Looking at the numbers for small businesses is discouraging as the majority of them go under in the first 5 years. One of the most common reasons for this is the fact that few business owners know the value of asking for bookkeeping help to ensure that they stay afloat. Knowing how much money you have at all times keeps you making smart business decisions to stay ahead of the pack.
Here are four ways to ensure that bookkeeping keeps your business running.
1. Balance Your Cash Flow
One of the most important things to keep an eye on for business owners is your cash flow. However, it’s challenging to manage money coming in and money going out when you’re in the midst of running a business. Most small business owners handle their bookkeeping and payroll systems on their own until they find themselves buried.
It’s hard to know what kind of profit you’re making or how your business is doing if you don’t know how much cash you have on hand from day to day. The best way to ensure that you don’t end up in trouble with vendors and customers is to know how much you owe everyone and how much you have coming in.
In most cases, you order your raw materials or products and don’t pay the people you’ve bought from on the day of the purchase. Usually, you get invoiced a month or a few weeks later. This means that you have to have the money set aside, even though it might still be in your bank account for a while.
You could write a check that goes uncashed for months and then suddenly see your bank account tank. You also need to account for how much money you have coming in but beware of spending it until you’ve got it in the bank.
If you’re watching cash flow from the perspective of your accounts, you’ll have the wrong idea about how much money you have from day to day.
2. Watch For Stagnation
One of the things that bookkeepers have is a long view of how your business is going financially. If you’re not aware of how much money a particular project or branch of your business is bringing in, then you might keep putting money into it.
Stagnation can mean that you need to divest from a project or a certain part of your business. When things start to slow down, it’s important that you’re able to take notice and looks for patterns. If you expected new products to do well, you need to make sure that you’re not over-investing in something that’s destined to fail.
Stagnation can also mean that you need to invest more. If you have amazing new products that you strongly believe in, failure to support them the way they need to be supported is a real problem. When you don’t put enough muscle behind the marketing efforts to get a new product onto the streets, you doom it to fail no matter how great it is.
3. Keep an Eye on Labor
Ask around the businesses and you’ll find that most companies will tell you that labor costs are one of the biggest line items they worry about. Labor costs can take a huge bite out of profits for any company. If you’re spending too much to get the same job done that other companies do for cheaper, you’re going to lose in the end.
The costs of recruiting, hiring, and training people are expensive. If you’ve hired lots of talented people, the last thing you want to do is cut them loose. However, if you look at your finances, you can find ways to optimize everyone’s role on your team.
Use the insight of your bookkeeper to see when and where you’ve got too much staff. They’ll be able to point to places and times when you need more staff. If you can’t find a place for them, this is a great opportunity for you to seek out growth, which is part of the next point.
Your goal when looking at your figures and getting the bookkeeping covered is to find new ways to make the most of what you have. When you’re able to make the most out of your labor, you take a vital resource and turn it into something powerful.
4. Look For Growth Opportunities
When you look at your bookkeeping figures, you don’t have to think dark thoughts. In fact, you can look at what’s in front of you and start to see growth opportunities. There are places where you could be expanding your business if only you had enough resources.
Bookkeepers know where the money is in your business and which departments need more of it. When you rely on your bookkeepers to help you guide growth in your business, you’ll find new ways to expand your services. With all of the staff that you’ve already trained and who know the ins and outs of your business, you can expand your company in powerful ways.
Searching for growth opportunities is vital to the survival of any business. Even if you’ve got the best product in a certain industry, there are other businesses who are going to be biting at your heels. You need to search for ways for your business to grow in order to ensure that
Bookkeeping Help Is More Than Keeping a Log
When you get bookkeeping help, you take all of the unnecessary work off of your shoulders. Handling your payroll, taxes, and managing day to day finances keeps you from running your business. Hiring someone to help will keep things moving in the right direction.
If you’re considering cloud accounting, check out our latest guide for tips.
Until the next time,