No doubt about it, every small business has its share of problems. But most of all, business owners complain about their lack of time.
It's a constantly recurring theme. Business owners want to keep their books updated, but they just don't have the time. So they do what comes easiest- slide their small business bookkeeping to the back burner.
That’s where we come in…
It’s very rewarding to have clients who understand how to use the bookkeeping system we’ve built and maintained for them. With our systems they have more time to focus on what really matters- making their business grow.
In my experience, it’s really not a lack of time that keeps a small business from staying up to date with their books, but rather an inability to manage it. 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.
Here’s a simple truth for running a successful small business…
You have to find a way to dedicate time to updating your books on a consistent basis so the bookkeeping system can do its job.
Up-to-date bookkeeping will help owners overcome the worrisome obstacles most small businesses face.
Here are 7 problems most small businesses encounter and how a proficient bookkeeping system will help solve them…
Running Your Business Blind
I see it all the time. A business owner is excited with the way things are going, but in reality they’re running their business blind.
They might tell me the number of customers they served or how many hits their website got last month. My response? "That’s great- but let's see if all that activity is benefitting your income statement and balance sheet.”
The blank stare I typically get tells me they don't have a small business bookkeeping system in place. As a result, they don't have up-to-date financial reports they can analyze. Fact is, this business owner is running their operation blind and with a false sense of reality.
Running a business off of a feeling rather than concrete financial data is a recipe for disaster. If you’re not updating your business's bookkeeping on a regular basis, you’re running your business blind as well.
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, and where it’s 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.
An updated bookkeeping system can take away much of the stress 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’re unsure of how well your business is doing financially, keep better books and relieve your financial stress.
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 financial reporting analysis on your small business. What’s more, 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.
Let’s face it; scaling a small business is difficult. However, trying to scale without a proper bookkeeping system in place makes it even harder.
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 your bookkeeping systems are ready for explosive growth.
A proper bookkeeping system put in place on day one will help you scale your business. You’ll be able to identify trends (both good and bad) and make sure you’re meeting or exceeding your goals.
It’s 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’ll need to alter your system to meet those needs.
It’s crazy to me how many businesses approach investors for money without a bookkeeping system in place. We get calls all the time saying their prospective investors want to see an updated balance sheet and profit & loss.
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 on raising money for your business, it’s important to keep your bookkeeping investor-ready. You should reconcile your bookkeeping system and get your CPA to sign off on your books regularly.
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.
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 financially. Furthermore, if you use an outsourced bookkeeping service, you’ll also have more free time to focus on things that are important to you.
Outsource your bookkeeping and focus on what you are good at and enjoy doing!
Having a dedicated business accountant can solve many of the problems you may currently be facing. Use Salt Lake City Bookkeeping as a tool to alleviate these obstacles and grow your business!
Until Next Time,
Salt Lake City Bookkeeping