Why is bookkeeping important to a small business owner?
As a small business owner, it is important that you keep track of what you are spending as well as your sources of revenue. Not keeping track of your expenses would be like playing baseball without keeping stats, i.e. keeping track of what is going on; you’d constantly be wondering who’s batting now, how many tries have they had, who’s next and what’s the score. All these details have to be tracked.
After the game, if the losing team wants to know how they could do better, don’t you agree that it would be helpful to know exactly how many bad throws the pitcher made or exactly how many missed hits each batter made on good throws, or even, which player it is that seems to be able to hit the ball no matter what? The team can use this information to plan strategy and practice sessions.
It’s exactly the same with your small business. Do you get to the end of the month balancing your check book and wonder where the heck all the money went? If you were maintaining a simple bookkeeping system, you could see that oh, yeah, this month you had that annual insurance payment, so it ate up a lot of your cash, but you don’t have to pay it again for another year. And that reminds me, next month is the semi-annual car insurance payment, so I’ll need to make sure I have that.
With a simple bookkeeping system, you will not be surprised by the once-a-year payments and can even, dare I say it, budget for these expenses. You will be aware of the income you are expecting each month (or at least a rough estimate) and can better plan for the expenses. You will have the data to plan a strategy, like, say arranging to break those yearly payments down into monthly payment or, even a full-blown 5-year business plan – how cool is that?
Next time I will tell you why I actually enjoy bookkeeping, which is why I would love to do it for your small business. Contact me for a free consult.