Bookkeeping As A Tool For Social Change

Caring about the survival of small businesses has been less of a concern to us at large, especially when we have bigger menaces to take care of. Most of the business solutions are driven towards medium to large business. And why not? That is where the solutions earn bigger, right? But let us take a moment to think about how to enable the small businesses to earn bigger and become big. I noticed, in my interactions with small merchants, that financial literacy is one of the key missing components affecting their growth. Yes, like most of us, they dream big and start small, but somewhere in the middle they do not grow.

Out of hundreds of micro merchants I must have interacted with, barely anyone tracked their day to day business performance.

“How do you keep track of your profits?”, I asked one of the retailers (Nanded, Maharashtra).
“I check my cash balance at the end of the day, that’s it”, he replied giving very little thought to credit transactions and stock in hand.

The cash earned at the end of the day or week or month is what mattered. That would sum up the business performance for them. The end objective of a small business is to have a positive cash flow from Day 1. Afterall, this is the source of bread and butter for a small merchant’s family. Bookkeeping is usually a low priority item for small businesses. However, the relevance of bookkeeping is crucial for businesses of all sizes.

Bookkeeping is the recording, on a day-to-day basis, of the financial transactions and information pertaining to a business. Bookkeeping builds organisational memory, keeping you well informed of your progress. Consistent bookkeeping strengthens the decision making and thus makes a positive impact over the bottom line (net profit). However, lack of bookkeeping system stagnates the business, if not fail. Bookkeeping helps a small business to record all of its core transactions and events; be it sales, purchases, inventory, tracking payments, cash requirement, expenses or net earnings.

The business decisions at a small scale has always been a gut-driven approach rather than a data-driven approach. There are many factors influencing this behaviour — lack of formal education, financial literacy, availability of resources, and more. The more precise is the business information, more realistic are the decisions coming out of it.

I understand that a double entry bookkeeping system is complicated and for all reasons mentioned above, the micro merchants do not want to complicate their lives any further. However, if there could be a very easy to use system which would help small merchants to record the core transactions and events, then a lot more sound business decisions would be made. Moreover, different performance indicators and trends can give them insights to build their financial literacy. And all this is possible with the lightning fast growth in technology.

I asked a shop owner in Bangalore, “how comfortable are you in adopting a mobile app solution”
It blowed my mind when he showed me his iPhone and said, “If you glance through my phone you will see only the apps that benefit my business. I use WhatsApp, some news app, bike/ car rental app for local business conveyance.” He added, “I may have studied only till Grade 10, but I can surf over internet to see if there is any solution out there to help me grow my business”

The usage of smartphones is India is going all time high every quarter. More importantly penetration of mobile applications like Facebook, WhatsApp and Paytm even in the smallest of towns is indicative of the growing technological adoption in remote areas. If there is some solution as easy and interactive as a Facebook/ a WhatsApp/ a Paytm that can be built then making a behavioural change in small merchants is less of an herculean task. You have 3 touch points and boom, your transaction is recorded! — I see easier adaptability of digitizing the financial records with such solutions. There are Chatbots, Artificial Intelligence, Machine Learning, Speech Recognition tools and many more upcoming technologies those can be utilized to boost the growth of these small businesses.

There would be infinite possibilities if this basic financial hygiene can be fixed. I can see businesses going from good to great. I can see them getting access to fair and affordable credit. I can see them procuring goods at the most competitive prices. And now that the challenges of the supply end are addressed, I know with right technology the businesses would be able to sell with ease. I know this is a highly unorganised sector requiring complete behavioural change, but no big challenge had no solution.

P.S. Please share your suggestions and feedback. I can be reached out at