After years of working with small business owners, I made a somewhat shocking discovery.
Quite a few business owners turn their finances and accounting information over to a book-keeper or an accountant. That step, in and of itself, is not particularly problematic. It's what comes next that surprised me. Too often the small business owner will let the book-keeper or accountant "manage" the finances. This arrangement is not ideal.
In some cases, the owner does not routinely know the specifics of how much money is coming in and how much is going out. That can seriously hamper an owner's ability to manage the scene. And if I had a dollar for every time a business owner told me in March/April how stressed they were because they had to come up with an unexpected, big chunk of money to pay the IRS. Those kinds of unanticipated financial demands can be completely eliminated with a basic shift of viewpoint.
The finances of your business are a crucial part of making it all work. And yes, I understand the role of the book-keeper and accountant. But that does not mean that the owner gives up knowing what the financial scene is on a regular basis.
And when I say regular basis, I mean at least weekly. At the end of every work week, you should have in front of you a breakdown of what came in and what went out. This breakdown can be very simple or it can be quite sophisticated. If your business uses products like Quicken or Quick Books, you can produce this report very easily and within seconds. There are other financial software programs out there that are also designed to rapidly produce these reports.
Whatever you use, whatever your book-keeper or accountant uses, it is very simple to print out a line by line report of the income that came in and the expenses that were paid out. And this report can be done daily, weekly, monthly, annually...whatever format you desire is just a few keystrokes away.
Managing your business on a week-to-week basis requires having the right information and having it in a current form. If you are not monitoring your financial scene on a regular basis, I suggest you do so. You might be shocked by what you discover, but you'll be a position to do something about it as opposed to being told at the end of the year or in March/April that you've come up short!
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