Category: entrepreneurship

  • How to Manage Small Business Finances

    How to Manage Small Business Finances

    One of the hardest tasks that business owners need to ensure is managing business finances. The fact is that you need to know how to manage the financial health of your company. Otherwise, you’ll definitely struggle to generate a profit, manage your resources, plan strategically and pursue your goals with a greater sense of clarity. Even if you have several other aspects of business management in order, neglecting your finances can topple your entire program.  

    It’s alright if you don’t have much experience managing personal finances, there are certain things that you can do to avoid slipping into bad financial habits. Here’s what you need to consider. 

    plant growing from coins symbolizing healthy business finances

    1. Properly Manage the Accounting

    Although you can invest in accounting software, it is best that you hire a bookkeeper or outsource the work to ensure that you can keep track of all costs and income. The fact is that managing business debt and expenses requires you to be on top of everything. Otherwise, you will struggle to pay off loans on equipment and other items, and slip into poor money management. 

    2. Review the Costs

    The next tip that you should consider is reviewing your costs. It is in your best interest to keep track of all expenses. You need detailed information to make more focused financial decisions. As costs can quickly add up, you have to stay on top of everything to not overspend or get into debt. 

    Managing costs allows you to obtain the supplies you need to keep your business running, invest in growth, and increase customer service standards, while ensuring you don’t go over budget.

    3. Make Financial Projections

    To avoid making serious mistakes in your business finances, and to give yourself the foundation you need to conduct long-term planning, consider making financial projections using all data within reach. The three most vital reports to use are a balance sheet, income statement, and cash-flow statement. These three reports provide the core information necessary for projections.

    Additionally, you can use several other forms provided by your accounting software and bookkeeper, like the profit and loss report, aged receivables summary, analyze sales report, and several others to refine your process. By anticipating your future business needs, you will be able to create a budget and address obstacles early on. 

    Moreover, you can use accounting software to monitor card payments and cash flow. In fact, you should be able to generate a report for a specific time period with just a click of a button. There are plenty of options for setting the period of time you want to focus on.

    4. Get the Invoicing Right

    Invoicing is one of the most important tasks that you need to get right to better manage your business finances. You must send out invoices as soon as you provide goods or services. There’s no reason for you to wait around. Also, you need to set the payment terms to ensure that payments are made promptly. You don’t want to be in a position to hound your customers to pay you back. 

    You want to establish a payment system that guarantees instant payments, or payments with a short lag time. You can even set automatic reminders that will reach out to your clients and customers to avoid late payments.  

    Make sure to clear the account balance as soon as a customer pays to avoid contacting someone who doesn’t owe you anything.

    5. Have a Separate Business Bank Account

    To avoid many troubles, you should have a separate business bank account. It will be used for income, capital, equities, and expenses. The worst mistake that you can make is mixing business money with personal finances. It is likely to cause tax problems, confusion when accounting for deductibles, mislocation of funds, and unexplained losses. Besides, you would be better able to track your working capital and cash flow when you have a separate business bank account.

    6. Manage Your Loans

    If you want your business to remain solvent and make the most of your resources, you will also need to keep a close eye on all your personal and business loans. Falling behind on payments, not taking advantage of lower rates when possible, refinancing too often, or taking out too many loans, these can all get you in trouble. Business debt can be a big help when you use it wisely and carefully. Unfortunately, it becomes a weight around your neck and a weapon against your credit when you don’t. 

    7. Use a Business Credit Card

    When it comes to paying off business-related expenses, you need to use a business credit card. However, it should not be used for personal purchases. You don’t want to get confused as to where certain expenditures need to go. You also need to account for these purchases when filing taxes. Plus, there are many perks to using a business credit card that can accrue over time. Always remember that you can save a ton of money when you choose the right card.

    8. Pay Yourself First

    Running a small business is a full-time job. This is one reason why you should pay yourself first. It doesn’t mean that you’ll gobble up all your profits. But you want to have a regular salary in place so that your needs and the wellbeing of your family are met. 

    Depending on the level of your current revenue and gross profit, you should set a salary that represents the hard work and innovation you put into your company. It should also provide enough that you aren’t worried about personal and family finances each day. This stress not only makes life more difficult, it makes it harder to focus on your work and the development of your people and your organization. 

    9. Be Frugal

    Since running a small business costs a ton of money, you have to remain frugal. There’s no other way to succeed, at least toward the beginning. Although you might pay yourself, it doesn’t mean that you should use up all the money. You need to save up and ensure that you invest it to diversify your income for long-term security and future opportunities. The money you save now will provide you with greater flexibility later on. It would allow you to weather many storms.

    10. Reduce Travel Costs

    In addition to the above, you also need to keep an eye on travel expenses. You can’t let them add up. If you notice travel costs going up, you will need to identify the source of the problem and find alternatives to reduce these expenses. If you’ve been flying to a location for business, you might be able to take a train or drive there instead if it’s close enough and economically wise to do so. Similarly, you don’t need to stay in a 5-star hotel or eat out at the finest restaurants every day. It’s the small things that make a huge difference.

    11. Keep Legal Fees Under Control

    Since legal services cost a ton of money, you need to better manage them to ensure that these fees don’t get out of hand. In order to better manage legal costs, make your expectations clear and opt for a more cost-effective billing option. 

    You should be able to discuss billing options to find out what works best. Moreover, you should also find out whether it is possible to defer payments until a more opportune time. Legal counsel is important for business owners. You don’t want to neglect it. However, you want to remain aware and engaged with it to ensure you are getting the best value. 

    business owners working together on business finances

    12. Be Strategic with Your Marketing Choices

    Marketing is such an important part of your business growth plan. It is imperative for building a dedicated customer base and your brand’s identity within the market. Sometimes, if you have the experience, you can handle your own marketing for a while. Be careful, though, as this can eat up a lot of your time, which can cause you to burn out and neglect it. 

    Other times, contracting with a professional marketing firm is the right choice, as they can put their experience, resources, and creativity to work for you to achieve significant results. It may cost a bit more, but you might make a lot more in return. Investing in a strong marketing plan is one of the best business decisions you can make. Look at all your options and invest in the marketing choices that push your business forward in tangible ways while not breaking the bank.

    13. Rent Instead of Purchase

    Since it costs a ton of money to buy property or large equipment, it might be better for you to rent or lease.. You should lease equipment to avoid having to pay maintenance costs. Besides, it will also ensure that you don’t overpay for anything and that you only pay when you need to use the equipment.

    14. Know When to Get a Loan

    There’s no reason for you to wait a long time until you take out a loan. Knowing when to take out a loan allows you to benefit from better terms. In fact, yo’ll be in a better position to negotiate and get the loan amount that you need to keep your business afloat. You should take a loan out when your business finances are in order. It is always best to get financing long before a possible emergency, and use it to strengthen your infrastructure and expand your efforts so you can navigate more difficult times more easily. 

    15. Sufficient Capital

    As a small business owner, you also have to keep an eye on your capital. It should be enough to keep the business running daily and to cover unforeseen expenses.. Generally, you should have capital that covers three to six months’ worth of expenses. 

    16. Never Spend Prematurely

    Lastly, you should think about each expense. Never pay for anything without justifying its cost. Know why you’re thinking about purchasing something. You need to be able to connect it directly to a clear objective or outcome. If you can’t, you should rethink your desires. 

    Conclusion 

    Managing your finances is one of the best things you’ll ever do for your business, No matter how many other areas you have in order, without a clear understanding and confident hand on your budget, expenses, spending habits, investments, and cash flow, problems will eventually arise. 

    Great money managers make better business managers. Finally, don’t hesitate to reach out to a great bookkeeper or bookkeeping service provider to help get your business finances in order. 

    Sound Accounts helps business owners achieve more with superb bookkeeping services and great advice. Contact us today to learn more. 

    To learn more about managing your business finances, check out our frequently asked questions below. 

    FAQ

    How can I learn how to manage my business finances?

    There are several resources to tap into. Start by teaming up with a great bookkeeper or accountant. Check out several excellent books on money management for business owners. Take some online classes from places like Coursera and Udemy, and partner with a mentor with considerable experience in this area. 

     

    How can I decrease errors and make the most of my business finances?

    Create a clear budget and stick to it.

    Keep meticulous records.

    Go over your most important financial statements and financial reports each day and keep physical copies of your financial documents on hand in addition to your computer files.

    Reconcile all invoices and receipts daily.

    Stay on top of your business expenses.

    Follow your business plan and your financial plan closely.

    Separate your business accounts and personal accounts.

    Control business travel expenses.

    Create a business savings account as an emergency fund to stay ahead of surprises and unexpected expenses.

    Keep detailed business records for everything.

    Consider strategic financial partners and angel investors.

    Make monthly payments on time.

    Consider leasing equipment instead of purchasing.

    Keep track of cash flow, profit margin, and business revenue so you can reach your financial goals.

    Protect yourself with business insurance.

    Know your tax burden and be detailed and on time with tax payments.

    Educate yourself on financial management principles.

    Talk with your bookkeeper about other ways you can stay ahead and avoid mistakes.

     

    How Long Does It Take For A Small Business To Be Profitable?

    It varies widely from business to business. It’s common, though, for many businesses to turn a profit after the second or third year. Your experience will be unique to you, though. 

  • A Simple Guide to Writing Your Best Business Plan

    A Simple Guide to Writing Your Best Business Plan

    A business plan is an absolute must when it comes to bringing your business idea to life. No matter what your business idea might be, you have to create a business plan to ensure that you know exactly what to do at every step of your growth and process. It serves as a road map and allows your organization to reach its full potential. Whether you’re a small business or a large enterprise, a business plan lays out the steps you need to take to consistently put your strategy to work and reach your goals sequentially.

    A business plan also helps you identify and overcome obstacles. You need to understand that each part of a traditional business plan will enable you to meet your goals, including sales, marketing, operations, employment, and financial aspects. 

