Why Successful Business Owners Keep Clean Financial Records
Yes, keeping clean financial records is a necessity for your business come tax time. But savvy business owners pay closer attention to their finances. Why? They know that the financial records are the backbone of a business. They tell the story of your business - where it’s been, and where it’s going in the future. Let’s dig into some of the benefits of tracking your finances on a regular basis.
Cash flow management
Do you ever worry about low inventory levels, making payroll, or find yourself needing to lean on your business credit card to make it through until the cash comes in? Keeping up with invoicing and collections, regularly monitoring your cash balances, and forecasting your future cash flow are all activities that can turn that cash stress into cash success.
Insights into profits
Which products or services are bringing in the best returns on your efforts? Who are your most profitable customers? Is your gross margin in line with the standard for your industry? If you don’t know the answers to these questions, you could be missing out on opportunities or unintentionally taking your business in the wrong direction.
Insights into expenses
By keeping detailed records of all your expenses, you can identify patterns and areas where costs may be higher than necessary. This allows you to make informed decisions about where to cut back, negotiate better deals with suppliers, or eliminate wasteful spending. Staying on top of your expenses helps ensure that every dollar is being used efficiently to support your business’s growth and sustainability.
Planning for the future
Once you know where you’ve been, you can plan where you’re going. Creating accurate financial forecasts and budgets allows you to anticipate future needs, set realistic goals, and make well-informed plans for expansion, hiring, or investments. Financial planning is not just about preparing for the next month or quarter; it's about setting a strategic direction for the long-term success of your business.
Making strategic decisions
How much should I charge? When is the right time to make my first hire? Which marketing methods should I stick with? I hear it from my clients - the stress that comes with owning a business can be overwhelming, with so many questions that come up every day. Most business owners don’t know where to turn for help - their friends and family can sympathize but won’t have the answers, they don’t want to pass the stress to their staff, and the tax preparer is too busy to help with business operations. A combination of clean finances and a knowledgeable bookkeeper can be invaluable resources to clear the fog and relieve the stress. I help my clients with these questions and more every day.
Reading financial data can feel like a second language - it takes experience to be able to get the story out of the numbers. I love being the translator and helping my clients interpret their financials, take away stress of the unknown, and make informed decisions. If you’re ready to get started, set up a call today!