Running a business without an accurate financial tracking system is equal to riding your bicycle down a busy road with your eyes closed. Gone are the days when you could get away with throwing everything in a shoebox and dropping it off the night before your tax returns are due.
If you want to beat the odds of business failure you need to have fully up-to-date financial information. This way you can make important decisions while there is still time to do something about it.
“Businesses always have problems. Numbers tell you where the problems are, and how worried you should be.” – Jack Stack (the Great Game of Business)
Tracking money rarely feels urgent day-to-day, it only becomes urgent when there is a problem. Bounced checks, not enough funds for payroll, or way overdue accounts receivable are examples of common problems in a business. The way you set up your books, specifically your chart of accounts, will determine if the information you collect is valuable or not. It is essential that you take the time to think about what you need to measure and review. For example, if it is important to know which of your products is the most profitable, then it is essential to separate your individual products and their associated costs so that you can get that data.
Sound confusing? I respectfully say “get on with it,” and do what ever it takes right now to put yourself in control of your business finances. It starts with tracking your money, all of it, on time, all the time, no matter what.
What do you need to record?
If you don’t have an accountant that you respect and trust completely, then now is the best time to start shopping for one. Be sure you are comfortable asking potentially “stupid” questions until they are fully understood by you. Hiring an accountant requires the same care as hiring an employee, take your time and be comfortable with the decision.
One last question, should you be doing your own bookkeeping? It depends on (1) if you like doing it, (2) if it is the best use of your time, and (3) you are able to do it accurately and keep things fully up to date at all times.
What ever you decide the most important action is to have your books 100% up-to-date at all times so that you can confidently build and run a profitable company.
Let us know if we can help, enjoy your Entrepreneurial Journey!
Beverlee Rasmussen CEC PCC
cell: 604 309 4242