different and there are employee expenses such as travel and meals and then business expenses such as inventory purchases and marketing expenses.

Here are a few keys for every business regardless of the type of expense:

  • Have a written policy that is followed by all
  • Keep everyone from employees to managers accountable to the process
  • Ensure the process has built into it proper documentation such as expense reports and purchase orders
  • Ensure the process has proper approval built into it. Meaning, make sure a manager is approving the employee expense report or purchase order

Moving on to the higher financial level. The benefit here is:

  • Having data to make timely decisions
  • Knowing what is on-track or off track
  • Identifying root causes of overspending
  • Fixing problems real-time

Here the process goes back to the budget we discussed. At month’s end, the actual amounts for all expense line items should be compared to the budgeted amounts. All line items should be analyzed to determine what we are learning. 

For instance, if a line item is over in a particular month, why is that? Maybe it’s a timing issue and we had to front-load expenses and no additional action is required. Or maybe, the marketing team has overspent and this needs to be brought to their attention to reduce expenses in a subsequent month to keep things on track.

The key here is to create both types of processes, put someone in charge of managing them, and use the information you are getting to cut business expenses to help you achieve your financial goals.

What Type of Questions Should We Ask When Looking to Cut Expenses?

We believe cutting expenses to achieve your financial goals is both an art and a science. You don’t want to simply cut an expense because it is over your budget. Maybe the expense that is over budget is helping you to achieve your business goals. In that case, why would you cut it?

This leads to our first question. We like to ask: “Does this expense get us closer to achieving our goals?”.

The question is to get you to really think about where you are allocating your capital and get you to prioritize. If the expense is mission critical, then we often advise to proceed with caution and perhaps find other expenses that are not as much of a priority.

Another important question to ask yourself is: “Why is this expense over and above the budget?”.

We have found that getting to the root cause often requires us to go deep. Meaning, we try to ask why at least 5 times to get to the bottom of it. Here is an example.

The marketing budget is over budget for the month by 25% or $15,000 but why:

  • Why 1x – Because the marketing team overspent
  • Why 2x – Because they needed additional support to achieve lead generation
  • Why 3x – Because they underestimated the resources needed
  • Why 4x – Because their original submitted budget was not scrutinized enough
  • Why 5X – Because the process for establishing budgets was not followed

As you can see, as you keep going deeper you get closer and closer to the real why. And by having the real answer you are able to make a smart decision. You can decide to re-forecast and increase the budget over the remainder of the year. Or you can decide to work with the marketing team on staying on budget and lower expectations on lead generation based on the resources deployed. 

Lastly, another favorite question is: “Who is accountable for this expense line item?”. 

We believe that whatever we measure and manage will improve and get better. And part of this is giving responsibility to team members to manage and own the number. 

So back to the example above, we would suggest that the marketing team leader is the person that should be taking ownership of approving the budget for the marketing team. This individual is now responsible for providing thoughts and actionable insights on getting the budget back on track. Never underestimate the power of “who” …..as in, who is responsible and accountable for this.

 

 

How Do We Actually Cut Expenses?

This is a delicate topic. But as your Company is growing, you may find that expenses naturally start to grow. Growth sucks cash in the form of expenses. But cutting expenses is one way to help you stay on track for achieving your business goals.

Here are some tips for cutting expenses:

  • Communicate your “revised vision” with the reduced expenses in the form of a re-forecast to your team. This paints a new picture of what we are aiming for on the expense side. And call out those specific line items and explain the why behind them. The point is, involve your team in this conversation.
  • Have open and honest communication with your vendors. You need your vendors just as much as your team and customers. They are helping to provide the goods and services needed to grow the business. So inform them by communicating timely and clearly so they can plan ahead.
  • Continue to hold managers accountable, ensuring they are driving the change needed to reduce expenses. This should be emphasized as a top priority that needs to follow through based upon an agreed timeline.
  • Keep banging the drum so that your expense management process is followed by all. Let everyone know they can play a role here to ensure the company succeeds.

So as you can see, there is no silver bullet. No doubt you can focus on certain line items but we encourage our companies to think before acting and not making quick decisions. We like to take a thoughtful approach and balance the tension between the short-term and long-term goals of the business.

Note, per the Small Business Administration one of the top reasons Companies don’t make it is they run out of cash. And the reason they run out of cash is they have more money going out in the form of expenses than money coming in in the form of revenue.

So this is a financial discipline worth investing in for your business.

So one last question, how is your expense management process and what needs to change?

3 Key Takeaways Related to Cutting Expenses 

If you want to build and grow your business, you need to make sure you are keeping an eye on expense management.

Here are three key takeaways related to reducing your expenses:

  1. Make sure you have done the hard work of building a detailed monthly budget. Review the budget versus actual by line item each month. Reflect on what you are learning. And determine what may need to change and re-forecast based on your learning.
  2. Lean into your process. Make sure that you have an expense management process in place that is followed by all. Assign one manager to oversee this to make sure that they are banging the drum on the expectations.
  3. Assign team members to be accountable for specific line items. Have them own the expenses and be prepared to offer up the “why”, suggestions for improvement, and take on the responsibility of the execution of any change needed.

Cutting business expenses

New Economy Team Members are Experts in Accounting for Entrepreneurs

If your Company is off track and expense management isn’t your thing, you struggle with building budgets that properly allocate funds, or you want to gain control of your finances to make smart decisions to build and grow your business, New Economy is an excellent partner. 

We’ll help you get your accounting done, and done right.

Schedule a time to meet with our Founder, Jeff, and discuss how we can add value to your situation.