    If you are on the lookout for business plan templates, you have come to the right place. To help provide you with a simple business template that will work for nearly all business owners, we have prepared this informative post. Don’t forget to pair your business plan with a solid mission statement. A mission statement will help you energize your business plan using your core values, so you’ll be able to take practical, concrete steps to achieve your mission, while remaining passionate and energized throughout. Let’s dive in. 

    What Is A Business Plan?

    A business plan is an execution plan that outlines everything you expect your business to achieve. It is presented to stakeholders, such as potential investors and new employees, to convince them to get on board. If you want your business venture to succeed, you cannot overlook the importance of a business plan. It ensures that your company remains on track and grows with the market while continually innovating.

    Why You Need A Business Plan?

    Launching a new business venture is no easy task. It comes with its fair share of headaches. Therefore, it is in your best interests to be prepared. With a business plan, you’ll have a guide to use while you conduct market analysis, map out your marketing strategy, make financial projections, carve out the specifics of your business model and business structure, figure out your legal structure, write down your business objectives, consider any intellectual properties, discuss possible business partners and key employees, survey your potential market, map out cash-flow projections, understand your competitive advantage, design a production process, establish a well-managed financial model, understand market demand and market share, and create a complete business strategy. 

    When you write a solid business plan, it will help prepare you for the challenges that you are likely to face every day. Besides, it will allow you to understand what needs to be done to achieve your goals. Once you have created your plan, you can review it to ensure you’re on the right track. Let’s look at a few of the primary functions of your plan. 

    manager working on business plan

    Establish Your Main Business Focus

    A major reason why you need a business plan is that it allows you to establish a plan for the future, refine your objectives and push out anything that’s distracting. It will include milestones or goals as well as the steps that your company has to take to reach them. 

    Secure Funding

    Another reason to create a business plan is that it will allow you to secure the funding you need to get your startup on its feet. There’s no better option for getting seed money. Since investors want to know everything about your venture, you must prepare a detailed business plan. It should cover everything, including revenue and expense projections, and related market data and analysis. It is best that you create a projected income statement and cash flow statement to ensure that investors have an idea about the costs involved. 

    Attract Executives

    To keep your organization growing, you have to partner with the right executives. This is only possible when you create a business plan. It will allow you to attract the best talent and encourage them to stick around. With the right people by your side, there is nothing that you can’t achieve. 

    Now, you should keep in mind that when presenting your business plan to potential executives, it can be either a written document or a visual media presentation. Ultimately, you want to create both versions. The written version will provide more detail, while the visual presentation will help others visualize everything in a more dynamic way. These presentations will help others make clear decisions about linking up with you and your vision. 

    Types of Business Plans

    When it comes to business plans, there are two options available. You can either create a simple or traditional plan. Generally, the decision for a traditional business plan means you’ll have a much longer and more detailed plan, covering a multitude of factors. It can have both short-term and long-term goals, whereas the simple business plan will cover a few key metrics in detail and some additional data, but not to the same degree or breadth as a traditional business plan. 

    Simple Business Plan

    The simple business plan was developed back in 2010 and has become incredibly popular in recent years. It is a canvas that comprises nine sections. Each part contains high-value information, including metrics for attracting investors. The lean business plan comprises a single page of information. Here’s what it includes:

    • A basic or “bare-bones” management strategy.
    • A basic description of tactics that will enable you to accomplish this strategy, including things like financing, marketing, product development and more.
    • A measurable plan for regular reviews or milestones, which includes specific tasks, deadlines, budgetary plans, and customer goals.
    • Forecasts for spending, cash flow and sales. 

    Traditional Business Plan

    Unlike a simple business plan, which is a single-page plan, a traditional business plan is comprised of lengthy documents, which can be dozens of pages in total. The thing about a traditional business plan is that it serves as a blueprint for the organization and details everything, from the launch to becoming an established business. Here’s what it would cover.

    1. Executive Summary

    The most important part of the business plan is the executive summary. It draws readers into your business plan and entices them to read on. However, if you fail to capture the attention of readers through your executive summary, they may not continue to stay engaged with it. 

    Although your executive summary is the first thing that would appear when people open the traditional business plan, it should be written last. When you make your attempt, you should focus on summarizing the problem faced by your market or potential customer and how your product or service can solve it. You will also have to mention key financial details and why people should invest in your business idea. The secret to getting it right is keeping it engaging. 

    2. Company Description

    The next thing a traditional business plan covers is the company description. This will provide an overview of your organization and include details like the founding of your business, the type of entity that you are running (LLC, Corporation, other…)and a summary of its history. This part of the business plan will provide a solid understanding of your business. 

    3. Products or Services

    As you move further, you’ll have to describe your offering. You need to focus on your customers’ perspective. By demonstrating the problem your product or service aims to overcome, you’ll be able to prove that you are targeting a bona fide market that will remain viable. 

    4. Market Analysis

    For this section, you’ll have to define your target market. Your marketing plan should cover who your customers are, where your customers can be found, and how you plan to reach them. A deep analysis must be provided about your ideal customer and how you can market your offering to them.

    You will also have to include detailed information on potential competitors and illustrate what makes your business unique when compared to theirs. Competitor data will help you leverage vital information to approach your market more confidently and effectively.

    5. Management Team

    To prove to potential investors that you have a management team that will deal with strategy and single process, you have to write a separate section. It will show how your business would be managed on a daily basis and how these management decisions contribute to your objectives.

    You must list the founders, advisors, partners, members, and employees that are critical for your business. It is crucial that you provide a summary of each individual, what they bring to the table in terms of knowledge, experience, skills, and goals, and how each person will contribute to your organization.

    successful corporation resulting from a good business plan

    6. Financial Plan

    Next, you have to cover the financial plan, which will cover all your finances. The least that you can do is include a profit and loss and cash flow projection for the next 3 years. Make sure you incorporate historical financial data to get it right.

    7. Operational Plan

    As for your operational plan, it will detail the physical needs of your organization. You’ll need to detail every operational aspect of your business’s operational plan, including the location of your venture, equipment needed, additional facilities required, transit and shipping processes, inventory and supply requirements, production plans, and every other primary operations activity. 

    In Closing

    Creating a professional, detailed business plan is necessary for growth and success. Business owners who move forward without a business plan or vision statement, set themselves up for failure. Don’t become another negative statistic. Plan ahead, write everything down, get specific, know your market, attract the right people, and move forward with confidence. For more information and some downloadable business plan templates, check out these links: 

    https://www.hubspot.com/business-templates/business-plans

    https://www.inc.com/larry-kim/top-10-business-plan-templates-you-can-download-free.html

    https://templates.office.com/en-us/business-plans

    Sound Accounts helps small business owners increase productivity and grow their busines with top-notch bookkeeping support and years of financial knowledge. Contact us today to learn more about partnering with us. 

    To learn more about business plans, check out our frequently asked questions below. 

    FAQ

    Do I really need a business plan?

    Definitely; yes! There’s no way to ensure you’ll have consistent work, high standards, accurate bookkeeping, solid marketing plan and marketing efforts, a practical operations plan, great talent, time management, innovation and goal achievement without a clear business plan.

    Do I need a business plan even if I’m working alone?

    Again, the answer is definitely yes! Even if you’re the only one doing the work, you won’t achieve consistent results or long-term growth without a detailed business plan that includes every primary aspect of your vision, operations, goals, finances, marketing and projections.

    What are some great resources for understanding business plans and ongoing business success?

    A great place to begin is with this article. Aside from this, find a mentor or two who’ve been in business for a while, operate transparently and according to a clear plan, and have achieved considerable success in their field. Be willing to pay for their time if they don’t volunteer it for free. The investment will be well worth it. 

    Read books by respected executives and entrepreneurs. Read prominent business blogs. Check out magazines like INC., Fortune, Entrepreneur, Harvard Business Review, and WIRED. 

    Surround yourself with a community of like-minded business owners and managers who want the same things you do. You can support one another with advice and counsel, toss around ideas, partner up on projects, and encourage each other during difficult times. 

    Who Can I Share My Business Plan With?

    The business plan you create can be shared with potential investors, business partners, other managers, and employees. It is best that you are careful about who you share your business plan with as you do not want it to get into the wrong hands. . 

  • Common Business Mistakes: Why Some Businesses Fail and What to Do Instead

    Common Business Mistakes: Why Some Businesses Fail and What to Do Instead

    Making a mistake in life and business every now and then is valuable for our learning curve, and teaches us several important lessons. However, you don’t want these to happen too frequently, especially in business. 

    If you want your company to be successful year after year, you need to avoid certain missteps that plague many businesses. Running a business demands a great deal from us in the way of skills, organization, training, communication, ongoing education, creativity, and leadership. Within each of these areas, we have wins and losses. The goal is to rack up more wins and come out ahead every day. Let’s look now at some common business mistakes and what to do instead to ensure long-term success. 

    1. Not Writing A Clear Business Plan 

    One of the most common mistakes that business owners in Silicon Valley and in other industries make is not writing down their business plan. It is impossible for you to guide your organization in the right direction when you don’t have a business plan in place, and one that is broken down in clear, attainable steps. 

    When you write a business plan, you get to create a sustainable business and stand out in the market. It is important that you define your business idea in detail and create a strategy that focuses on attracting your customer base, maximizing resources, marketing effectively, and attracting great talent.   

    Once you write your business plan down, you will have a clear idea of what you plan to achieve. As a new entrepreneur, you’re likely to begin your venture without considering the big picture. This will prevent you from understanding your market and from getting your finances and logistics in order. Moving forward with a strong plan is the best foundation you can give your organization. 

    chess game representing business mistakes during failed strategy

    2. A Failure to Focus on Cash Flow

    Another mistake that business experts suggest new startups avoid, is overlooking cash flow. You have to pay attention to your cash flow to remain solvent, manage payroll accurately, and make the most of your profits.

