Track Your Money Efficiently
You already know how vital it is to forecast the money flowing in and out of your business. Well, it’s just as vital that you figure out a system to track these receipts and expenditures as they happen and generate reports from which you can build strategies and action plans.
As we see it, constant number-crunching can actually be a great source of sanity and provide sense of control over your business. By managing those numbers on a daily basis, you’ll be able to anticipate everything from sales decisions, to purchasing, hiring, time off, and more.
There are a number of ways to track your transactions. For some, this means using the latest software package that’s got all the bells and whistles and handholding how-to’s included. For others, it’s a simple spreadsheet system with accounts payable, accounts receivable and overall cash flow. For yet others, it’s time to dial the bookkeeper and have it handled for you. A good accountant can counsel you on what the right solution should be for your business need, but here’s an overview of the options for your consideration.
There’s no lack of accounting software out there to choose from. Intuit’s QuickBooks is the most-used program out there by small businesses, and its costs range from just under $100 to up $3,000, depending on your needs. Microsoft’s Accounting Express offers a free version for business owners and another more advanced release for just under $150. Sage Software’s Peachtree is another popular choice, ranging in price from just below $70 to $500.
All of these products also offer online solutions that allow you to do your books from anywhere, on the Web. Also, many software programs have links to major banks, so you can merge the data with your online-banking accounts. This is a significant convenience and time saver.
Everyone has a different opinion about which accounting software works best. If you decide to go the software route, it’s important to pick a program that is easy for you to use, so that you can track your finances with minimal difficulty. It’s also very important to sync up with your accountant when using these solutions – you’ll want to make sure that all of the methods your accountant needs you to adhere to are indeed adhered to. The last thing you want to have is an extremely efficient year of a software package only to find that it creates an even more complex tax filing situation for your accountant. That’s an easily avoidable nightmare with a little dialogue at the outset.
Some people prefer to build a customized solution for their number tracking efforts. It may require some man-hours if you need to build a sophisticated spreadsheet, or it might be extremely simple and basic, requiring not more than a few minutes to set up. At StartupNation, we not only use an off-the-shelf software solution to manage our numbers but we use a customized spreadsheet we created as well.
Track numbers day-to-day and keep business and personal separate
Also, find a method where you can easily distinguish between personal and business funds. If you have to commingle the two, for example, by using your personal checking account to cover a shortfall in your business, make sure it is clearly documented.
Ideally, you should keep personal and business funds separate, such as through a dedicated credit card for business.
Also, you want to create a visual dashboard with “readouts” that allow you to understand your numbers at a glance. For example, know your sales pipeline stats, actual sales revenue from your website, inventory levels, status of bills that must be paid, etc.
By visiting these stats daily, you can begin to recognize patterns as well as opportunities for change and improvement of procedures. Knowing your numbers helps you create strategies and tactics that impact you short term as well as long term.
Hiring Bookkeepers & Accountants
If you aren’t very computer savvy or just don’t trust yourself with your company’s books, it might be best to hire a bookkeeper to do the number work for you. However, that route can prove costly. In the Phoenix area, for example, rates for bookkeeping can start at $50 per hour, says Michael Minyard, the president of an accounting firm in that city.
But a bookkeeper at that price may be worth it, too. Think of it this way: If you can generate more revenue than $50 for your company in that same hour, a strong argument could be made that contracting a bookkeeper makes sense. Like anything, one of the best ways to choose a bookkeeper is to ask other small business owners for any good resources they’ve used, or check with a local chamber of commerce to find a good fit. You can also use our online service to receive competitive quotes from providers on bookkeeping services.
And don’t assume that your work is done when you’ve finally found your dream bookkeeper. Once they do the basic data entry and flag glaring issues, it’s up to you to then identify the subtle and strategic takeaways. It’s up to you to manage those numbers and make them a platform for planning and taking action.
Whatever method you choose to track your numbers, just make sure that it is accurate, efficient, and regularly tended to. Strong bookkeeping will help you deal quickly with upcoming cash shortfalls, avoid future tax-preparation problems and give you the information you need to effectively run your business.