Last Week I started a post on the challenges of bookkeeping for Business Owners. If you missed it, you can read it here.
Some business owners only perform bookkeeping tasks as minimally as they can throughout the year, and then are overwhelmed by what needs to be prepared at the end of the year to prepare their tax return. In most cases, you are probably spending all of your time getting the data into some sort of software, whether that be Excel, QuickBooks or Simply Accounting, that you never have the time to look at some of the valuable information that the data can provide for you.
I’m here to tell you that it doesn’t have to be like that and in all honesty it shouldn’t be like that. Bookkeeping, if done right, can be one of the most important and valuable pieces of information to help you run, manage and grow your business. No matter how big or how small you are, I always go back to my favourite saying – “How can you manage what you don’t measure?” (Actually my favourite saying is “What doesn’t kill you makes you stronger”, but that didn’t seem appropriate here )
Now imagine the following scenario:
- From your bookkeeping, you are able to determine what your most profitable product or service is.
- From your bookkeeping, you know how long it takes for your products to turn through your inventory, and which ones turn the fastest and the slowest.
- From your bookkeeping, you know exactly how profitable that job or project was.
- From your bookkeeping, you are able to determine who your best customers are in terms of sales, and who your slowest paying customers are.
- From your bookkeeping, you are able to determine who are your most productive employees or highest performing sales people.
- From your bookkeeping, you are able to determine whether you can afford to invest in a new product or service launch, and what numbers are required and when to make that product or service successful.
- From your bookkeeping, you are able to determine what the business can afford to pay you or your next employee.
Hard to believe that all of that is possible from that stack of papers that you usually tackle after your business has closed, or on your precious weekend time. But it is possible and so much more.
Some of you may already receive some of the information I’ve listed above when you sit down at the end of the year with your accountant. But what if you could have that information at your fingertips, every month throughout the year?
Where can you take your business with all of that valuable information? Or…what can you accomplish in either your business or your personal life with all of that free time? I’d love to hear your comments or your experiences with your bookkeeping from a business owner’s perspective.
What is your biggest challenge? If you’ve been able to overcome it, how did you achieve it? After all, regardless of how long we’ve been in business, we can always learn something new. By the way, in case you were wondering what the picture has to do with this article…not much really, but I’m partial to Boxers since we have one, and hopefully the picture made you smile
Small business owners must be competent managers who possess a thorough knowledge of their field. Interested individuals should have a combination of formal education and practical training suited to the kind of business they want to operate. A person interested in running a store, for instance, needs experience in retailing, along with high school or college courses in bookkeeping, accounting, and business. More technical training or an apprenticeship may be required to work in some fields. To open a machine shop, for example, a person must complete a formal apprenticeship and have many years of experience as a machinist. Prospective small business owners should also be familiar with tax laws and with state and federal laws regulating businesses.
A business’s accounting system contains information potentially relevent to a wide range of people. In addition to business owners, who rely on accounting data to gauge their enterprise’s financial progress, accounting data can communicate relevant information to investors, creditors, managers, and others who interact with the business in question. As a result, accounting is sometimes divided into two distinct subsets—financial accounting and management accounting—that reflect the different information needs of these end users. Financial accounting is a branch of accounting that provides people outside the business—such as investors or loan officers—with qualitative information regarding an enterprise’s economic resources, obligations, financial performance, and cash flow. Management accounting, on the other hand, refers to accounting data used by business owners, supervisors, and other employees of a business to gauge their enterprises’s health and operating trends.