tags: Certified Public Accountant New York City, company, CPA, CPA Manhattan, nyc, NYC CPA, small business, small business growth, small businesses
Everyone wants small businesses to grow, provide jobs and expand beyond the start up stage.
But growth is difficult. For instance, you may face a particularly vulnerable time when your business outgrows the den or extra bedroom and moves into outside office space. Another tricky period comes about when you hire your first employees.
Let’s start with some tips for the first scenario. Going from a home office, where you probably had very little overhead, to being an employer paying rent and salaries, is a big step. While a company is ramping up, it’s not surprising for it to post a loss. The key is for you – as the entrepreneur – to anticipate that loss and plan for how to cope with it.
Before you move your growing company to an outside office, set aside enough revenue to cover your lease or rent payment for the first six months or a year. If you can’t do that, consider starting with the stepping stone of temporary office space, which can be rented a couple of days or weeks a month and on an as-needed basis for meetings. That’s a good way to test the waters and see whether you like working in an outside office – not to mention whether your operating budget can handle the extra expense.
Similarly, before you hire full-time employees, think about using a temp agency or contracting with a freelancer part-time.
Before you make any major moves with your business, particularly those with substantial financial impacts, it pays to sit down with your accountant and do a detailed projection for the immediate future, including a revenue forecast, a list of variable and fixed expenses and an anticipated profit figure. In your revenue forecast, list the absolute minimum figure alongside the likely revenue and the ideal revenue you expect, so you’ll have a projected range to work with.
Be very conservative in estimating whether your company can handle major growth or whether you ought to hold back and wait for better timing. The main thing to remember is that while growing your company should be your ultimate goal, you must plan, plan, plan before you take those first crucial steps.
Jonathan Medows, CPA
MEDOWS CPA, PLLC
About MEDOWS CPA, PLLC: We are a boutique CPA firm located in New York City (Manhattan), dedicated to helping small business owners and individuals. In addition, we also provide CPA services to people outside of the state and country.