    It doesn’t matter how much growth you’re seeing or how fast your company’s rate of expansion is, you must still have enough freed up cash to meet all your expenses. Understanding cash flow will also help you take advantage of loans, build excellent relationships with banks and other lenders, and find strategic partners.

    To determine how profitable your company is, you have to monitor your revenue and expenses. This will enable you to maintain your cash flow and make necessary changes early on to avoid other problems later. 

    3. Not Assessing Market Idea

    Failing to conduct market research is one of the biggest mistakes that you can make. Even if you plan on catering to niche markets, you still have to find out if your business idea is viable. By learning about your competition, you will be better able to differentiate your offerings from those of your competitors. 

    You should never dive into a market without first understanding your audience and marketplace. You need to determine the demand for your product and adapt your model to both fit and lead in your field.

    In order to learn more about the market landscape, you have to conduct extensive research. Consider the following.

    • Customer habits
    • Press coverage 
    • Social engagement
    • Online reviews
    • SEO (Search Engine Optimization) rankings
    • Talking with other entrepreneurs
    • Studying sales figures for similar products and services for the past several years

    4. Spreading Your Business Thin 

    A huge mistake that new businesses make is spreading themselves thin by selling too many products. If one product doesn’t do well, you might be tempted to introduce more products to attract customers. You also might have a few very successful products and assume that adding to your roster will mean even more success. However, success is never a guarantee. 

    Your target audience might not be interested in what you have to offer. Your decisions might alienate loyal customers too, if your new offerings take away from the original experience or simplicity of your products. 

    Still, they might be successful but you need to make sure you have the infrastructure established for production, distribution, and quality control, so you can meet the growing demand. For a while, try focusing on the products that are performing well. If you want to attract more customers, you have to establish a brand that is centered on your core values and meeting customer needs consistently. Later on, once you’ve built a solid foundation, consider expanding. 

    5. Overlooking Organic Marketing

    If there is one thing you need to realize, it is the fact that organic marketing is a big deal. You might overlook the potential of organic marketing, which includes blog posts, case studies, guest posts, unpaid tweets, Facebook updates and more, and end up spending too much money on paid ads. Of course, it’s important that you rely on ads as one part of your marketing strategy, you still have to focus on organic content marketing. It not only helps you generate more traffic but build stronger, long-term relationships with your customers. 

    Even though the cost of organic marketing might seem high initially, it is worth it. Since 70% of clicks go directly to organic search results, you have to get it right. It is important that you create content based on the needs of your customers rather than just your business model or programs. 

    manager planning business strategy to avoid business mistakes

    6. Not Offering Incentives

    To get people to take an interest in your products or services, you sometimes need to offer limited amounts of free or value-added items or services. Of course, you don’t want to overspend on these, but there are ways to create intro programs, informational services, or simple products that provide valuable information or enjoyment to get people connected. 

    The primary goal of incentives is to use these perks as gateways for marketing, brand building, and more organic advertising. These offerings allow you to get people signed up for your newsletter, monthly service, or other memberships. This allows you to keep an open dialogue going with your audience.

    7. Not Seeking Help

    There is just so much that business planning can achieve. You have to get the right help if you want to succeed. Common areas where we often need help are with IT management, custodial services, bookkeeping, innovation and creative development, strategic investment, finance, engineering, outside consultation and in simply hiring the right employees. Developing partnerships with talented and experienced individuals across multiple fields gives you access to far more resources, knowledge, and creative power than you would have by yourself. 

    Being an entrepreneur doesn’t mean that you have to take on everything on your own. It simply isn’t possible and the attempt will only wear you out. You have to think about the opportunity cost of doing too many things on your own. While doing everything might sound great, especially if you’re someone who likes to control everything, it tends to be time-consuming and will prevent you from building business relationships and coming up with new ideas. 

    8. Not Knowing Your Target Audience

    A common business mistake that you have to avoid at all costs is not knowing who your target audience is. You have to perform quality research if you want to succeed. Once you have come up with a product idea, you have to learn more about your customers. It is not an easy job to hunt down customers when you focus on building a product first instead of understanding your customers and letting them guide you. 

    Building a customer profile is the name of the game. Take time to process consistent conversions if you want to succeed. It will allow you to establish an environment where you let your customers’ needs lead the way. Even if there is sufficient demand in your niche, you still have to identify the ideal customer you want to target, how best to talk to them, and how to keep them interested and loyal. 

    9. Not Having a Strong Marketing Plan

    Continual success in business requires a strong marketing plan. This means not simply tossing out random, scattered marketing campaigns here and there but creating a clear and sequential strategy that you can follow each day for every aspect of your marketing efforts. 

    Your plan should be well-rounded enough to cover all bases but be specific enough for you to analyze your returns regularly. This way, you can apply what you’ve learned toward creating even better, more focused marketing campaigns.  

    managers working together to avoid business mistakes

    10. Not Securing Your Intellectual Property

    Lastly, you also need to secure your intellectual property to protect your original ideas. Otherwise, anyone can copy and lay claim to your or very similar plans. Intellectual property includes trade secrets, patents, trademarks, and copyrights, along with designs, technologies, and much more. 

    Ensuring the safety of your proprietary information and unique vision is an absolute must. Be careful who you share it with and make sure all individuals in the know have signed detailed non-disclosure agreements. 

    Conclusion

    Creating and running a business may carry a lot of unique struggles. But it also carries with it, an immense amount of positive potential. You’ll be compelled and inspired toward personal growth, creative problem solving, more strategic planning, improved communication and collaboration, and healthy risk-taking. 

    While mistakes are common, they don’t have to ruin us, and we can avoid some of the biggest business mistakes by learning from those who’ve already walked a similar path. 

    Sound Accounts helps business owners like you succeed with individually tailored bookkeeping solutions that improve efficiency, maximize productivity, increase organization, and lower stress. Connect with us today to get started. 

    To learn more about avoiding business mistakes, check out our frequently asked questions below. 

    FAQ

    What are a few common reasons why businesses fail?

    Some common reasons why businesses fail include:

    • Lack of financing. 
    • Not investigating your specific industry or market
    • Failing to develop a business plan
    • Not attracting good talent or partnerships
    • Overspending on the wrong things
    • Expanding too quickly or not quickly enough
    • Underestimating resource requirements
    • Not focusing on marketing and connecting with your audience

    Can poorly managed businesses recover?

    The short answer is yes, but it takes considerable change. It’s not enough to simply realize that what you’re doing isn’t working. You’ve got to be teachable, which is probably the most difficult thing for people, especially entrepreneurs, who are by nature, highly independent. 

    If you remain open to learning, mentorship, guidance, new ideas, refinement, better money management, creative thinking, a lot of adaptation, and a bit of humility, you can turn things around. This will require you to not only refine your business strategy but your own internal mindset and mode of operation as well. 

    What are some good places to look for help with my business?

    You can find loads of help from a multitude of sources including:

    • Mentors
    • Business consultants
    • Financial professionals
    • Other entrepreneurs and managers
    • Books on business, investment, management, leadership, and personal development
    • Public presentations by noteworthy professionals
    • Blogs and other online sources
    • Community resources catering to business owners
    • Networking groups
  • 7 Small Business Improvement Ideas

    7 Small Business Improvement Ideas

    When it comes to running a small business, it can be difficult to ensure consistent improvement. However, it’s the only way that you can achieve success. Having a checklist can help you stay on the right path.

    There’s a lot that business owners can do to make improvements within a 1-year period. No matter what your customer base might be, here are some small business improvement ideas that will come in handy.  

    happy business owner finding small business improvement

    1. Measure Your Marketing

    The first thing you need to do is measure your marketing efforts and the way they affect your customer base. It is crucial that you have a clear idea about which marketing channels are helping to boost sales and which aren’t. It will allow you to identify unsuccessful marketing endeavors or underperforming ones that simply need refining. You need to determine if you are putting your money into the very best campaigns. 

    For instance, you can track how people find your website. It might be through a guest post, an advertisement, a landing page, or a referral program. When you know what works, you get to double your efforts and pour more resources on your successful channels to improve performance. 

    You just might end up finding new opportunities for growth and expansion during your marketing research. So, diving deeper is worth it on several levels. Fortunately, there are plenty of tools that you can use to evaluate your marketing efforts. Utilize the tools at your disposal to the maximum extent. Take advantage of Google Analytics, various SEO programs, and the professional advice of a marketing or digital marketing specialist. 

    2. Upgrade Your Sales Funnel

    Next, ‌ensure that your top-of-funnel prospects are converting into leads, and eventually, paying customers. Even if you have lots of prospects within your industry and market, you still have to get them to make a purchase. An area where you can focus on increasing leads is your website. As we live in a digital world, you have to take complete advantage of your website, associated landing pages, and affiliate sites. 

    A great way to encourage visitors to provide their contact information is by providing them with something valuable. It could be a free trial, an introductory program,  or even a guided demo. As soon as you have an email address, you should be able to provide perks such as insider tips and exclusive discounts to convert leads. 

    Only when you provide something meaningful to potential customers, can you expect them to buy from you and keep coming back for more. Once you get them hooked, you can expect repeat customers who will help drive your business toward success. Also, make sure your rates are in line with the quality of your service and make sense within your market. 

    3. Improve Your Online Presence

    To grow your small business, you have to boost your online presence. Even simple updates to your website can make a huge difference. It is important that your contact information is easy to find. However, you have to take things up a notch. For instance, if your prospects email or call you, provide amazing customer service to them. You should respond to them immediately to resolve their concerns and establish strong customer relations. 

    Make sure your site or sites boast intuitive, easy-to-handle navigation, are clean, modern, and attractive, make sense for your particular industry, and provide important information quickly while keeping customers interested in learning more. 

    A popular marketing trend that can help your small business stand out is local SEO (search engine optimization). It will help your company get noticed and attract more customers in no time.

