Failing to plan is planning to fail
Many new clients come to me without a formal plan, not so much for the lack of any planning but because they just don’t know where to start when preparing a plan. My quick answer for them is to just start writing.
Why are you going into business? If you are already in business, why you are already in business. What drives and motivates you into business? Why this business?
Who are your going into business with? Will you have business partners or do it alone? Who will your customers or clients be? Who will be your suppliers and employees?
What will your business actually do? Will it produce something? Will you provide a service? What is it that your customers or clients want from your business? Will you be able to meet their needs and expectations?
Where will your business operate? Will you have a shop front? Will you need an office? Will you operate online? Where will your customers or clients come from? From where will you source your supplies?
When will you start? When do you expect to achieve certain milestones in your business? Do you have a plan of when to transition out of the start-up phase?
How will you manage the business, juggling your limited time between the new business, family and friends. Will you operate the business concurrently with your existing work as your business builds up?
Now just start writing. There is no correct answers and no one will be assessing your writing. Point form is fine. Key words are better than nothing. The business plan is your tool to keep yourself accountable and to help you understand your own business. You can’t write a business plan if you don’t understand your plan for the business.
In a year or two, the written business plan will give you the opportunity to look back and assess what you got right and what you got wrong. It is an opportunity to learn that can not exist without a written business plan.
I have been involved in Cloud Accounting since 2008 when I saw the benefits of a single accounting ledger in the cloud for my clients as a way to fundamentally change their business for the better, improving efficiency and reducing the time for compliance.
Historically, accountants would manually collect invoices, receipts, bank statements and other relevant documents to compile a set of accounts and allowing for the preparation of annual tax returns.
The introduction of the GST saw the introduction of more computerised accounting systems such as MYOB and other desktop based software but these systems were designed more to ease the extraction of specific reports than ease of data collection. Quite often, the benefits of a desktop based computerised system never justified the added hassle and costs of the system.
Many new and existing clients are still asking me about the benefits of cloud accounting with a single ledger, especially over their traditional desktop based accounting software.
Cloud accounting and the single ledger provide significant benefits in terms of automated data collection and entry, and the added convenience of an accounting ledger able to be simultaneously shared and accessed between business owners, bookkeepers and accountants. There is no longer the need for an accountant to send adjusting journals to the bookkeeper or business owner. There is no longer the need to struggle with swapping data files, and no waiting while someone else does their work.
While the automation helps reduce the compliance time and costs, the biggest benefit to business owners is from the live access available to accountants and the ability for real-time advice on financial matters. For too long business owners and accountants have accepted not knowing the financial status of their business for 6 to 12 months after each year. Accountants can now advise on matters as they occur and be a true partner for success.
This is co-operative accounting as it should be.
I am often asked why I recommend Xero over similar competing hosted accounting systems and the simple answer is in the Xero community. From the start, Xero understood that the most important aspect of any system is in the openness of the system. Xero have created a system that encourages cooperation between other specialised cloud-based systems as noted in their extensive Xero add-on list.
As the Xero user base has grown, I have also noticed a significant increase in the number of good bookkeepers gaining experience in Xero. These bookkeepers who already have extensive experience with desktop based accounting software are also seeing the benefits of the single ledger in the cloud.
It is this fast growing network of Xero partners that makes easy the choice of Xero as the cloud based accounting system. It is easy for a business to extract its accounting data and move to another system. It is now easy to find another bookkeeper or even a new accountant.
While Xero is not the only cloud based accounting system the DFK Richard Hill team and I work with, it is our preferred.