Numbers Matter: Why You Should be On Top of Your Small Business Finances
Tax time is looming and you’re looking at that ever-growing pile of receipts on your desk and wondering, ‘when am I ever going to work up the courage to tackle that?’ Your immediate next thought is, ‘wow, those windows look really dirty… I should probably clean them.’ And boom… receipts get left for another day!
None of us (well… let’s be honest, except for us bookkeepers and accountants!) went into business because we thought doing our finances would be fun. Our passions and talents lie elsewhere and finances are left on the back burner. Besides, who wants to finish that awesome new product/webinar/marketing strategy and then have to pour themselves another coffee at 9pm to tackle the numbers? AND, what if we don’t like that bottom line?
All the advice tells us to get on top of our finances and to understand our cash flow, but it is really that important?
I would argue yes, for the following reasons:
How much did you spend on advertising last year? What about office expenses? Do you know how much your business is costing you? Numbers are knowledge. Understand them, understand your business. And when decisions need to be made quickly, you can make them confidently knowing that they are backed up by up-to-date numbers.
Owning your own business isn’t just about the flexible hours and the passion, it’s also about making money. By knowing the bottom line, you can make decisions that make sense. It can be the most empowering thing – knowing how well you’re doing… or how much you need to work to reach your goals.
Are you drawing a ‘salary’ from your business or is your business drawing a ‘salary’ from you? Do you actually know how much money you’ve invested into your business? According to the Government of Canada small business statistics, “Lacking both a credit history and the collateral needed to secure a loan, over 80 percent of start-ups used personal financing to finance their new businesses.” Yep, that’s us. And it’s important to keep track.
Plus, it’ll help you sleep better at night.
As small business owners, we wear so many hats… taking on social media, marketing, blogging, planning, sales, and the list goes on. But knowing your numbers helps your business ‘why’ make sense. And if you find the numbers hard to untangle, that doesn’t mean you’re a bad business person, it just means your forte lies elsewhere.
Don’t fight the numbers, ask for help. From a friend who understands these things better than you do. From a professional. Or, come to the New Business Bootcamp and I’ll give you some tips on controlling your numbers.
Jayne Dykstra is founder of JnH Bookkeeping and loves helping entrepreneurs keep their financials in order. She will be speaking at the Mamas & Co. New Business Bootcamp on April 22nd. Learn more here.