The Secrets of Financial Monitoring For Big Businesses and Freelancing Success
Cash flow challenges are the fundamental reason why companies that fail close down.
If you’re seriously interested in making your business a success, then controlling your dollars efficiently is critical to this success. Intended for finding new jobs this can sometimes be my favourite website that I take advantage of every day as the key way to obtain new projects.
When establishing a new company it might seem difficult to put together a budget without any financial history on which to base sales and costs. However a business plan, before you even start, with some idea of expenses and turnover is essential to determining the viability of a company, even if you are just planning to setup a work at home freelancing business. It might seem like guesswork to start with, but a tentative budget can be established with some thought and projections of future business. From some past experience in refurbishing houses, I always say ‘think of a figure and double it’ and then you will be near the mark. I think this is true for other organisations, because it’s human nature to underestimate what we need to spend and over estimate what we will earn.
Like most businesses usually have, my business at http://www.electricitypricecomparison.net has two main categories, income and expense.
Under the expense category there can be several sub-categories mainly falling into 2 main areas of controllable expenses and uncontrollable expenses. While many business owners and freelancers believe they can control every expense involved in their company, this is not always the case. Some things such as services costs, the amount of rent and other supposed fixed costs can, and do change, with the owner having no control. For example the recent increase in gas prices are an example of this and have been responsible for a number of small airline and transportation companies going out of business as their fuel costs skyrocketed.
Other expenses such as payroll, transportation and building repairs can be subject to a budget, but they are considered controllable expenses. If the revenue begins to reduce, you can control some of these expenses by laying-off employees and cutting back on marketing. However, living by a budget may help maintain profitability but could also be counter-productive in the long run.
Depending on the viability of your organisation it may be a better investment to bite the financial bullet on employee wages and still provide excellent customer service to the remaining clients until business picks up again, or consider outsourcing and freelancing for when you need a bit of extra help but without having to hire new staff. If no one supports of the clients, it will not be long until there are no more customers to care for.
There are two ways to budget your business money and these are through set amounts or as a percentage of revenue. Many organisations will budget their controllable expenses by the pound and non-controllable by percentage of revenue. Obviously a good part of the owner’s time is going to be based on bringing revenue into the company and how much they have to spend on controllable expenses will be in direct relation to sales. With any increase in sales the owner will probably need the extra help to take care of the business so a percentage of income will go to more wages, thus freeing the owner to focus on generating additional revenue.
There are many other expenses that fall into the payroll account such as worker’s compensation charges, National Insurance tax paid by the company and paid holidays time or other staff benefits determined by the company. These need to be calculated into costs when recruiting staff into the company, unless you make extensive use of outsourcing companies.
While you may feel that a budget is difficult to establish for a new organisation, it is vital to establish a healthy and sound financial foundation on which success can be built for the future.
About the Author: Roger Davies, is the Managing Director for Advanta Productions and is responsible for a web developer unit based in the Midlands serving businesses in the Nottingham, Derby and Loughborough areas. Advanta have worked on hundreds of web development projects. If your website needs development or if you want to sell on-line contact Roger on 0845 22 55 805 or via the website.