    Another vital component of upping your online presence is in taking advantage of social media. You can use Facebook to run specialized ads, provide updates, images and video to your followers, run awesome video ads or informational spots on YouTube and access Twitter, Instagram or TikTok to stay engaged with your audience and customers. Whether or not you like social media, it’s here to stay, and it’s a huge marketplace for business owners willing to jump in. 

    4. Invest in Customer Relationships

    Even though improving customer relationships is not a new strategy, it remains one of the most important factors in achieving solid results. To get started, you will need to listen to what your customers are looking for. It will allow you to customize your offerings to suit their needs. Take time to get to know your audience.

    Ask for detailed feedback about your customers’ thoughts on your brand’s equity, which is its value determined by their perception and experience with your brand. Your brand equity has a major impact on its relevance and longevity. Conduct surveys and read online comments. Perform an analysis of the most frequent requests or suggestions and discuss ways to take advantage of this information with other key decision makers in your organization. 

    You will also need to provide outstanding customer service to ensure success. From speedy responses to customer inquiries and simple purchasing and navigation, to offering special deals and reasons for them to remain loyal, there are plenty of ways to improve your relationship with your customers.  

    5. Improve Your Finances

    To make sure that your business moves in the right direction and doesn’t lose momentum, you have to focus on improving your finances. Take time to analyze your financial performance from every angle. This includes expenses, monthly rents and leases, all funds, loan payments, equity share, employment costs, investments, revenue, property (both real and digital), research and development costs and more. 

    If you do not have a dedicated bookkeeper, you need to hire one or outsource the work to an expert bookkeeping service provider. There’s only so much that you can do on your own. It is in your best interest to get help from a professional to better manage your resources, stay current on taxes, navigate the waters during growth periods and economic downturns alike, and spot opportunities you may have missed.

    business owners working on small business improvement ideas

    6. Motivate Employees and Boost Morale

    You rely on your people, not only to get the job done but to make sure your vision for your organization and your brand is translated effectively to your customers. To do so, you not only have to provide excellent training and follow-up, you need to keep them motivated and happy. Check out the suggestions below to improve employee satisfaction and performance.. 

    Recognize Good Work

    To get your employees to do their best, you have to recognize and sometimes reward good work. You can do this by offering a personalized gift, a paid day off, or even a small bonus. Occasionally, you can offer stock or small equity share for rising stars and executives. Recognition goes a long way in motivating employees. It makes them feel noticed, and most importantly, valued. Valued employees are also loyal employees. 

    Make Work Fun

    To avoid burnout and boost motivation levels, try to make work as enjoyable as possible. You can do this by organizing social events, hosting themed get-togethers, providing candy or desserts, playing upbeat music, taking time to simply talk with and get to know each staff member, celebrate employee birthdays and significant life events, and ask employees for their input about how you can make things more fun. There are plenty of ways to get everyone excited about what they do. 

    Provide Flexibility 

    We live in a period of time where employees cherish flexibility more than anything. This is why you should consider allowing your employees to decide the hours they should work. You could even offer provisions for work-from-home days by adopting a hybrid model. Make sure to allow time off for medical appointments, childcare emergencies, and personal days to improve well-being and motivation levels. 

    Ensure Professional Development 

    In addition to the above, you can even offer professional development opportunities to motivate workers. Assign a mentor to each individual employee, offer in-house training, or offer to pay for online or certificate courses that improve their performance and value.  

    7. Keep Up with Current Trends and Innovate

    Lastly, you should also keep up with the latest relevant trends and use this information to develop new products and services. It is impossible to operate your business in isolation. New developments in technology, marketing, products, and communication take place continually. Of course, not all trends are worthy of your attention. But you can absorb the information, analyze it and then make decisions based on the most valuable developments. 

    It’s also very important to keep a close eye on the global market because significant developments can dramatically impact your business. Newer products, faster technologies, more cost-effective production standards, all these can potentially drive business away from you toward your competitors. Staying current and engaged means adapting to necessary changes even while you stay true to the core of your business.  

    Conclusion

    Running a business is a dynamic, ever-changing endeavor. It takes not only vision, heart and will, but a range of skills, a wide knowledge base, great leadership, creativity, adaptability, and more. Long-term success requires an open mind and a readiness to make changes when the market or your audience calls for it. 

    When you combine sound business principles and a willingness to innovate with thoughtful leadership and great money management, you’ll have a winning combination year after year. Consider getting an older business mentor as well, to provide you with wisdom you may otherwise not have access to.

    Sound accounts helps business owners succeed with custom-fit bookkeeping solutions and better money management. Contact us today to learn more. 

    For more information about improving your business, see our frequently asked questions below. 

    FAQ

    What are some popular small business ideas?

    Some popular small business ideas to consider include starting a gym (athletic club), an auto repair shop, restaurant, pub or micro-brewery. Also, consider things like a cleaning business, daycare, an errand-running service, elder care home, construction company, woodworking business, computer repair, second-hand clothing or furniture shop, among others. You can also try becoming a freelancer or independent contractor for other businesses. 

    What are some ways to grow your business?

    If you are looking to improve and grow your business, here are a few things to consider. 

    • Make a clear business plan and set goals.
    • Apply best practices used by the world’s most successful business owners
    • Educate yourself on every detail of your industry
    • Keep financial score: understand your cash flow, debt interest rates and balances, equity, and have a great bookkeeper around to keep you ahead of the curve
    • Motivate your workforce by recognizing value, offering bonuses and prizes, more time off, flexible work hours, and promotions
    • Monitor all the latest trends and apply this information to developing better brands and new business opportunities
    • Understand the positive impact that highly skilled but disadvantaged individuals have on your business
    • Understand how economic downturns affect your not only your employees but your brand. Economic downturns can also provide new opportunities for growth as new needs arise during these seasons. 
    • Improve your relationship with your prime contractor
    • Learn how different cultural and historical beliefs and practices affect the way your brand or business is interpreted within other nations as well as in the United States.
    • Consider the advantages of renewable energy.
    • Consider using independent contractors for certain jobs
    • Sharpen your selling ability with ongoing training or mentorship
    • Master business presentations
    • Understand your business activity targets and how these should steer your goals
    • Consider using high-impact marketing
    • Use social media to your advantage
    • Upgrade your technology

    Where should I look for great business advice?

    The internet is full of excellent blogs written by experienced professionals from every field. Find a few that really speak to you and challenge you to break out of your limitations. Read a new book on business strategy, creativity, development, or personal growth every week or month. You’ll be astonished at how much you learn. 

    Consider hiring a mentor to walk with you for a while, no matter what stage you’re in. They can help you sharpen your current skills, develop new ones, spot troubled areas, gain an understanding of business law, refine your vision and goals, look for new business opportunities, and become a better leader. Their rates will vary depending on their experience level but it’ll be well-worth your time and money.

    The period of time they spend with you can be one of the most impactful seasons in your career. Mentors can add invaluable experience to areas you never knew were falling behind. They also quite often know just how to strengthen and encourage us when we’re feeling lost. Asking for assistance or coaching isn’t a weakness, but a strength. We grow by learning and doing, by using the best of those who’ve gone before us and combining this with our own innovations. 

  • 5 Keys to a Successful Business

    5 Keys to a Successful Business

    Running a business is no easy task. There’s a lot that goes into ensuring productivity and profitability. Patience, determination, confidence, innovation, a willingness to adapt, basic business skills, and, of course, funding are a few of the many things required to be successful.

    As an entrepreneur, it is your job to develop business strategies to meet key performance indicators. You need to know what makes a successful business tick, how technology affects what you do in the modern world, and how you can best interact with your audience. Whether you’re having trouble finding customers or meeting finances, here are some things that all types of businesses should know to unleash their full potential. So, let’s not wait any longer. 

    business owner thinking about the keys to a successful business

    1. Make a Plan

    A prime key to success that drive success in business is planning. There is no way around it. It is in your best interest to dedicate considerable time to defining your vision. You have to figure out exactly what type of business you hope to create, what you want from the business, and how your offerings can meet the needs of potential customers.

    Think about why you are in business. Consider your products and services, your hiring and talent acquisition, your creative development and your marketing strategy. Each of these requires specific, not generalized, attention, where you lay out a detailed plan of attack for each step of your process and every aspect of your organization. 

    When you look at the big picture, you’ll be able to identify opportunities and set the concrete goals you need to realize business success. You might be looking to boost your income to leave a part-time job. You may want to have more money to care for parents or children. Perhaps you thrive in the creative side of things. You might be looking to implement a new tool or innovative technology, or maybe there is an established brand you’re looking to compete with. Whatever motivates you should keep you fueled while you’re creating smaller, attainable goals that move you forward.  

    It’s a great idea to write down your goals. Brainstorm with business partners and lead team members. Before you get to work, you should know exactly what you’re working towards. Use a business plan template to help you map out the framework of your business and your choices. This will speed up the process, get rid of superfluous matters and mental clutter, and keep you focused on the things that matter each day.

    Through proper planning, you’ll be able to focus on development, brand identity, rates, accountability and performance. No plan is perfect, and with time and growth comes the need to adapt and pivot your objectives occasionally. Yet, a clear plan accompanied by daily execution of that plan across every department is the difference between a business built on sound principles and one skating by on little more than excitement, blind hope and scattered efforts.

    2. Be Consistent and Create Routines

    The next thing you need to do if you want transformation for your business is something we hinted at above, and that’s consistency. You have to show up every day and work your plan to make progress. 

    You need to be consistent with your organization habits, your spending, your saving and investments, consistent in the way you treat your employees and customers, in how you handle conflict and navigate difficult relationships and in your production or service standards. When you’re consistent in all things, your team members have greater confidence in you, your business partners feel at ease with their investment, and your customers turn into loyal devotees.

