1. New Mexico Broadband Program Internet Tools for Small Business Success
Module 3
Accounting and Finance

2. Internet Tools for Small Business Success Class Series
Terminology & Planning
Communication & Collaboration
Accounting & Finance
Intro to Online Marketing
E-Newsletters
Websites & Blogs
Search Engine Optimization
E-Commerce
Intro to Social Media Marketing
Facebook & Twitter
Social Media Administration
Linked In
This module is the third in a series of twelve classes that teach how to use Internet tools to increase the success of a small business.

3. Primary Business Components
Planning
Operations
Accounting & Finance
Sales & Marketing
Hiring
Accounting
& Finance
Operations
Planning
The twelve classes are structured around the five major components involved in running a small business.
These five major components are: Planning, Operations, Finance and Accounting, Sales and Marketing, and Hiring. Each of the 12 modules in this training series falls under one of these categories. The first module titled “Terminology & Planning” fell under the “Planning” component of running a small business, and the second module titled “Communication & Collaboration” fell under Operations.
This module is the third in the series. We will demonstrate ways to use Internet tools that can assist with the accounting and finance requirements of your small business.
Management & Hiring
Marketing
& Sales

4. Discussion & Demonstrations
How This Class Works
Terminology
Discussion & Demonstrations
This class will cover terminology and offers a combination of discussions, demonstrations, and hands-on exercises.
Hands-on Exercises

5. Class Framework Divided into Core Business Elements
Internet Tools for each Element
Terminology
Realm of tools
Choosing the right tool for your business
Getting Started

6. Today’s Class Goals Understand the terms bookkeeping,
accounting, and finance
Learn ways to finance your business
Understand the benefits using online
accounting tools
Explore local resources for financing
Here are our goals for this class.

7. Terminology Accounting
The systematic recording, reporting, and analysis of financial transactions of a business.
Accounting is a method of telling a story or giving a description of events. The story is always about items that have a value -- where they came from, how much they were worth, how much they cost, how much they were sold for, what happened to them, and how much of them are on hand at any given time.

8. Terminology Bookkeeping
Keeping records of what is bought, sold, owed, and owned; what money comes in, what goes out, and what is left.

9. Bookkeeping versus Accounting
Bookkeeping - systematic recording of the amounts, dates and sources of each revenue and expense transaction
Accounting - the bigger picture. It is the system that tracks data, including people, and records the transaction's history. It also uses bookkeeping information to analyze the business’s financial circumstances.
Bookkeeping is a basic system of recording amounts, dates, and transactions and accounting is that and more.

10. Other Terminology
Start-up capital – resources needed to launch a business
Break-even – when revenues equal costs
Cash flow – the movement of money in and out of your business.
Profit and Loss Statement – adds the revenues and subtracts the operating expenses, leaving the profits. A profit and loss statement measures the results of operations over a given period of time.
Here are a few other terms you should know.

11. Why use Online Accounting Tools?
The software is always current
No need for IT support
Data automatically backed up
Ability to access from numerous locations
Ability to access from any computer, Smartphone, or iPad
You can purchase accounting software and install it on your personal computer or your server, or you can simply pay for the use of the software online. Think of it as “leasing” the right to use the software for a certain period of time.
The software you choose to use and the amount you pay is based on the features that you need.

12. Types of Online Accounting Software
Simple
Electronic check book ,
Basic
Payroll, receivables, basic inventory system
Standard
Audit trail, multiple users (Quick Books Pro)
Advanced
Purchased in modules, financial reporting, job costing
There are hundreds (or even thousands!) of online accounting software applications available to choose from. The one you choose should be based on the size of your business, how many people will be using the software, and the functionality you need.
Prices range from free to thousands of dollars per month (if your company is very large and thousands of people will need to use it). In general, price increases occur when: you need payroll and inventory capability; you have multiple users and need an audit trail, and you need financial reporting and job costing capability.

