Common Small Business Problems Solved Through Bookkeeping
Every small business has its share of problems. But most business owners complain about their lack of time. It’s a constantly recurring theme. Small business owners want to keep their books updated, but they just don’t have the time, so they slide their bookkeeping to the back burner. It is very rewarding to have clients who understand how to use the bookkeeping system that we have built and maintained for them. It is not a lack of time that keeps a small business from keeping up, but rather an inability to manage time. I could give you a million excuses why I don’t want to do our books or post blogs on a consistent basis, but I manage my time and make it all happen. You have to find a way to dedicate time to updating your bookkeeping on a consistent basis so that you can allow your bookkeeping system to do its job: namely, solve some of the problems you are facing.
Operating In The Dark
I see it all the time, a business owner who is psyched with the way things are going, but in reality they are running their business blind. They might tell me the number of customers they served or how many hits their website is getting. My response? “Oh yeah? Who cares? Let’s take a look at your profit & loss and balance sheet.” The blank stare I typically get tells me that they don’t have a bookkeeping system in place, which means they don’t have up-to-date financial reports that they can analyze. This business owner is in fact running the business blind with a false sense of reality. They are running their business off of a feeling rather than concrete data. If you are not updating your business’s bookkeeping on a regular basis, you are running your business blind as well.
A Firm Understanding Of Cash Flow
Your bookkeeping system can really give you a great sense of cash flow if handled properly. I use QuickBooks as a cash flow tool all the time. By taking advantage of memorized transactions and QuickBooks daily reconciliations, you can tell where your cash flow is at and where it is going. If you use QuickBooks properly, you should be posting expenses and deposits before they actually clear your financial institutions. I see business owners constantly using their online bank balances to assess cash flow, which I consider a huge mistake.
Reduce Your Stress
Having an updated bookkeeping system can take away some of the stress that you face as a small business owner. For example, if you are worried about profitability, debt, and sales, the answers to these questions should be at your fingertips. Updating your bookkeeping regularly will put the answers to many of your financial questions right in front of you, in plain black and white. If you are unsure of how well your business is doing financially, keep better books and relieve your financial stress.
Hold People Accountable
A good bookkeeping system is a great way to hold everyone accountable in your small business. Your bookkeeping system should be capable of holding various people accountable, including customers, vendors, and employees. I would especially focus on holding employees accountable. If you have a solid financial budget and forecast in place, you should be able to do some financial reporting analysis on your small business. You should review your financial reports with your sales team and other key employees to hold them accountable to the goals you set. Using your bookkeeping system for accountability is a great way to keep your business on track toward reaching its goals.
Grow Your Business Quickly
Scaling a small business is difficult; trying to scale without a bookkeeping system in place only makes it harder to grow. As a small business starts to scale, they become incredibly focused on sales. Believe me, I love the mentality of wanting to sell non-stop; however, you need to take a step back and make sure that you are set up to scale. A proper bookkeeping system put in place on day one will help you scale your business. You will be able to identify trends (both good and bad) and make sure that you are meeting or exceeding your goals. It is easier to put the proper bookkeeping system in place from the beginning and make adjustments. As you scale your business up, your bookkeeping needs will change and you will need to alter your bookkeeping system to meet those needs.
Ready For An Investment
It is crazy to me how many businesses I see try and approach investors for money without a bookkeeping system in place. We get calls all the time saying that their prospective investors want to see an updated balance sheet and profit & loss. Really? You didn’t know they would want that? Would you invest in a company without looking at the financial health of the business? I know I wouldn’t. If you plan to raise money for your business, it is important to keep your bookkeeping investor-ready. You should reconcile your bookkeeping system and get your CPA to sign off on your books regularly.
Flexibility And Freedom
How can your bookkeeping system offer you freedom? It can free you from the uncertainty of the unknown. A good bookkeeping system will show you exactly where your business is at, financially. If you use an outsourced bookkeeping service, you should also have more free time to focus on the things that are important to you. Many business owners look at bookkeeping as a task that can be done after hours. A do-it-yourself owner will most likely try and tackle the bookkeeping in the evenings or on weekends. Let’s be honest, that stinks and can often lead to burn-out. Outsource your bookkeeping and focus on what you are good at and enjoy doing.
Having an updated bookkeeping system can solve many of the problems that you may currently be facing. Use your bookkeeping system as a tool to grow your business, not just for tax filing purposes.
How are you using your bookkeeping system to help you grow your business?
Originally published at www.slcbookkeeping.com.