    Focus on creating healthy routines. Entrepreneurs that don’t have a personal routine need to develop one. Your routines carry into your work habits. They not only keep you relaxed, rested, at ease and focused, but help you find stamina and clarity in your creative and professional efforts.

    Your routine should only take a few weeks for you to get used to. Start by rising at the same time every day. Most successful individuals follow this rule. It trains your body and mind to expect a certain schedule, and unconsciously trains your psyche to take your life and work more seriously. Rising at a consistent time establishes value, both your inherent personal value and that which lies in everything you work to achieve. 

    Make your bed every morning. This is another common habit of successful individuals. It keeps your mind less cluttered, heightens self-discipline, is another way of taking your life seriously, and unconsciously inspires you to approach everything else in your day with the same sense of deliberate thought and action. 

    Make time for your well-being, whether it be meditation, prayer, working out, or other life-giving activities. These energize us in multiple ways and prepare us for all that lies ahead. They increase our openness and accountability to others and to our own heart. Find some quiet each morning and a few pleasurable things to bring a bit of simple happiness. Sit and read quietly, drink some coffee or tea, listen to music, give yourself plenty of time for the commute so you’re not rushing and stressing yourself out. Then go to work with a clear head and a positive outlook.

    Your morning will set the tone for how your day goes. This is why you have to show up not only with focus and determination, but peace of mind and ease. 

    Make sure that you create a routine based on your personal energy cycle and professional and personal responsibilities. It will help you get things done in a way that adds to, instead of takes away from, your life.

    The key here is to create a routine that provides structure to your day while ensuring that you find some time to relax and rejuvenate. Success should be a good thing, not something that brings imbalance or unhealthy habits into our world. Look at your entire life and set priorities based on your most important values, dreams, beliefs, and relationships. 

    3. Seek Help

    There’s just so much you can do on your own. This is why it makes sense to ask for help when you need it. The worst mistake you can make as a new business owner is thinking that you can get everything done on your own. This is a quick path to burnout and failure.

    You have to understand that you can’t do everything yourself. It doesn’t matter how talented you might be. If you ask any successful business owner, they will tell you how important partners, collaborators and assistants are to your success. You’ve got to learn and be willing to delegate. 

    Begin by joining a business startup or entrepreneurs’ community to hold yourself accountable and seek valuable advice. You can speak with other entrepreneurs to find out what works and what doesn’t. 

    You should also consider finding a mentor who has overcome the challenges you are now facing. He or she can guide you in a range of matters that stretch across both professional and personal arenas. Besides, it will reduce your learning curve and provide you with the support you need. 

    In addition to the above, you should hire all the help you need as long as you can afford it. For instance, you should outsource your bookkeeping to an expert to ensure that you’re able to stay organized, remain compliant, and make the most of your finances.

    entrepreneurs working on building a successful business

    4. Prize Creativity 

    Organizations that put creativity high on their list of values tend to achieve things others do not. Too many companies dig their heels in and refuse to adapt or think creatively about problems, about advertising and marketing, about brand image, about communications, hiring, or the way they brainstorm and conduct strategy sessions. For this stubbornness, they get very little in return. 

    If you aren’t willing to rethink things, to try something new, nothing new will ever happen. Risk, albeit calculated risk, is a prime component of every successful or groundbreaking company. Try to hire talent that values creative approaches to problem solving, individuals who think creatively naturally, those that will help you and your team find out-of-the-box approaches to old problems and new endeavors alike. 

    Creativity increases your agility within your market and against your competitors. Remember, you can hold on to the values that have made you great while still championing new ways of thinking and doing that carry your business into the future. 

    5. Trust Your Gut (With a Few Caveats)

    This often doesn’t seem like good advice, especially when we’re trying to raise kids or mentor someone. But at times, it holds up. Trusting your gut isn’t about completely throwing caution to the wind, walking blindly ahead unprepared, or acting purely on emotion alone. It’s about trusting your convictions, your beliefs, trusting your most essential desires and vision for your life and business. Beyond everything else that swirls around you each day, you still need to hold on to the core of what first inspired you to begin your business, and trust those convictions to partially inform the decisions you make.

    Notice, we said, “partially inform.” Good decision making takes research, good counsel, accurate data, along with boldness and confidence in your gut. When you combine these, you’ve got a very strong framework from which to make key decisions. 

    Trusting your gut is also about knowing that while you absolutely need sound advice, accountability, and wise counsel, you shouldn’t abide by everyone else’s opinion. They have their own ideas about your company and how you should run it. Not all of these ideas are useful or even good. You’ve got to trust yourself to navigate these and separate out the good from the bad. 

    When you’re feeling confused, misguided, and overwhelmed, step back, calm yourself, and listen to your gut. Then confer with others and move forward. 

     

    In Closing

    Building and running a strong business requires so many things from us, and these requirements seem to only grow as our business grows. Thankfully, the longer you do it, and the more you surround yourself with good people and creative ideas, the better equipped you’ll be to handle just about anything. 

    Don’t forget to hone your technical skills, your people skills, adopt necessary technology, keep an eye on budgets and performance, and value creativity. There are many more successful business keys we could mention, but the short list we explored today should inspire you and get you started on your path to creating a better business. We wish you continued success in your life and work. 

    Sound Accounts helps business owners find success through better bookkeeping and sound money management. Connect with us today to learn more about partnering with us and take the stress out of bookkeeping. 

    To learn more about building a successful business, check out our frequently asked questions and answers below.

    FAQ

    What is the key to success in business?

    Well, there are many keys, not just one. The list is too long to print completely here. But some keys to succeeding in the business world are being realistic about your prospects. When you go into business, you have to make sure that you have a plan in place, no matter how much you love what you do. Although passion is important, you have to be clear-eyed and objective, if you want to outperform competitors.

    Next, it’s important to value good talent, creative thinking, continuous learning, various aspects of business security, accountability, innovation, following sound money management and accounting principles, knowing the industries you’ll be working in, building successful partnerships, developing strong relationships with team members and customers, doing exactly what you say, knowing your market and your audience in-depth, creating a great brand identity, and much more.  

    What are 10 important skills of an entrepreneur?

    If you are planning to become an entrepreneur, you’ll need to sharpen the following skills or key components:

    Sales

    Negotiation 

    Strong work ethic

    Strategic development

    Emotional intelligence

    Team Development

    Communication

    Marketing

    Leadership

    Business Finance

    What are some qualities of a good brand?

    To launch a great product or service, you need to focus on the following qualities:

    Reliability

    Design

    Engineering

    Market Positioning

    Quality Control

    Brand Story

    Communication and Marketing Strategy

    Packaging

    Deployment Strategy

    The needs that your brand meets or the problems it solves

  • How to Use Xero Accounting Software

    How to Use Xero Accounting Software

    Xero is one of the most popular accounting software programs out there. It is widely used by small businesses everywhere. If you’re a new Xero user, it is important that you learn how to make the most of this resource. In this guide to Xero accounting software, we’ll share all the information you need to get started. The following steps will allow you to manage your finances with greater ease and confidence.

    1. View the Xero Dashboard Video

    As a newbie to Xero accounting software, the first thing that you need to do is watch the Xero dashboard video to get an idea of how it works. It’s located at the top left corner and will provide you with valuable information about navigation.

    2. Enter the Business Details

    The next thing that you need to do is provide all your company details. If you are running a limited company, you’ll have to enter the registered office address and the registration number. The information you provide would be displayed on the invoices you issue clients. To enter or update the business details, you need to head over to Settings and select Organization Settings. Here is the information that you will need to provide.

    Logo

    Email

    Website

    Trading Name

    Display Name

    Physical Address

    Registered Address

    Organization Type

    Registration Number

    Phone and Fax Numbers

    Organization Description

    3. Head to the Financial Settings

    Make sure that you go to Financial Settings from Advanced Settings to provide the following information.

    VAT / Sales Tax Details: The VAT period, VAT number, and VAT scheme should be filled in.

    Financial Year End: To make sure that the right year-end appears on all of your reports, you must determine your financial year-end first. 

    business owner using xero accounting software

    4. Include Company Branding

    Another great thing that you can do with Xero accounting software is that you can add your company branding. To do so, you have to go to Invoice Settings from Settings to make sure that the invoices include your logo and payment terms. By covering your payment terms, you can improve your cash flow and encourage customers to make payments on time.

    5. Create the Chart of Accounts

    One of the main reasons why businesses rely on Xero accounting software is that it allows them to import their chart of accounts from another accounting software. Then, it’s possible to modify the chart of accounts. An accounting service provider can help you decide the chart of accounts. Otherwise, you can add, customize, and delete the accounts based on your business goals. For changing the accounts, you have to check out the Chart of Accounts in Accounting. It would enable you to customize the chart of accounts.

    6. Create the Bank Account Feed

    If you have a PayPal account and credit card, you will need to create your bank account feed. You can watch the video on this to get started.

    7. Reconcile Regularly

    Even if you don’t have much experience with bank reconciliation, Xero makes everything super easy. Within a few minutes, you can go through the pre-matched items to make sure that all your data is updated. Since Xero would be connected directly to your bank account, it would automatically pull up transactions. In fact, it even remembers when you categorize transactions. Therefore, you can click “OK” to ensure that it sticks to the category of your choice. It’s important that you reconcile your accounts every week to ensure they remain accurate.

    When you update your invoices regularly, you also benefit from a clear picture of your cash flow. With an accurate view of your cash flow, you can avoid falling behind on payments and make better decisions. You can also make use of Xero’s useful add-on apps to help you reconcile more efficiently. 

    8. Create the Payroll

    If you have employees, you’ll need to utilize Xero to create a payroll for monitoring expenses. It would provide you with access to all your payroll costs without having to go through different spreadsheets to determine total costs. Creating the payroll is straightforward. You can visit Payroll from the Payroll Overview to get started. If transferring payroll data from a different system during the financial year, you will need to add opening balances.

