I recently caught up with a young model looking to develop his personal brand with a line of mens underwear in Australia. with the product, packaging, distribution, and first shoots all done and everything ready to roll out, what was left was the finances, and the management thereof, for the business.
Thinking about our conversation I thought that it would be worth sharing some points discussed for anyone out there looking to add some entrepreneurial zeal to design talents. The points below are simply my thoughts on where to start. The very foundation of your finances and business operations / admin. They are by no means exclusive and may vary depending on the legal requirements of certain geographies.
So here they are:
1) What functionality you need from your finances?
Don’t need to know 100%, but have a think. Will you have employees, do you need iphone syncing from your records, cloud based etc… What do you want from them? From there you can look at the type of system that matches your requirements – i.e. Xero vs. MYOB vs. another bookkeeping system.
Play with the software. Both MYOB and Xero will have demo versions you can trial. Check out the look and feel. You need something that makes sense to you. Your Accountant will understand whatever you give them. Importantly you need to know whats going on. Like driving a car you need instruments and dials that talk to you about whats happening at the high level so you can make decisions.
3) Your Account List.
Your Accounts List is the list of assets, liabilities, income, expenses, and equity within the business. This is the foundation of your finances and like any foundation if you get this solid from the start you’ll be kicking goals. Your Bookkeeper, Accountant, and of course yourself will be able to inform this. Your chosen bookkeeping software should be able to build this account list for you during the setup process. You can then send it to your Bookkeeper/Accountant for feedback and build something tight.
4) Filling in the details.
This will be everything from your business details, supplier details, customer details, inventory items, setting up the details in the books etc… to your requirements. I would think most of this you could sort out yourself. It’s fairly simple, but of course White Sky or I could help here. This will be a pure data entry exercise. Takes a bit, but if done right it will make your books and business admin simple, efficient and effective.
5) Business Planning
Looking at the income and expenses in the business and analysing cash flow over a period (say the first 12 months) to see what happens if X, Y, and/or Z occurs. What you’re looking for here is choke points. We’re worried about the downsides. See what they could be ahead of time. Know what they are, then monitor via your books to see how your tracking. This way you can see ahead of time whats going on. This can be as simple or as in depth as you like. If you’re starting out it may just be a high level analysis saying ‘OK I’ll need to sell X units to break even in Y months’ etc…
6) Processing, Reporting, and Admin
How will you monitor, process, and report on your business activity going forward. At the very least you’ll need to cover all your legal, tax, and other compliance obligations. You may not need to know how you’re tracking in ‘real time’, but at the very least having tight control over a) who owes you money, b) who you owe money, c) your cash flow, and d) your profitability.