Author: Alina Făniță, CEO, PKF Finconta

The entrepreneurial environment in Romania, even if still fragile, is placed by the new generation in a favorable light. However, it is not easy to run a company in Romania or anywhere. Development problems are added to the administrative ones with strong financial emphasis.

Company owners at the beginning of the road are often lacking experience in account management and knowledge of accounting principles. This is where the mistakes if avoided, the business could grow much faster or it would not collapse. That's why start-up owners can succeed is to know the following:

1. Put together a realistic budget

The implementation of the budget should not be taken as any activity resulting in a situation recorded on a piece of paper or in a purely decorative file. Just as with a business plan that is first put on paper until the business begins, the same is the case with the budget outlining the financial plan to follow. Its role is similar to a guide that indicates without limiting the owner's decision. Indicates whether the expected income levels are sufficient for ambitious capital allocation plans to increase business in the coming year. It can, therefore, highlight whether the need for marketing requires a higher investment or if growth plans are good to be reduced if sales cannot support the level of spending.

2. Do not consider the business as your pocket

Even though it may be tempting for owners to buy an expensive car or to renew infrastructure with the latest generation of equipment, it is the biggest mistake of the owners to spend too much in the early years since the founding of the business. Excessive spending can create a deficiency that business cash cannot manage. And if bank financing is unfriendly, then the company is in a financial crisis for its own sake.

If you are the owner, allocate a monthly sum from which to live. If the business is reasonably profitable then dividing a portion of the end-of-year profit as dividends and investing the difference in business growth is a wise measure.

3. Get everything organized to get clarity

Do you know where all bills, credit notes, bank statements, and other financial documents are located? Lost or incomplete entries can create a major problem for a company. Computerized registrations ensure that if the commercial premises will suffer a fire overnight, the accounting records will not be lost if there are back-ups on the computer outside the location or the book is done online in the cloud. Smart Bill is an excellent solution for small business desktop and cloud-based accounting needs.

4. Manage debt effectively

When the company's development plan provides for partial funding to expand, this debt needs to be managed well. Debt management in business should be properly understood, including knowing the different funding options available to small businesses and how much the financial solutions will cost.

5. Manage receivables tightly

Ensure that as your business grows, the accounting receivables do not extend too much. Pay attention to the evolution of the average number of days that bills are overdue so they do not increase over time with the expansion. Pay attention to the money you are about to collect and make sure you do it. You do not want overdue debts, as companies stop paying in due time before entering into liquidation.

6. Keep a slim staff scheme

It's great to see the team grow, but with each employee, they raise the company's costs with salary, taxes, office and other furniture, computer, etc. The indirect costs of each employee may exceed the salary. Under these outsourcing conditions, certain services help avoid many of these associated costs. Pay on workload or hourly. Freelancers pay for their own office space, equipment, and an Internet connection, often costing less than the real cost of a similar employee. It is also possible to hire different professionals for small tasks, consisting of several hours of work, rather than finding a person to do everything which is more difficult to find.

Managing a business's finances means discipline, systems for verifying them, and the desire to manage them well. The advice for young entrepreneurs would be the following: keep the business separate from your personal accounts and do not be afraid to make plans and fight to achieve them!

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About PKF Finconta

For more than 24 years, PKF Finconta is one of the 10 leading professional services companies in Romania. Since 2006, we are a member of PKF International Limited. PKF International is a leading international business advisory organization. The company grew consistently over the years, forming a Group of four companies: PKF Finconta, PKF Finconta Consultanta, PKF Finconta HR and Finconta Consulting SPRL, members of national professional organizations CECCAR, CAFR, CCFR, and UNPIR. We provide a wide range of business advisory and related specialist services. We have seven core areas of expertise and within these areas, we tailor our services to your business and your needs: audit, corporate finance, tax, bookkeeping and accounting advisory services, transfer pricing, payroll and personnel administration, and insolvency.