    9. Include Payment Services

    Small businesses that use an active payment service should link it to their Xero account. Some options include GoCardless, Stripe, and PayPal. As there are plenty of payment options to choose from, you should have no trouble finding the solution that’s right for you. All you have to do to get this going once you’ve decided on a service is head to Payment Services which is located in Invoice Settings.

    10. Create Payment Reminders

    To ensure that all your customers stay on top of their payments, you can also create payment reminders on Xero accounting software. Getting paid on time is necessary for staying afloat. By setting up payment reminders, you can expect to get paid quickly and keep your books more accurately. You can head to Invoice Reminders by opening Invoice Settings. Only if you have the habit of regularly reconciling receipts should you set up the payment reminders. If you chase payments that customers have paid, it can hurt your reputation. To avoid this, make sure to reconcile daily.

    authorized employees using xero accounting software

    11. Add More Users

    Xero accounting software also lets you add more users. To add more users, you need to head to Users from Settings. This means that you get to add the bookkeeper, accountant, and just about any other stakeholder. Here is some of the information offered by the software.

    Send Invitation to a User

    Edit a User

    Add a User’s Details

    View Your Xero Users

    12. Generate Basic Reports

    To unleash the potential of Xero accounting software, you need to know how to generate basic reports. Only when you have entered the data will you be able to put these reports to good use. You can view the Profit and Loss, Balance Sheet, Aged Payables, and Aged Receivables. Visit Reports in Accounting for more options.

    13. Connect Apps

    Lastly, you can connect apps to the Xero accounting software. It offers a variety of add-ons and apps that you can leverage for streamlining processes and saving time. You can view the apps for performing a variety of functions such as document management and cash flow forecasting. Check out the Xero app marketplace to find out more. By connecting Xero to apps, you can get more out of the software.

    Conclusion

    Now that you know how to use Xero accounting software, you can get started. There is a lot you can do with this incredible tool. It’s a strong choice for many businesses. However, it is still important that you partner with a great bookkeeping service provider to help you plan ahead and make the most of your financial data. 

    Sound Accounts helps business owners manage their finances and put their data to work for them. We’ll stay on top of your bookkeeping so you can rest easy and have the knowledge you need to make excellent business decisions. Connect with us today to get started. 

    Check out our frequently asked questions below for more information about accounting software and bookkeeping. 

    FAQ

    What does Xero accounting software do?

    There is a lot that you can do with Xero accounting software. If you haven’t used it yet, you’re missing out. It is a cloud-based accounting software, designed to help small businesses manage all their finances. You can rely on it for performing bookkeeping functions such as payroll and invoicing. It can even be connected with apps and your bank accounts. You’ll have access to just about every type of information you could possibly need.

    Which is better, Xero or QuickBooks?

    Since Xero and QuickBooks are both extremely popular, chances are that you are wondering which

    software is better. It is important you understand that these two applications are designed for different purposes. Xero is a powerful accounting software that caters to small businesses that require simple navigation and processes. On the other hand, QuickBooks is designed for businesses that have an accountant on board and prioritize scalability. Therefore, it is difficult to claim that one is better than the other. It all comes down to your requirements.

    Is Xero difficult to learn?

    The best thing about Xero accounting software is that it’s easy to use. Unlike most accounting software solutions, it is relatively straightforward and doesn’t require accounting expertise. This means that you should get the hang of it within a few days. Besides, Xero even has a training portal that offers courses which you can take to learn how to navigate within the program. The learning programs do not require any prior knowledge and teach you everything you need from the ground up..

    How Much Does It Cost To Set Up Xero?

    You can decide whether to use either the free version of Xero or the paid version. If you want more features, you will need to spend at least $13.50 a month. However, it is well worth the cost.

    Do I still need a bookkeeper or bookkeeping service if I use Xero?

    Although it isn’t necessary just to use Xero,  you will need one to make sense of the reports and help you plan ahead. He, she, or they can manage your payroll, produce graphs, spot hidden details and issues, and make projections to ensure that you’re getting the most from your software. 

  • The top 3 financial reports every small business owner must know

    The top 3 financial reports every small business owner must know

    When starting a company or managing a business, it’s easy to overlook certain things. Our hands are full of so many concerns. One thing you should never forget is your finances. Not only do major corporations need to keep an eye on their numbers, but the success of small business owners depends heavily on managing resources well and gaining a deep understanding of reports and analytics. 

    The numbers tell us about the financial health of our company in multiple areas. Only when you have the right information, can you expect to make the right business decisions. This affects decisions like when to hire someone, the purchase of inventory, market pricing, departmental resource allocation, new investments, product development, and expansion. Although bank statements might provide some level of insight into your financials, they are just never going to be enough to manage a business effectively.

    You need in-depth metrics to make sense of many factors, like determining how long your company can survive without cash and how long it takes for sales to bring cash, referred to as the cash conversion cycle. 

    If you want a comprehensive understanding of your business’s financial health, there are a few reports that every small business owner needs to understand. These include a balance sheet, income statement, and a statement of cash flow. Each of these provides valuable data for assisting with key decision-making.

    These three financial reports are interrelated and you need to understand each of them to unlock the true potential of your business. Let’s take a brief look at each one. 

    1. Balance Sheet

    One of the most important financial reports that you need to understand is your balance sheet. It reveals what you own in comparison to what you owe. A quick glance at a balance sheet will show you the value of your company’s assets at a specific date (i.e. today), the money that debtors owe you, and how much you owe creditors. In addition to this, it would also mention initial investments and equity over time.

    In order for a balance sheet to be considered accurate, it must balance. This means that both sides of the report have to balance. Keep in mind that the money you borrow would be considered both a liability and an asset, as it would appear on both sides of the balance sheet. For instance, if you take a 3-year loan of $5,000 from your bank, it would appear in the financial report as $5,000 in cash and $5,000 in liabilities. Thus, the equation would balance the statement.

    The following equation is used for preparing an entire balance sheet.

    Assets = Equity + Liabilities

    To better understand a balance sheet, you should view it in personal terms. We all have a balance sheet in our lives. Our personal balance sheets include how much money we owe on a mortgage, credit card bills, interest on student loans, and the cash in our bank accounts. The same goes for your business. Cash refers to the money that you have on hand, whereas, accounts receivable is how much money you are entitled to receive for providing a product or service. It is vital that you keep an eye on this number.

    For instance, when you provide products on credit terms, your accounts receivable would be much higher than your cash at hand. Perhaps your clients might default on payments. In such a situation, you should consider charging a retainer, especially when dealing with first-timers.

    Inventory is an asset that you can sell to receive cash. Similarly, prepaid expenses such as marketing and rent are also an asset. On the other hand, liabilities are on the opposite side of the equation and account for what you owe. The two most common liabilities that small businesses have are accounts payable and credit. The amount is owed to suppliers and vendors. Then, there is equity, which serves as your net worth. It is defined as the difference between what you own and what you owe. Hence, you can learn a lot about a company by viewing its balance sheet. You need to find out if the debt owed is higher than the assets owned. Moreover, you also have to know how long it would take for sales to convert into cash.

    Some additional important information that you can obtain from the balance sheet is mentioned below.

    Cash Conversion Cycle: This ratio determines how long it takes for sales to provide cash. It is important as it allows you to find out whether to trade in cash only or provide credit terms.

    Working Capital: It is calculated by deducting current liabilities from current assets. The formula is used for finding out how much money you have for daily operations.

    Debt Ratio: This is used to find the ratio of debt to assets.

    Sales and Inventory Ratios: If you hold inventory, you can use these ratios to find out how quickly the inventory converts into cash after-sales.

    business owner working with their top 3 financial reports

    2. Income Statement

    The next financial report that you need to know is your income statement. It is used for determining profit or loss over time, usually a year. An income statement is necessary for finding out if a business is profitable or not. It includes sales, cost of goods sold, and operating expenses. Every entrepreneur has to know how to read an income statement to better understand the finer points of their finances. There are two sets of transactions that are mentioned in this financial report. They include operating revenue and expenses which relate to the cost incurred for directly generating the revenue and non-operating expenses such as tax.

    A great thing about an income statement is that you can easily adjust it to suit your requirements. Whether you require an income statement for a month or a year, you should be able to generate it for the desired period using accounting software. For instance, if you have two revenue streams, which include cosmetics and hair products, you can create an income statement to find out how much profit each product is generating for you. The following are some crucial indicators that you need to evaluate using your income statement.

    Burn Rate: This is the amount of money a business loses each month. Specifically, it measures how long it takes you to spend money on the business.

    Net Profit Growth Rate: It measures the increase or decrease in revenue by comparing two income statements.

    Net Profit Margin: It is the ratio of net profit to sales revenue.

    3. Statement of Cash Flow

    Lastly, you’ll need to know what a statement of cash flow has to offer. Small business owners tend to neglect this integral financial report and simply focus on the income statement and balance sheet. However, it can make or break a business. The statement of cash flow maps out how cash and cash equivalents enter your business and leave. It merges both the balance and income statement to provide valuable insights.

    A valuable metric that you need to calculate using the statement of cash flow includes sources of cash. It allows you to find out how much money you are receiving within a given period and where the money originates. You might accumulate money by getting a loan, fundraising, selling stock, or through sales. Negative cash flow would indicate that your business is having trouble meeting expenses. This is why it’s important that you learn to better manage your cash flow, as it would serve as a cushion for your continued efforts.  

    The statement of cash flow provides an overview into where cash is coming from and where it is going, which you cannot expect to determine with an income statement alone. For instance, when your bank account has a large deposit, it doesn’t mean your sales have increased. Instead, you might have taken out a loan. There is plenty of information you can gather with a statement of cash flow. Never underestimate its importance. 

    business owner using his top 3 financial reports

    Conclusion

    Each of the above financial statements is necessary for evaluating the performance of your small business. You can use the information for making both short-term and long-term decisions. In addition to this, the bank will ask you to submit these statements to determine if you qualify for a loan or not. When you immerse yourself in accounting, you get to gather valuable insights. With professional bookkeeping services, you get to hire an expert to prepare these three financial reports for your business so that you can make the best decisions.

