All too often, business owners look at bookkeeping as a necessary evil.
At Kahuna, we don’t see bookkeeping like that at all. Cash flow is the lifeblood of business, and a healthy understanding of what’s going on with the cash can make all the difference in your ventures.
To start looking at bookkeeping as a powerful scoreboard to leverage, you will need to know the 5 reasons your business needs bookkeeping.
1. Focus where you are strong
Although bookkeeping can be a powerful tool to use, it doesn’t mean you have to love doing it. Hiring a good bookkeeper (or outsourcing) can allow you to get incredible results without you having to dig deep into journal entries, chart of accounts, and bank reconciliations.
If you are a business owner, being able to focus on your business by thinking strategically can be a results-multiplier for you.
2. Confidence in knowing what’s going on
When your books are a mess there is always a lot of unknown. You may have cash coming in, but you don’t have a real understanding of what is happening with the business and what the future looks like.
A good bookkeeper provides an extra set of eyes on the finances. It helps to have someone to talk to who can point out red flags or potential opportunities!
3. Tax season can be much simpler
For most entrepreneurs tax season can be a complete nightmare!
It’s when you pay the price (in time and money) for all your bookkeeping negligence throughout the year.
It doesn’t have to be this way.
Good bookkeeping throughout the year will leave you equipped with the proper reports so that when tax time hits, you can hand over exactly what’s needed (or invite a CPA into your system) and they have what they need quickly and easily.
The same goes for producing financials for investors, advisors, or banks.
4. Get the picture you need to make informed decisions
As an entrepreneur, making decisions is your most important skill, and many of those decisions are investment decisions. Can I afford to invest in this opportunity? What’s working well that I can invest in more aggressively?
With good bookkeeping, you can have real-time information that allows you to be informed of your decisions.
Without financial information, your decisions are just guesses.
5. Thinking strategically
When you are a new business owner, most of the time you are dominated by thinking about the here and now. You have to be, after all, everything falls back to you and most of the time you don’t have the ability to think beyond this week.
But strategic thinking is where you go from a bootstrapping entrepreneur to a true business. It’s what separates the amateurs from the pros. Being able to take a macro-view of your business and the surrounding markets and opportunities are where you find quantum jumps for your business.
Good bookkeeping doesn’t do that for you, but it provides financial reports that allow you to take a moment out of the day-to-day and be the CEO. You can look at your reports and have a big picture view and ask the questions, What’s working? What’s not? What are my opportunities over the next 6 months to a year?
Without good bookkeeping, you are always reacting and looking backward. That may work in providing a job for yourself and staying in business. But if your goal is sustainability, growth and improved profitability – getting a better handle on bookkeeping might be a big trigger to help you get to the next level.