As a small business owner, you undoubtedly have dozens of plates in the air simultaneously. And if you’re new to owning a business, you may just be learning the ins and outs. While it’s fun to dream of what you want your business to accomplish, it’s not always as exciting to consider the nuts and bolts of entrepreneurship — like keeping the books. Here, we offer three basic tips for overcoming any bookkeeping challenges you may face.
1. Determine an airtight method of record-keeping
At some point, every small business owner has a conversation with themselves. It may sound something like, “Man, I’m glad I’ve always been careful about record-keeping. It’s made my life so much easier.
Or it could sound something like, “What I wouldn’t give to go back in time and come up with a better system of record-keeping. I spend half my time spinning my wheels, trying to figure out where things are.”
Ideally, your conversation will involve congratulating yourself for being such an ace record-keeper. Your records are organized and up to date, and you keep track of invoices, receipts, bank statements, and correspondence. When a customer calls with a problem, you can easily pull up their records. When a vendor quotes you a price, you can quickly look to see how much you paid for it last time. When it’s time to pay taxes, you know right where to look for the needed numbers. In short, you’re killing it.
Whether record-keeping is a challenge for you or you’ve achieved pro status, consider taking advantage of the many tools available to you. For example, customer relationship management (CRM) software is a simple way to track your interactions with customers, analyze their past behavior, and anticipate future needs.
2. Prioritize cash flow management
Building a business that can withstand the test of time involves more than watching money roll into your business bank account. It’s about always knowing where you stand financially at all times. That’s where cash flow management comes in.
Cash flow management involves tracking the money that comes in and the money that goes out. Sales are great, but you must also know how much salaries, materials, utilities, insurance, and other business expenses will cost.
The only way to truly assess your business’s financial health is to have a complete picture of cost vs. revenue. In short, how much do you expect to earn, and how much of that money do you need to spend to keep your business up and running?
While there are plenty of great programs available to small business owners, one of the most practical for cash flow management is accounting software. Cloud-based accounting software can help you manage your cash flow by providing real-time financial data and reports. Rather than spend hours digging through records, accounting software allows you to learn where you stand at a glance. It’s a time-saver that frees you up to take on other important tasks.
3. Value your time
Speaking of time savers, be honest with yourself about the time constraints you may face as your business begins to grow. That could mean setting new hours of availability. For some small business owners, it’s tough to let the phone go to voicemail when a friend calls to shoot the breeze or to say no when asked to take on a task unassociated with their business. This can be especially true for those working from home.
No matter how demanding your business is, there will always be those who believe working from home means you have time to do them favors, like watching their kids or helping them pick up furniture across town. You may have to remind people that this is your business, not a hobby. You have set hours in which you should not be disturbed.
If you don’t value your time, the people around you won’t either.
Need help?
Finally, if bookkeeping begins to feel overwhelming, free help is available. The nonprofit organization SCORE is a perfect example. In partnership with the Small Business Administration (SBMA), SCORE is a large network of small business mentors who offer a variety of services to people like you who have struck out on their own. With chapters across the U.S., SCORE provides workshops, e-guides, videos, and in-person workshops. For example, this prerecorded one-hour webinar teaches the basics of small business bookkeeping.
One of the most exciting things about starting a business is the knowledge that you’re doing it on your own. Oddly enough, it’s also one of the most intimidating things about starting a business. The truth is, with time and repetition, bookkeeping practices will begin to make sense to you. In the meantime, you don’t have to go it alone.
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