3 Areas to Manage in Your Small Business
Consider these 3 primary areas in managing your small business: Accounting System, Cash Flow and Profit Improvement
Accounting System - Software and Applications:
Core accounting applications, such as Xero and QuickBooks Online, provide the essential summarization, reconciliation of accounts, and financial reporting for a business. Manual ledgers, Excel spreadsheets and boxes of receipts are not accounting systems, nor adequate record keeping methods. Consider implement an accounting system with the assistance of an accountant or bookkeeper. Monthly bookkeeping services for your business can provide great value in terms of time savings for you and result in accurate data for measurement and monitoring of business results. Grow your accounting system as your business grows with add-on partners for point-of-sale, payroll, financial analysis, and bills management. Our Add-On Applications Section of our website provides links to common solutions.
Cash fuels the business engine. In order to meet cash needs of the business in a timely and adequate manner, work to shorten the cash conversion cycle. Speed up the inflow of cash on sales to customers. Are you invoicing customers and collecting at the time of product or service delivery? Or, are you waiting 30-60-90 days for your customers to pay? You will incur operating and management expenses as part of the sale to the customer. How long can you really afford to wait for the customer to pay? Understand your cash conversion cycle and work to accelerate cash collections on sales transactions.
A properly designed accounting system can provide critical information necessary to analyze profitability. What are your prices in relation to costs incurred to deliver the product or service to the customer? Are your prices too low? Are you competing on price, or value delivered? Small price adjustments can potentially lead to significant profit results. Analyze costs incurred. Should your expenses be leaner, i.e. reduction in wasteful costs. Are labor expenses too high for sales being generated? It is not good practice to underpay employees. Instead, understand and identify when your company payroll costs are too high. How can you increase employee productivity and efficiency? Develop appropriate labor efficiency ratios for your business and continually measure.
Owning a small business is more than just doing what the business does. Devote the time to effectively manage your business with the proper tools to measure and manage cash flow and profitability.