If you survey most entrepreneurs about the main causes of business failure, accounting and financing would be among the answers. Even if you have the most innovative or groundbreaking ideas, if you don’t get your finances in order, you are bound to fail.
Unfortunately, these areas may take up a significant portion of your time that can otherwise be used towards upgrading your product or streamlining your service. Other entrepreneurs have noticed this and have started up companies that over services like business tax and accounting services for busy entrepreneurs.
The list in this article gives you the best bookkeeping ideas and financing options open to you as an entrepreneur.
Table of Contents
Bookkeeping Ideas
Cash vs Accrual Accounting
One of the first decisions you have to make as an entrepreneur is choosing the accounting method for your bookkeeping system. For tax filing purposes, you should stay consistent with whatever method you choose.
- Cash-based accounting: This is a straightforward method that revolves around recording your revenue as it enters your account and noting expenses when they exit your account. New entrepreneurs find this method attractive due to its simplicity.
- Accrual: When implementing the accrual method, revenue is recorded when it’s confirmed, and expenses are noted when they’re incurred. It is the more comprehensive method of the two because it reflects income and expenses better than the cash-based method.
Your Bookkeeping Method
After you have decided between Cash-based and Accrual-based systems, you need to consider how you want to conduct your bookkeeping. It is understandable as you are starting to manage all your business transactions yourself. But as your business grows and you become increasingly busy, this will no longer be possible. There are two routes for you to take:
Bookkeeping Software
You can subscribe to a cloud-based bookkeeping solution to manage your accounts online. This service is capable of connecting to your business’s bank account and monitoring all your transactions and online business loans automatically. This frees up your time to focus wholeheartedly on other tasks.
Part-Time Or Full-Time Bookkeeper
If you are not too keen on letting the software automatically take care of your bookkeeping needs, you can always outsource to a qualified bookkeeper. Your choice of either part-time bookkeeping or full-time will depend on your workload.
Financing Options
Angel Investing
Angel investors are informal investors who are often entrepreneurs with quite a bit of experience under their belts and have money available for investment purposes. Angel Investors have no set amount that they invest, and at times, they may invest as a group.
This is an appealing source of finance because it does not only come with money. Often you are given “smart capital,” where you gain access to your investor’s network base and industry knowledge. Whenever possible, find an informal investor that knows your business.
Crowdfunding
Crowdfunding is a popular method of accumulating finances to fund one’s venture. As the name suggests, you are financed by a “crowd” of people interested in helping you grow your business.
This “crowd” is not usually comprised of professional investors, but of everyday folk with some extra cash. The propositions on crowdfunding platforms are usually easy to understand to appeal to the general public.
There are a variety of crowdfunding platforms available. On these online platforms, there is a section for the entrepreneur to detail the investment opportunities available. The other section is for people who want to invest in these opportunities, dependent on the entrepreneur’s requirements.
Some platforms have a definite focus, and that needs to be considered when selecting your preferred platform to avoid choosing one incompatible with your goals.
There are a few ways to go about crowdfunding:
- Peer-to-peer loans: Loans through a crowdfunding platform are a popular route taken by those who do not qualify for a loan through conventional methods, for various reasons. Sometimes you don’t have adequate collateral, or your risk profile is not appealing. The “crowd” loans money to your business on the basis that the money is coming back with interest.
- Equity: This is where you sell a stake in your business to a crowd of investors. This, in turn, encourages them to invest in your business. Equity is the alternative to having your stock being bought or sold on an official stock exchange.
- Rewards-based/Pre-order: This method is where investment is made by the crowd in return for goods or services, usually the goods or services that the business specializes in.
Conclusion
As an entrepreneur, if you are not busy yet, you are bound to be in the future. The above ideas have been compiled to lighten your load as you navigate the business landscape. Find a point that resonates with your business and style, and continue forging ahead.