    Sound Accounts is your ideal small business bookkeeping partner. We help business owners from every market sector organize, analyze, and capitalize on their financial info. Contact us today and discover the difference excellent bookkeeping and financial knowledge can have on your growth. 

    Check out our frequently asked questions below for quick information about taking advantage of your financial reports. 

    FAQ

    Why is it important to monitor and understand my financial reports?

    Using your accounting software and partnering with your bookkeeper to print and analyze your reports gives you the vital information you need to see your current performance clearly, uncover problems, reallocate funds, spot trends, and make decisions for growth with much more accuracy. 

    Financial reports include an incredible amount of data related to your spending, debts, assets, investments, departmental performance, revenue and so much more. There is simply no way of accurately or confidently managing a business without a clear understanding of every aspect of your company’s finances. 

    Besides the three important reports mentioned above, what are some other financial reports I should always be aware of?

    Some other good reports include Accounts Receivable, Net Profit Margin Over Time, Budget vs. Actual Report, AR Days vs. AP Days and more. 

    How do I make sure I’m making the most of my financial reports?

    You should be tracking your info and studying it consistently, preferably on a daily basis. Set aside time each day to focus on your financial health and toward making projections and decisions based upon the information gathered. 

    Most of all, it’s a good idea to partner with an experienced bookkeeper to help you make sense of your data, spot details you may overlook, explain financial info in easily understood ways, and help you decide on a plan of action for the next season. 

  • 5 Secrets of the Most Profitable Companies

    5 Secrets of the Most Profitable Companies

    Running a business isn’t easy. When you start a new company, you are unlikely to know everything there is to know about consistent success. However, there are a few secrets that every great company knows. If you want to overcome challenges that arise and take your company to the next level, here are 5 of the top secrets of the most profitable companies you need to know.

    1. Communicate from the Core

    One of the main secrets of the most profitable companies is that they communicate from the inside out. They regularly ask themselves why they are doing what it is they’re doing. Spend some time thinking about why you wanted to be in business in the first place and what your customers care about. In order to become a popular brand, you need to have a purposeful mission statement that attracts customers and encourages them to take an interest. Although people can live without a service or product, you need to prove to them that what you are offering matters through your mission and vision.

    A statement isn’t enough, though. You need to orient your business in such a way that your decisions align with your mission at each level and within each department. People will always gravitate toward genuine passion and vision. They can smell a fake and just as easily spot the genuine article. People want something to believe in, something to rally around. The best brands, business owners and brand managers, understand this. Putting your focus and energy behind something that brings you satisfaction and meaning has a way of rubbing off on others. And often, they’ll stay customers for life.

    When Apple launches new products, it describes its vision which instantly attracts people to take an interest. For instance, when Apple recently launched the new MacBook, it claimed that it wanted to engineer the lightest Mac notebook ever and managed to do the impossible. If there is one thing that you can learn from Apple, it is the fact that it engages its target audience by first promising something incredible, then by proving to them that it can conquer the impossible and provide them with the best product. It prioritizes the needs of its users to develop easy-to-use products that are a class apart. In short, speak from the heart, communicate clear objectives, only promise what you’re confident you can deliver, rally others toward your cause, and then deliver time and again.

    2. Do away with poor performers and invest in the promising ones

    Another secret that you need to know if you want your company to be profitable is to get rid of poor performers. Although this might sound harsh, you need to create the best working environment to ensure that your company grows. This means that you simply cannot let someone’s negativity affect everyone’s performance. By having the weakest links exit the building, the complainers and the ones always looking to pick apart the mission, you’re doing everyone a favor. Keeping the best improves productivity, creativity, trust, and loyalty. 

    Most of the successful companies would not be where they are today if they kept workers who only complained and failed to provide results consistently. On the flip-side, invest heavily in the development of talent that shows promise, even those who might be lagging behind but are hungry for growth and change. 

    business owners discussing secrets of the most profitable companies

    3. Walk It Out

    Quite often, you might feel stuck. Although it’s perfectly normal to feel like your business is not going anywhere, you need to do something about it. Don’t let the waves of worry and negativity take over. Think about it, run solutions and act decisively. Interestingly enough, there is a way to help this process along. Before you take on any task, you should consider, quite literally, walking it out. Studies show that exercise goes a long way in improving your decision-making skills. It allows you to think creatively by organizing your thoughts, cleaning out distraction and stress, and focusing you in new ways. 

    Now, you don’t need to head to the gym for a heavy workout. You just need to take a quick walk around your office a few times. It will work wonders. In fact, you should even encourage employees to stretch their legs when they feel stuck. It is also a good idea to host walking meetings. All you need is 4 to 6 people to brainstorm some amazing ideas. To avoid overexertion, you need to ensure the meeting does not exceed 30 minutes. Physical movement is a catalyst for cognitive movement. Creativity blossoms when the body gets working. 

    4. Be Transparent

    A secret that you will notice every profitable company follows is being transparent. The fact is that customers today value transparency more than ever before. This is why it is important that you open up about methods and processes. Now, transparency does not mean that you need to share your trade secrets. It simply requires you to be honest about your business operations. If you want customers to purchase from you repeatedly, they need to be able to trust you and have faith in your mission and product or service. Information sharing and openness go a long way in helping establish trust and loyalty.

    When you mess up, don’t hide it or try to candy-coat it. Say it like it is. Be direct. Present the necessary facts, the sincere apology and your clear plan for fixing it. Oftentimes, with brands, there is a kind of “family” dynamic going on with your audience. Be open and generous. Most will stick with you when they see your character in action. 

    5. Encourage Employees to be Creative

    Original thinking is necessary for an organization to be profitable. Too many business owners, in an effort to control everything, try to micromanage their staff, keeping them from the freedom, space, and engagement needed to develop original ideas. Encourage your people to get creative. Communicate creative thoughts and ideas even if they don’t immediately seem great. Sometimes, ideas take time and other minds to get to their greatest manifestation. 

    Don’t be afraid to spend a bit for this, to dedicate time and other resources to allow creativity to flourish. For instance, Google allows its engineers to spend time working on projects they are passionate about. This allows the company to come up with unique services. Free up your people. It will come back to you with new products, greater productivity, and a happier workplace. 

    Conclusion

    Of course, this isn’t an exhaustive list. There are many more secrets of great businesses. We’ll dive into more of them in future articles. It’s important, though, for you to grasp the keys to building a strong, trusted, innovative business, one that attracts customers, builds loyalty, and continues to develop itself and its services. Many have gone before us. We may as well learn as much as we can from them, both their failures and successes. 

    Sound Accounts cares about the success of your business. We help business owners gain the edge they need with individually tailored bookkeeping service packages. We take care of your bookkeeping needs so you can take care of your business. Connect with us today to learn more. 

    For answers to a few of your business management questions, check out our FAQs below. 

    FAQ

    What sets the most profitable companies apart from so many others?

    It’s definitely a host of things. But many of the fundamentals are consistent across the line, transparency and openness with customers and employees, consistent follow-through, encouraging creative thought and original ideas, rest and movement (mild exercise), ousting poor performers while investing in promising talent, and putting your efforts behind products and services you’re passionate about. 

    What are some things to always avoid?

    Don’t promise what you can’t deliver. If you need to wait a bit longer, do so. Solidify your objectives, and communicate clearly when you’re ready to present new things. Don’t get stingy with investing in new talent and in creating an environment where freethought can thrive. Pour into your talent pool, reward them, and build their confidence. 

    Don’t get hammered by poor lifestyle choices like unhealthy eating, a lack of exercise, too much alcohol, or avoiding time with loved ones. Your business and brand will reflect your own life and health. Be good to yourself and it will bring new life to your professional efforts. 

    How can I be sure I’m staying on the right path in my business?

    Find a good mentor. Look for someone who has shown repeated success for many years, both in business and in their personal life. You want someone who values integrity, quality, creativity, personal health, transparency, loyalty, and tenacity. 

    Even if you’re paying for their time, an amazing mentor and consultant with years of experience can often be the voice you need to help you dial in the finer details.  Make sure it’s someone with no agenda except to see you develop. You don’t want someone looking to recreate your business in their image but someone who wants the best for you and your company. 

  • Guide to Free Accounting Software

    Guide to Free Accounting Software

    Whether it’s about getting more organized, keeping better records, tracking cash flow and tracking expenses, making better use of your financial statements, or finally contracting a professional bookkeeping service, developing a strong bookkeeping strategy will always change your business for the better and often enable you to grow in ways you didn’t previously have access to. 

    It’s important that, as business owners, we take full advantage of technologies that might give us a leg up in our efforts. One area that often needs an upgrade is in our bookkeeping and money management. One affordable way to get a better handle on things, especially when you’re just starting out or fairly new, is picking up a good accounting software. 

    While free options will not be as robust as paid choices like QuickBooks or Xero, several no-cost options exist that offer a range of possibilities for business owners hoping to better manage their books, simply handle invoicing with ease or take advantage of the sleek workflow and automated data organization that comes with accounting software. Let’s look at 4 choices for free invoicing or free accounting software in 2022. 

    1. Wave

    A top choice, Wave is a web-based software, which means you can access your account from anywhere with an internet connection. It may lack some advanced features, but it’s no slouch. Wave gives you the ability to connect unlimited credit card and bank accounts, and track income and expenses. You’ll also have the capability of invoicing clients and partners and scan receipts as well. 

