You would be surprised by how many small businesses don’t understand their bookkeeping and are dismayed by how much time they spend doing it. Many small businesses don’t have an adequate bookkeeping system in place to understand their current situation. Some don’t even know the status of their accounts receivable, accounts payable or cash flow.
It is especially concerning when many businesses lack visibility of their cash flow. Many businesses fail because they didn’t have a system in place that showed them when they were running out of cash. Many struggle with bookkeeping for many different reasons. It is critical that small businesses have a good bookkeeping system.
It’s Not Natural for You
Let’s face it… not everyone understands accounting. Of those who do understand it, most don’t enjoy it. Good business owners understand the importance of accounting, but they also know that it is not worth their time to handle the bookkeeping themselves.
Most business owners are frustrated or overwhelmed by their bookkeeping, so they neglect it. Others think that bookkeeping is easy, so they attempt it themselves or have a friend or relative help. Either way, both types of owners usually end up creating a huge mess that contains inaccurate financial information. All of this leads to a bookkeeping system that doesn’t report on basic numbers like A/R, A/P, or cash flow. This situation leaves the owner running the business without good financial visibility.
You Are Taking A Large Entrepreneurial Leap
When people leave their secure full-time job and start a business, they are usually quite excited. They are ecstatic that they finally made the leap and have their own business. Finally, they are following their passion and couldn’t be happier.
Then reality sets in, time becomes compressed and stress kicks in. They realize that it is up to them to bring in sales, make payroll, and take care of not only themselves and their family, but also all their employees. So, they panic and, rightly so, focus on sales and the growth of their business.
All You Want to Do is Focus On Business Growth
The Sale function is very important. Sales are the lifeblood of the business and can be the determining factor between succeeding and failing.
Inexperienced business owners get in trouble when they don’t have the time to properly track and analyze their sales numbers. The fear factor that I mentioned above causes them to sell to everyone, and they often close risky or unprofitable deals.
With better focuse on measuring your sales results, you would know your ideal customers and with which prospects you should disengage. This focus will help you increase sales strategically and become more profitable.
By not measuring sales efforts, some get into cash flow problems and eventually run themselves out of business before they even have time to react.
You Haven’t Felt the Pain (yet!)
When I ask prospects what they are currently using for their bookkeeping software, I often hear, “I track everything in Excel.” I know immediately that I am dealing with a person who has not felt the pain of running a business without a proper bookkeeping system in place.
If you bring an angel investor or a bank into your business and show them an Excel-based bookkeeping system, you will not get any money. If you bring your CPA an Excel-based bookkeeping system, you will either get a huge bill or be told to go get a bookkeeper.
Then, there are the business owners who have no bookkeeping system in place. When they try to raise money, get a bank loan, or file their taxes and they fail because they don’t have a bookkeeping system. After they feel the pain, they understand the importance of bookkeeping but still don’t know how to get it done.
The Value of Good Bookkeeping
Bookkeeping is so much more than just a means to filing your taxes or get a loan. Your bookkeeping is a growth tool that can take your business to a new level. But how can bookkeeping help your business grow?
- If your bookkeeping were so accurate that you had an update on A/R, A/P, Inventory, and actual cash flow any time you wanted it, would that be valuable?
- If—instead of looking at last month’s P&L 15 days after the month closes—you had a P&L any time you wanted it, would that be valuable?
- If you could review the financial future of your business with extreme accuracy and spot potential opportunities or problems at any time, would that be useful?
If you answered yes to the above questions, but your current bookkeeping system does not provide you with that information, it’s time to make a change.
Focus on what you do best
YourBizManager can help! You can start the process by sending us an e-mail to info@YourBizManager.com or by texting or calling 424-246-6006.
Receive a FREE consultation and 50% off
Click here or contact us to receive your free consultation and 50% off your first four (4) hours of service. Just mention this post.
About Doris Cristiano & YourBizManager
As an independent bookkeeper, Doris Cristiano has been providing flexible business services on the west-side of Los Angeles since 1997. To support business needs and growth, YourBizManager tailors its services to each unique situation and works closely with its Clients’ at their business or home office. More About Us