13. Types of Online Accounting Software
Tools in the Simple and Basic category discussed on the previous slide are free or low cost. Many of them offer a free trial period. The more sophisticated the features, the more the cost.

14. How do I choose the right one?
Determine your needs
Be financially literate
Talk to your accountant or CPA
Know your Budget
Talk to your IT Department
Find out what similar businesses are using
Determine your projected growth
Create a wish list of features
Here are some basic tips as to how to determine which online accounting software to use.

15. A discipline concerned with determining value and making decisions.
Terminology
Finance
A discipline concerned with determining value and making decisions.
Now let’s talk about finance. Here is a simple definition of finance. Remember that accounting is a method of telling a story or giving a description of events. Finance uses that description of events and uses it to evaluate, make decisions, and determine value.

16. Financial Information
Helps you to: Price your product Know if you are making or losing money Know your cash flow Work with bankers and investors Make informed business decisions
Financial information can help you to price your product, know your cash flow (when to expect your money to come in and go out), and know if you are making or losing money. Financial information helps you to make informed business decisions.

17. Resources for Financing your Business
Personal savings
Family and Friends
Bank line of credit
Commercial loan / Small Business loan
Strategic Partners and Customers
Now let’s talk about financing your business. That is, how will you get the money to start your business and keep it running until you are able to be profitable (make money)? Studies show that most small businesses are financed through personal savings and from funds provided by family and friends.

18. Resources for Financing your Business
Local and Regional organizations that can help:
Here are some local/regional resources for financing your small business. Let’s look at each of these websites.

19.
Accion specializes in micro loans and offers small business owners information on finance and other topics important to small business success.

20.
Wesst specializes in business training and business consulting services for small business owners. They also offer loans.

21.
Finance New Mexico offers financing, business consulting, loans, and other business assistance.

22.
The New Mexico Small Business Development Center has offices in 20 communities around the state. They specialize in business consulting and can point entrepreneurs and small business owners to resources such as companies that provide loans.

23. Financing Planning
To start a business you need to understand what your business’s initial cash requirements will be. Calculate:
one-time start-up costs
working capital months
a reserve
Now you know where you can go to finance your business. But, how do you determine how much cash you need?
To find out, you need to calculate your one time start-up costs (initial costs to start the business such as legal fees, advertising, accounting fees), how much it will cost to keep the business running on a day to day basis for 12 to 24 months (working capital), and a reserve for unexpected expenses. This can be easily accomplished with a spreadsheet. If you own a small business, you need to learn to use a spreadsheet such as Excel or the spreadsheet application in Google Docs. Spreadsheets will allow to do everything from keeping inventory to running financial scenarios such as an initial cash requirement calculation.

24. Initial Cash Needs
If you own a small business, we highly recommend that you learn to use a spreadsheet application such as Excel or the spreadsheet application in Google Docs, which is free. Spreadsheets will allow to do everything from keeping inventory to running financial scenarios such as an initial cash requirement calculation.

25. Calculate Start-Up Costs
Use your handout and follow the directions to begin calculating the initial start up costs of your small business.
It’s important to learn how to use spreadsheet software such as Excel for financial and other business purposes.

26. Today’s Class Goals Understand bookkeeping, accounting, and finance
Financing your business
Benefits of using online accounting tools
Local resources for financing
Here are the class goals that we talked about at the beginning of today’s training. Did we meet them?
You should understand the difference between accounting and finance and have a better idea about why and how to choose an online accounting application. You should also understand the options that small business owners have to finance their businesses and where to go to look for a small business loan.
Thank you for coming to class and we hope you join us for “Introduction to Online Marketing”, the fourth session in the Internet Tools for Small Business Success series.

27. We appreciate the time you spent with us
We appreciate the time you spent with us. We hope to see you at the next training!
These materials were created collaboratively by the New Mexico Department of Information Technology, Fast Forward New Mexico, and the New Mexico State Library, under grants provided by the National Telecommunications and Information Administration. These materials are not to be used for profit. Connecting you to a world of opportunities