A recurring theme for me lately has been scaling a small business. The last few referrals I have dealt with were small businesses that wanted to scale up. They understood how to grow their particular business; they just didn't know how to set up a bookkeeping system to support scaling. It can be difficult to set up a small business bookkeeping system that supports massive growth. The problem is that small businesses tend to be "do it yourselfers." Funds are usually tight so implementing a bookkeeping system that will support growth can be difficult. Here are a few ideas I have on designing a bookkeeping system that supports scaling.
It's much easier to dial in your bookkeeping system when you are still small. Maybe you currently have one location but your goal is to have 50 locations. My advice would be to work really hard in the beginning to put in a bookkeeping system that works and performs the way you need it to. You will run into problems along the way. You will find that you wish that you could extract certain information from your bookkeeping that you currently can't. If you work through these bookkeeping issues in the beginning you will find solutions to your problems. You should work hard until you are able to use your bookkeeping system as a tool to make key business decisions. Once you have a bookkeeping system in place for the small version of your business it makes growth much more realistic. As you grow, your bookkeeping system will develop naturally on its own. However, as you grow you will encounter other types of problems so you must be ready to identify and solve new issues with your bookkeeping system as you scale up.
As the owner you need to communicate with your bookkeeper to let them know what you need from your bookkeeping system. In order to grow what information do you need to make decisions? As you grow what reports or information will you need? Maybe you will know the answers and maybe you will not. However, having a vision of where you want to be and what is holding you back from a bookkeeping standpoint will be critical. There is no way to build a bookkeeping system that is meant to scale unless everyone involved in the bookkeeping process has a clear understanding of where they are going.
Technology is going to play a huge role in scaling your business; not only from a bookkeeping standpoint but in general. The proper use of technology will be a huge ally in setting up a bookkeeping system designed to scale your business. Technology can make efficient bookkeeping a reality, which in turn promotes scaling. I will warn that you should do some research and ask some advice before investing to heavily in technology. There are two common technology mistakes I see from business owners looking to scale, buying too much technology or the wrong type of technology. Some business owners buy so much technology that they are incompatible with each other and that results in a disorganized system that is tough to grow. I also see owners buy something they think they need but they really don't. In regards to bookkeeping bring in a professional bookkeeper to ask their advice before investing in what you think you need.
The bigger you grow the more vulnerable to theft you will become. You should input checks and balances into your bookkeeping system to prevent theft. Inputting tight procedures regarding cash and other forms of payments will be crucial. Having a system that clearly controls and proves out cash balances is important. You should also follow other fundamental bookkeeping procedures to eliminate theft like limiting your bookkeeper's access and authority regarding your finances.
You should find a professional bookkeeper to help you. I would look for not only an accounting professional, but also one specific to your industry or growth plan. As an example one of our specialties is restaurant bookkeeping. With a long history of involvement in restaurants (both managing and doing bookkeeping for restaurants) it's an industry that we consider ourselves experts in. Maybe you want to look for a construction bookkeeping expert or an auto mechanic expert. Finding a trustworthy accountant that has specific experience with your industry will help you scale your business.
Keeping your bookkeeping system fundamental and simple in the beginning will help you in your scaling process. One common bookkeeping mistake I see business owners make is to over complicate their chart of accounts. Too much detail in your chart of accounts can make your financial reports complex and often meaningless. You should use your bookkeeping systems as a tool to help you make key business decisions. Keep your chart of accounts simple and your bookkeeping system easy to follow from the beginning. Getting a tight bookkeeping system in place that is fundamental will aid you in scaling. As your business grows, so will your bookkeeping wants and needs and you can make changes as needed.
If you want to build a bookkeeping system that will support a scaling business you need to start small and keep it simple in the beginning. Another important point is not to wait until your business is booming to think about bookkeeping. Put a tight bookkeeping system in place right from the beginning and you will be much better off as your business starts to scale up.