Most people look at bookkeeping as a chore that must be done to simply get back some much needed cash at the end of the year. With this perspective, it is no wonder so many businesses fail from the gate. Actually, accurate bookkeeping and tax reporting (although important) is so far at the bottom of the list, it really is not funny.
Product pricing is likely the single most important aspect of a business. Be it pricing a “widget” or pricing the services you provide, if your pricing is not accurate, you can hang up ever creating a profitable business. It sounds quite simple in the beginning, charge more than it costs, right? Well, several factors can come into play: insurance, packaging, delivery, marketing, etc. All facets of the business must be factored in when considering how much it costs to deliver whatever it is that you are selling.
Cash flow is probably the next largest aspect of a business. Many small businesses do not consider maintaining a positive cash flow as a vital element. Some go into business thinking that the demand will simply cover this element and in conjunction with ineffective pricing, they simply put themselves into the poor house within the first 24 months of operation. It is sad to see, but occurs in the business world quite frequently. Proper small business bookkeeping could have allowed them to grow in proportion to their profits and allowed the dream to flourish.
If you are going to borrow cash to get started, another huge aspect of small business bookkeeping is to get to know your banker well. Develop a rapport and your banker can provide vital assistance if your business takes an unexpected downturn. A good banker will give you credit options and help your business with differing payment plans until things swing back up again.
Small business bookkeeping can be the backbone of your business. As much as it seems to be a laborious task for many, it will make or break your business. Keeping accurate records, especially for the first few years is what will create the wind in the sails of your business vessel. Do Not take your small business bookkeeping lightly. Research these basic aspects and research it some more. Check with local and federal small business administration agencies for more guidance.