Taking care of car glass is what you do. And you’re good at it. You can replace and repair windshields all day long, and you often do.
You’re well-trained, your customers like and appreciate you, and business is going really good.
Or is it?
Money is Great; Bookkeeping is Boring
If you’re not paying close attention to the financial end of your business, you may not be doing as well as you thought. That’s why you need to take care of your business’ finances as well as you take care of your customers.
It’s difficult, though. You’re not an accountant, and while you know it needs to be done, managing money can be a tiresome nuisance.
Simplify Your Bookkeeping
Fortunately, there are many steps you can take to make small-business financing a little easier, whether you’re working with an accountant or using financial software to do it yourself. Here are three to get you started in a, well, profitable direction:
- Keep your receipts. Detailed summaries of your business income and your expenses are the key factors in successful accounting. Develop a system that works for you to record the amount, date, and other relevant information about each sale or purchase.
- Set up and post to a ledger. A ledger allows you to summarize your revenues, expenditures, and anything else you’re financially tracking. Reviewing your summaries gives you an idea of how your business is doing, such as the amount of profit you’re making. To make your ledger work, transfer your receipts on a regular basis to your ledger, which is called posting. How often you post – daily, weekly, or monthly – is up to you, and depends on your sales volume.
- Create basic financial reports. Using your ledger summaries, you can develop specific reports, such as monthly profit levels and expense totals. This helps give you a big financial picture of your business, so you’ll be able to tell how much it’s worth at a specific point in time. The key reports you need to create regularly are a cash flow analysis, a profit and loss forecast, and a balance sheet.
Why Proactive Bookkeeping is Essential
While not as much fun as spending time with customers, spending time on bookkeeping duties is critical to your success for several important reasons:
- Income. You want to get paid, don’t you? So you need to manage your business income so you can have some personal income.
- Business management. Knowing how much money you’re bringing in lets you know how much you have on hand, and how much you have in the bank. And make better management decisions by knowing how you stand financially.
- Pay bills. You have to spend money to make money. And you’ve got to pay for supplies, equipment, utilities, training, your employees, and more to stay in business.
- Pay taxes. No one’s favorite expense, but a necessary one. Managing your money right throughout the year makes this easier to do come tax time.
- Reduce stress. OK, you’re not going to reduce all your stress. Running a business means dealing with stress on a full-time basis. However, having a good handle on your money makes it easier to handle the other challenges you face daily.
You don’t neglect your customers, because you’d lose some business if you did. So don’t neglect your finances, because you could lose your entire business.