Accounting for Entrepreneurs: What to Expect?

/in , /by

If you are an entrepreneur, your skill set is probably not in accounting. You are a visionary, a risk taker, you have guts, you have passion and you are trying to add value to the world by solving a problem.

But your accounting is important. 

In this article, you will learn: 

  • What is accounting for entrepreneurs and who does it?
  • Why accounting is important for entrepreneurs
  • What to expect as your business grows
  • 3 key takeaways related to accounting for entrepreneurs

Let’s dive in.

accounting for entrepreneurs

What is Accounting for Entrepreneurs and Who Does it?

Accounting is the process of recording financial transactions pertaining to a business. The accounting process includes summarizing, analyzing, and reporting these transactions to:

  • Oversight agencies
  • Regulators
  • Investors
  • Leadership teams
  • Tax collection entities

We encourage all entrepreneurs to engage in the process of accounting from day one. But the extent depends on the needs of the business and it evolves over time.

Many entrepreneurs that have under $1,000,000 in raised capital or revenue will take the “do it yourself” approach. But Entrepreneurial companies with over $1,000,000 in raised capital or revenue will seek the support of a remote outsourced accountant.

Accounting takes work. There is a setting up of an accounting platform like QuickBooks online. Setting up bank feeds into the platform. Categorizing transactions. Completing all the detailed reconciliations. Creating and executing accounting policies. Yes, we can automate and use A.I. but it still takes work.

The accounting is done with the purpose to produce timely and accurate financial statements to provide you with financial information to make smart decisions to build and grow your business.

Why is Accounting for Entrepreneurs Important?

There are a few different reasons why accounting for entrepreneurs is important.

But most importantly, the accounting will result in having financial statements that will help you access the financial condition of your business. You will be able to use it to ensure you are on track to achieve your goals.

Here are a few other reasons why accounting for entrepreneurs is important:

  1. IRS – You are going to be required to file an accurate tax return for your business at the end of the year. The accounting that is done will allow you to efficiently and effectively file this tax return with the IRS and keep you out of jail 🙂
  2. Inventors or Banks – By engaging in the process of accounting you will be able to provide financial information your investors will be asking for, like financial statements to determine the financial health of your business.
  3. Leadership Teams or Decision makers – These folks are responsible for ensuring the strategic plan is on track and making business decisions. By producing a monthly financial statement from your accounting process, this team will be able to evaluate if the business is on or off track with its financial plan and overall business strategy. If there is no leadership team in place, this information is still very useful to the CEO or business owner. The idea is to use the data to make smart decisions and not just go off your “gut” or how much cash you have in the bank. This is probably the most important reason to engage in accounting for your entrepreneurial business.

 

What to Expect as the Business Grows?

As your business grows things will get a bit more complicated and your systems process and team will need to evolve.

Initially, your accounting team might just need an accountant. This team member will be focused on more tactical things like running payroll, paying your bills, invoicing your customers, and maintaining your Quickbooks Online.

When your business grows, you are going to need more timely and accurate financial statements. These financials will help you to make smart business decisions. This team member that will be working with you on understanding your financial results is a Controller. They are also responsible for setting processes and policies that will evolve as your business grows.

As your business keeps growing it may require additional funding from an investor or bank. At this point in time, you might need a Chief Financial Officer (CFO). They are the right hand to the CEO or business owner and thinking about the future of the business and helping to provide future visibility in the form of a budget or projection.

At New Economy, we provide a little bit of each to our clients. Since we work with growing Entrepreneurial companies, there is a need for both tactical and strategic support to help the business achieve its goals.

As for Technology, much of it is scalable. 

In our experience, there is some relatively inexpensive technology that is supporting businesses doing $5-$10M in revenue or in fundraising.

Here is a bit of the technology stack that we use at New Economy:

  1. Quickbooks Online or Xero for the accounting platform
  2. Bill.com for vendor payment and customer invoicing and collections
  3. Gusto or Rippling for payroll
  4. Expensify for employee expense reimbursement
  5. Carta for cap table management
  6. Jirav for budgeting and projections

There is lots of technology out there and a remote accounting firm like New Economy can help you to determine the right fit for your business.

3 Key Takeaways Related to Accounting for Entrepreneurs

Being an entrepreneur is hard enough. You don’t need to worry about your accounting. You should be focused on building your Company and let us help you gain control of your finances to make smart business decisions.

Here are three key takeaways related to accounting for entrepreneurs:

  1. No matter where you are in the business lifecycle make sure you have a certain level of accounting in place. If you are under $1M in revenue or funding it might be “DIY”. If it is more consider outsourcing your accounting to a remote accountant.
  2. Continue to assess the accounting team you have in place. As your business grows,  you should be increasing the depth of your accounting team to go from tactical support to more strategic support.
  3. Leverage your accounting to help you achieve your goals. Your accounting will produce financial statements that will tell you if you are on track to meet your business goals. Use them well to make smart business decisions.

 

accounting for entrepreneurs

New Economy Team Members are Experts in Accounting for Entrepreneurs

Getting your accounting done and done right is the key to financial peace of mind for you and your business. That’s why our team at New Economy is an excellent partner.

We help entrepreneurs gain control of their finances to make smart decisions to build and grow their business. 

Schedule a time to meet with our Founder, Jeff, and discuss how we can add value to your situation.

CONTACT US

 (401) 256-2404

CONTACT US

 (401) 256-2404

Grow your business by leveraging your financial data. We’ll show you how.

Subscribe to my bi weekly Newsletter for tips, tricks and curated content on how we grew New Economy from $0 to $2.2M in revenue.

Subscribe