Talking Money — Making it, tracking it, making some more – Twin Cities
Second Sunday Series – Editor’s Note: This is the 10th of 12 columns on starting a business — one on each second Sunday of the month, from September through August. Last month’s column
described the importance of staying focused, while the months before discussed systems to set up, making the first sale, ways to choose the startup’s focus, goal-setting processes, key startup steps, burnout, the entrepreneur’s personal assets and weaknesses, and self-employment as a career choice.
We’re tackling a big subject for today’s business startup topic: Money. As in making money, for sure, but also tracking it, managing it, and, hopefully, making some more. That’s a lot for one small column, so we’ll begin by focusing on some baseline questions. First,
Are you starting a business because you want to make big money?
It’s OK if the answer is no. It’s also fine if the answer is yes. The truth is, whether you want to make a lot or you’re fine with less, you’ll need to make at least enough for the business to survive, whatever that figure would be.
What’s interesting is that businesses operated by money-focused entrepreneurs can go under just as quickly as those run by entrepreneurs whose goal is to fulfill a personal passion. Why would that be? Because being focused on making money isn’t the same as being good at it. And being good at making money isn’t the same as managing it well.
You can see the pattern here. Desire and talent are good, but when it comes to financial survival they’re not enough. In fact, they may not even be necessary at all, as long as you have — wait for it — competence. Which brings us to the second baseline question:
How competent are you with finances?
If the question makes you squirm, that’s good. In this situation a little uncertainty and humility are useful, because they’ll lead you to ask for help.
The help could entail something small, such as someone setting up a simple bookkeeping process so you can track and review your numbers, or something more constant, such as an on-staff accounting professional. Most startups will land in the middle, with initial help setting up systems and intermittent help from an outside professional.
With so many options for assistance, the final baseline question is the most critical:
Are you willing to ask for help with your company finances?
For this, the only right answer is yes. Even math whizzes and accountants get financial advice when they start businesses, so why wouldn’t you? With that settled, you just need to identify what, exactly, you need help with. Knowing that will let you select the right people for your team, whether they come as employees, contractors, or advisers.
Here’s a partial list of finance issues most startups face:
• Establishing / testing financial goals
• Choosing banking systems
• Creating a process for paying the owner
• Setting prices for products or services
• Creating invoicing and tracking systems
• Initiating payment and collection processes
• Tracking and analyzing expenses
• Managing payroll and related taxes
• Submitting quarterly and annual employee tax reports
• Collecting and submitting sales taxes
• Developing and analyzing profit, loss and income statements
That’s a lot, but it may not cover everything for your particular business. Here’s your startup assignment for June: Transfer this list to a notebook or word processing page to give you more room to work. Then start notating — which of these steps will you need? Which are already started or in hand? And, of course, which do you need more information or help to complete?
Your next step is to decide whose help to use. For relatively simple tasks, such as creating invoices, you may find what you need online. On the other hand, you could decide on a more complex solution, such as an accounting software package that requires training to use.
As a shortcut on the “getting help” step, consider contacting someone in each of these categories: 1) An accountant specializing in small business who can help set up your initial bookkeeping, payroll and tax processes (or who will do these tasks for you); 2) a business adviser who can help with establishing financial goals, setting prices and tracking expenses; and 3) a banker who can help set up your banking processes.
This will be an ongoing process throughout the life of your business, but you’ll be glad later if you can set a good foundation now. Come back in a month for the next Second Sunday installment, and we’ll dive into more steps to guide your business startup journey.
Amy Lindgren owns a career consulting firm in St. Paul. She can be reached at [email protected]