While the word ‘bookkeeping’ might make small-business owners groan, it doesn’t have to be that way. Here are 10 ways to use accounting and bookkeeping to help you grow your business:
1. Define your goals. The most important motivator for getting you working on growing your business is to set a goal. Use your bookkeeping data to get a sense of how much revenue you’re bringing in and based on this information set some growth goals for your business If you sell lower priced items or services, you will likely want to set a sales goal. If you sell higher-end items or services, a revenue goal may be more relevant to your business, since a small number of sales can generate lots of revenue.
2. Identify key trends. Your profit and loss statement, which shows how much money you are bringing in and how much is going out, also offers information on how you run your business. Can you identify an interesting trend in sales? For example, do they spike in a certain month? If so, discovering why this trend is happening can help you to get better at maximizing your sales.
3. Treat your best customers even better. A good accounting system will show you who your repeat customers are and how much they are spending. Since 20 per cent of the customers often make up 80 per cent of the sales, it’s critical to keep this 20 per cent happy and delighted. By offering special customer service touches, such as a handwritten thank you note included in the customer’s order you will ensure that these customers keep coming back.
4. Use your sales reports to guide decisions. Looking at your sales reports can shed light on which of your marketing programs are working and which aren’t. Considering shutting down programs that aren’t working and instead put time and money into programs that have proven to have worked in the past.
5. Track and manage expenses. Review where your money is being spent by looking at your monthly and yearly expense summaries, which show the top expenses that you have in your business. Business owners often forget to look at this pertinent data. Yet, doing so may spark ideas for reducing your expenses.
6. Use your data as a negotiating tool. Take a look at how much you are spending with key vendors. Provide them with information about how much you are spending with them in order to negotiate better pricing.
7. Maximize your time. Focus your accounting efforts on value-add tasks, not tedium. Time and money saved on accounting can be put into helping your business grow.
8. Get working capital to grow your business. New companies are popping up that will allow you to get a loan based on the data in your accounting system.
9. Simplify your product line. Use your accounting data to see what products or services are the best-selling and which are the low selling ones. Consider dropping the low selling ones so that you can focus on the key products or services that are driving your business forward.
10. Pat yourself on the back. Keep an eye on your key performance and financial metrics over time. When you see things improving, give yourself a pat on the back and treat yourself to something that matters to you. Doing this will help motivate you to keeping on top of your growth goals for the business.
Steven Aldrich is the senior vice-president of applications at Go Daddy, and an expert on all things small-business related. Outside of Outright and Go Daddy, Steven is president of the board of the Bay Area Glass Institute, a non-profit glass studio