Unlock Financial Success: Know Your Numbers & Nathan’s Top 10 Bookkeeping Practices
Unlock Financial Success: 📈 Know Your Numbers & Nathan’s Top 10 Bookkeeping Practices 📚
As a small business owner myself, operating in the landscape and irrigation industry, I understand the challenges and the importance of being intimately familiar with your business’s financial health. Here are key reasons why knowing your numbers is not just important, but critical for your business’s success.
1. Informed Decision Making: Just as a doctor can’t treat a patient without understanding their symptoms, a business owner can’t make effective decisions without understanding their financials. Operating your company “blind” is pretty scary.
Knowledge of your cash flow, expenses, and revenue enables you to make informed decisions, whether it’s about investing in new equipment or hiring additional staff.
2. Identifying Opportunities and Risks: By keeping a close eye on your financial numbers, you can quickly spot trends, seize opportunities, and avoid potential pitfalls.
3. Building a Sustainable Business: Long-term success isn’t just about making profits; it’s about sustainable growth. Knowing your numbers helps you plan for the future, ensuring that your business not only survives but thrives in the long run. This includes planning for expansion, saving for lean periods, and investing in employee development.
4. Gaining Investor and Lender Confidence: If you’re seeking investment or need to borrow capital, having a clear grasp of your financials is crucial. Investors and lenders want to see that you have a solid understanding of your business’s financial health and are managing it well.
If you are wanting to meet with your banker/lending institution, you really want to present your company & financials with confidence.
I personally meet with my bank manager every year using this template.
5. Effective Resource Allocation: Knowing your numbers helps in allocating resources more effectively. By understanding where you are generating the most revenue and incurring the most costs, you can make strategic decisions about where to allocate your time, money, and other resources.
6. Stress Reduction: Running a business can be stressful, but having a clear understanding of your financial position can greatly reduce this stress. Knowing your financial standing helps you to plan ahead and feel more in control of your business’s future.
Here are my top 10 finance/accounting tasks that all business should follow. These steps will provide you with the ability to see your finances and make profit!
- Use QBO or similar Online Accounting Platform
- Evaluate your own time. What should you do that adds the most value to your company?
- Set up your Chart of Accounts specifically for your industry with the proper grouping
- Ensure Expenses are being allocated to the proper account
- Implement a Month End Process (depreciation, prepaid expenses, loan interests etc)
- Reconcile your credit cards, bank accounts & Balance Sheet monthly
- Ensure all of the HST rules are being followed and use the HST module
- Invoice promptly & collect AR before 31 days
- Don’t skip paying CRA!
- Educate yourself…no rely on your External Accountant for all of the answers!
Clearly there are more things that businesses should do, such as cost management, paying down debt, budgeting and forecasting. However, the basic principles of good bookkeeping & accounting are essential.
Now you may be wondering, does my Bookkeeping/Accounting need help?
Contact Southbrook Accounting for our Exclusive QBO Accounting Assessment to see how you can improve your visibility.
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