Starting a Business? Avoid the Usual Pitfalls with Good Financial Management
Looking to launch your own business? There’s good news for you: The small business segment is growing rapidly, and it’s a great time to start a business. According to the Small Business Administration, “While corporate America has been ‘downsizing’, the rate of small business ‘start-ups’ has grown, and the rate for small business failures has declined.”
As an entrepreneur, starting your own business is one of the most exciting times of your life. You wake up every day doing what you love. However, along with the pride and joy of having your own business also comes the often difficult (and daunting) task of managing aspects of your business that you are not an expert in. One such task is managing your finances and understanding your financial footprint. It’s a task that is often feared yet small business owners know that it’s a necessity to the survival of a business.
Small business owner, Nadine Quintero launched her own doula business, Fruits of My Labor Birth, in January of this year. She was excited to embark on her mission-driven business of helping women through the process of childbirth. However, even with 10 years of prior experience working with pregnant women, Quintero, like millions of other new business owners, is fighting against statistics: one-third of small businesses fail within the first two years because they run out of money.
At this point, you may be thinking, “How can I ensure long-term financial health for my business?”
It’s a no-brainer that financing your new business, sustaining the flow of money that comes in and goes out, and ensuring a steady stream of income is essential to the long-term survival of any business. Deeper knowledge about your finances and how to make smart business decisions as a result is also equally important. Similar to Quintero, the majority of business owners are experts on the service or product they build their business on; they’re not financial experts. According to a recent Intuit survey, only 40 percent of small business owners consider themselves financially literate, and two-thirds wish they knew more about their finances.
Good financial management is not just about knowing how much money you have in the bank. You need to understand your finances beyond balancing a checkbook and knowing what your finances indicate about the health and wellbeing of your business. Partnering with a financial expert, and integrating a financial management tool that best suits your business needs are two key decisions you should make early on. Not only should you look to integrate a financial management solution during the early stages of your company, you need to ensure that it can grow and adapt to the changing needs of your company. Once you deeply integrate a financial management platform, you don’t want to change. In fact, Intuit data found that 70% of new businesses buy accounting, payroll or HR services in the first 12 months. Only 7% of SMBs switch suppliers in a given year.
“A strong financial backbone can make or break any small business,” said Karen Peacock, senior vice president of small business at Intuit. “We’ve created QuickBooks to be that backbone, helping small business owners simplify and streamline their finances so they can focus on their customers and growing their business.”
According to a recent Intuit survey, 2 out of 3 small business customers say they’ve become more efficient since they started using QuickBooks. These businesses save an average of 6.4 hours per week on accounting activities since they started using QuickBooks.
In addition to QuickBooks, Intuit has created a number of resources to fuel small business success. Last year, the company launched the OWN IT Network, an online community of small business owners supporting each other in growing their businesses. For aspiring entrepreneurs, Intuit’s created a free tool to guide new business owners through the critical first steps on how to start a business. Finally, the Small Business Center is the ultimate guide for operating a small business, providing guidance, advice, insights and data to arm entrepreneurs with practical resources.
The most important lessons Quintero’s learned while starting her business: to learn from other people’s mistakes and to find the right experts to work with. While Fruits of My Labor hasn’t required extensive bookkeeping quite yet, Quintero is using QuickBooks to keep track of her early expenses and income and will hire an expert as her business grows. Currently, QuickBooks is providing Quintero the ability to track financial data from invoices and payments. And when she’s ready, the software will enable her to scale as her company grows, offering features that are more suitable for complex business operations and potentially even a channel for funding. Furthermore, she relies on experiences from other entrepreneurs to build a strong and successful business.
“As an early-stage business, I have a lot of decisions to make, from hiring employees to determining the best way to provide customer service to figuring out a payment model,” said Quintero. “While we’re trying to learn how to manage a business along the way, I’m comforted by the fact that QuickBooks helps solve for a fundamental part of my business.”
Intuit QuickBooks is built to fuel small business success by providing a robust ecosystem of cloud-based financial management solutions. Follow this series to learn about resources available to new and aspiring small business owners, including tips, tricks and anecdotes about financial management, aligning yourself with the right partners, and using the cloud and new tech innovations to achieve long-term success.