Do you run and hide at the mention of book keeping or sales analysis?
One of the most daunting tasks for most small businesses, unless of course you are an accountant, is the prospect of having to do your own book keeping and organising your records.
However this can open a wealth of opportunities for you and your business to grow and capitalise on some hidden gems.
If you are a sole trader you will need to keep track of monthly expenditure and income as well as VAT, if applicable.
Take charge today
The first thing to do is take charge, don’t be frightened and get yourself organised.
It does not have to be a complicated system when you are first starting up, but good organisation is vital for your business.
It can be as simple as 1, 2 3
- Put every invoice and receipt for each month in a clear plastic envelope, clearly labelled expenditure with the month and year in question.
- Now take another file or folder for income and add all your invoices that you have raised on your customers, again label accordingly.
- Now you have that organised in two files, the next step is to transfer this to, for example, an excel spreadsheet and then keep it up to date with just a few minutes a day.
You can develop an easy to use spreadsheet with columns for income, expenditure and if applicable VAT. As you grow there are lots of software packages you can consider that include product records, stock control, Vat calculations, automatic statement runs and much more. But for now, we are just looking at the spreadsheet option and some of the benefits.
Benefits
This will allow you to quickly see all your suppliers and how your monthly expenditure is against your monthly income and where that income is coming from. Now you can see the profit you are making each month.
With these important figures to hand, you can see if you need to make adjustments to your expenditure or if you are doing well and could consider spending some money on marketing and growing your business even further.
Big businesses do a huge amount of analysis on turnover, profit and loss, gross and net margin %, customer segmentation, product analysis and much more, every month.
As a small business it is very important that you also know where you stand, as small changes have a big impact on your business and your cash flow.
You really cannot afford to wait for the end of the year when you give a big box of paper to your accountant to sort out and then, eventually he tells you if you did ok or not!
Your hidden gems
Here are some of the advantages of getting things under control and being more organised
- You are up to date
- You can meet your deadlines
- You can see how your finances really are at any given point in time
- You can give the VAT man all the information he needs when he arrives for a spot check
- You can defend your position when the tax man demands a large sum from you, if you have no records, you have no proof
- You know how profitable your business is
- You know which customers are your big spenders and which spend little, but take up all your time
- You know which customers have paid and who has not
- You know how much you owe suppliers
- You know which suppliers you spend a lot with, so you can ask for more discount
- You know which products sell well and which are gathering dust
- You know where your stock is going and when to reorder
- You have the facts and figures to make the necessary adjustments to protect and grow your business
- You know, you do not have guess or panic anymore
“A few simple steps and you are in control of your business, your business is no longer in control of you.”
There are many things you can do with the extra time and money and even more important without the extra worry, so take control and move forward to a more organised, proactive and confident you.
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