    Some additional Wave features include:

    Journal transactions

    Bill and invoice reminders

    Payments made in foreign currency

    Customizable sales tax

    Customizable income and expense categories

    Double-entry software

    The ability to run multiple businesses through one account

    Exportable Accounting Reports

    Another great perk of Wave software is its security. It packs 256-bit SSL encryption and data backup. You’ll also get support via email, along with helpful hints from their blog, forum, and help center. Lastly, Wave expands your options by offering free add-ons like Wave Invoicing or pay-as-you-go add-ons like Payroll by Wave, that enhance your experience and give you more control over your accounting. 

    As with any product, Wave does have a few drawbacks. It carries few tax capabilities and isn’t ideal for larger companies. Still, Wave, with its strong security, thorough collection of benefits and add-ons and ease of access, makes it one of the best choices for free accounting software. 

    2. ZipBooks

    ZipBooks contains most of the features you need for basic business bookkeeping, like expense management, bank syncing, billing, invoicing, and even reports. Additional features include bank reconciliation, auto-categorization, tagging and more, plus a wide range of detailed reports. ZipBooks helps you accomplish even more with data-driven insights to enable you to make the most of your financial reports. With greater financial intelligence comes better business decisions. 

    ZipBooks offers an automated payroll option via a link with Gusto. You’ll need to subscribe with Gusto, which starts at $39 a month plus $6 per person per month. While this means an extra expense for you, Gusto is a great service that many business owners swear by. And paired with ZipBooks, can really streamline your payroll management. If you’re hoping to make online payments to your invoiced customers, you’ll need to use Square or PayPal and pay the associated fees. 

    ZipBooks is an above average choice for free accounting software. With several built-in features and some of the best intelligence and reporting insights of any free software, it’s an excellent program for many businesses. Learn more about ZipBooks here.

    business owner using free accounting software

    3. CloudBooks

    This one is sort of a cross between no-cost and low-cost. You can use CloudBooks to invoice, track expenses, create estimates, track time, easily communicate with your entire team, assign tasks, run projects, and more. However, you’ll need to upgrade and pay a very reasonable fee of $10 per month if you’d like to send more than 5 invoices, offer payments online for your invoices or brand your materials. 

    For help, you can contact CloudBooks by email or even phone. They also keep a regular blog going with some great articles, featuring not only helpful hints about using CloudBooks, but timely posts about business, accounting, media, and marketing. Check out and sign up for CloudBooks here. 

    4. Zoho Invoice

    This self-admitted “forever-free” tool is an excellent choice for small business owners looking to create and manage invoices and collect payments, all with ease. Customize your templates with brand-specific choices, track expenses, communicate with customers using your client portal, create estimates, and run time-tracking on project billing.

    Zoho is trusted by a wide range of businesses and entrepreneurs for its ease and automation. Everyone from freelancers, musicians and artists, to designers, lawyers, consultants, non-profit organizations, taxi and transportation, medical, travel and tourism, and everyone in-between, are using Zoho to manage their invoicing and payments. 

    At its heart, Zoho isn’t just one, but a suite of apps, designed to help you manage your business better in just about every way. Their offerings include programs like Zoho Books, which goes beyond invoicing to include everything you need for complete bookkeeping. From there you get to choose programs or subscribe to the entire suite and gain a serious selection of features that allow you to email, invoice, manage bookkeeping, create and track marketing campaigns, manage projects, design, handle customer service and sales pipeline oversight, and book appointments. 

    Zoho is customizable, features great mobile apps, and its interface is attractive and mostly intuitive. They’ve also made considerable upgrades over the past few years, allowing for a greater level of control and customization. 

    Free for the basic service of Zoho Invoice, which includes one user, if you’d like to step up, which will be necessary for many if not most users, there are a range of paid Zoho Invoice plans, with a graduated system of features and pricing. From there, you can move into Zoho’s wider range of business products, requiring anywhere from $30 to $250 per month for a comprehensive suite of management tools to help you take care of just about anything. 

    Conclusion

    This is by no means an exhaustive list. And we’ll look at another set of free software options in the near future. But this should at least inspire you to take a look at bookkeeping or invoicing software if you’re not already taking advantage of the features and benefits of today’s available technologies. 

    Remember, though, no program is a full substitute for an experienced bookkeeper. It’s important to create bookkeeping habits and strategies that are sustainable, comprehensive, easy-to-follow, and cover everything. A bookkeeper can make this happen for you and take the burden off your shoulders. 

    Sound Accounts helps companies from all sectors achieve greater productivity with a range of superb bookkeeping services. Don’t leave your finances to chance. Reach out today to see the difference great bookkeeping makes in your business. 

    For quick answers to questions about free accounting software, see our frequently asked questions below. 

    FAQ

    Is accounting software right for me?

    The answer to this depends on a few things. It’s really never a bad idea to pick up a quality bookkeeping management tool. These programs, whether you’re handling your own books or outsourcing, can give you quick access to basic accounting tools and a range of reports. Not to mention keeping your records organized.

     How do I choose the best software for me?

    There probably isn’t a “perfect” software for any business owner. So many of them will work just fine for most companies. It comes down to which features you need, the ease of use and the style of navigation you prefer, and how customizable your options are. You’ll also need to determine which is better for your success, a good free version or a more comprehensive paid program. 

    Is accounting software a good replacement for a bookkeeper?

    The short answer is no! While very small businesses, say one or two people, especially ones with a very basic business model, a limited range of expenses, and few customers, can manage their own books using accounting software and good habits, most growing businesses need to eventually transition to some kind of professional bookkeeping help. This might be an in-house employee or even the more versatile outsourced bookkeeping service, which offers you exactly the services you need at a price you can afford. 

  • 5 Small Business Bookkeeping Myths

    Small business bookkeeping is sometimes a contentious subject, with business owners digging in hard to set up camp on their own chosen side. Some swear by staff help, others love the ease of contracting with an outside service. Still, there are those who only want to handle it themselves. 

    There are definite pros and cons for each. And within each one, a range of responsibilities, inherent to that particular approach. Whatever your chosen bookkeeping path, it’s clear that great bookkeeping is essential for professional success. It’s also clear there is a great deal of misunderstanding surrounding the subject. Let’s look at 5 small business bookkeeping myths that often trip up business owners and how to approach them instead. 

    Myth #1 Bookkeeping is Just Data Entry

    To be sure, there is a fair amount of data entry involved in the bookkeeping process. If you’re doing it the old-fashioned way, with ledgers and notebooks, you’ll be writing down a lot of information each day. If you’re using software, it will save you a lot of time but still require you to enter certain information and go over your reports regularly. 

    But bookkeeping isn’t just entering information, it’s a lot more. It involves keeping track of and reconciling bank accounts, organizing and filing receipts and invoices, tracking expenses and payroll, understanding cash flow, credit and debt, following up with customers, partners and vendors to go over payments, verifying costs, fixing accounting errors, preparing you for business taxes, understanding capital, preparing you for an audit if necessary, and doing an analysis of detailed financial statements and reports to ensure overall financial health.. 

    Proper bookkeeping can mean the difference between a business that loses money, is prone to audits, and wanders aimlessly and one with a clear vision, well-managed finances, and a structured path toward growth. 

    business owners thinking about bookkeeping myths

    Myth #2 Bookkeeping is Expensive

    Another myth that often keeps business owners frantically trying to manage their own bookkeeping is the idea that bookkeepers are expensive. With an annual average between $30,000 and $60,000 for in-house bookkeepers, the truth is more reasonable. Beyond this, many small businesses, especially when starting out, don’t need full-time bookkeepers and would do just fine with part-time help. 

    When it comes to outsourcing, you get to pay for exactly the services or time you need. Bookkeeping service providers usually offer a range of options to meet the varying needs and budgets of their clients. So you get top-notch industry experience and the support you need without having to go through the hiring process or setting up an office. 

    Myth #3 I’m Giving Up Too Much Control

    A common belief is that outsourcing to a professional bookkeeping service means losing control of your business and finances. This couldn’t be further from the truth. Professional bookkeeping firms stake the success of their business in being trustworthy, consistent, organized, transparent, and good communicators. 

    They take data safety seriously and use a host of technologies and best practices to ensure your company’s info is protected. Bookkeeping service providers work with you to make the most of your financial management, helping you make more informed decisions and allowing you to focus on core management activities instead of using up time on bookkeeping activities. If anything, bookkeepers enable and empower you to gain greater control with more time, a clear vision, and more focused financial choices that lead to business success.

    Myth #4 You Only Need Bookkeeping Help During Tax Time

    It’s true that bookkeepers can be lifesavers during tax season, especially for small business owners who already have a lot to deal with. But if you neglect taking advantage of the organization, expertise, analysis, and advice provided by great bookkeepers throughout the year, tax time is likely to be fraught with problems, missing paperwork and records, and a lot of stress. 

    Having a bookkeeper throughout the year means your books are maintained accurately every single day. Your records are always in order. Accounting mistakes are caught early and fixed quickly, and you ensure that taxes are paid accurately and on time. Bookkeepers also help you find the maximum deductions so you end up saving money. 

    Additionally, gearing your financial focus simply around tax season is a bad idea. Your bookkeeper’s knowledge is invaluable. You’ll be able to partner with them to put your financial reports to better use, helping you streamline spending, hire more strategically, reorganize under-performing departments, and invest with greater clarity. 

    business manager's bookkeeping ledger sitting open

    Myth #5: Bookkeeping is Simple Work; I Can Handle it Myself

    It is occasionally true that there are business owners with bookkeeping training who successfully manage their own books. But this is rare and also applies mainly to companies where the business owners themselves are the only employee, or one of only a few staff members. 

    Most of the time, business owners find that bookkeeping takes more time and focus than they’d like to be spending. They find that their attention is pulled away from management tasks toward bookkeeping needs. They also discover that bookkeeping is a lot more than data entry and keeping a box of receipts. It involves consistent follow-through, good organization, analytical skills, a grasp of tax laws and details, and a desire to understand the nuances of financial data. 

    Contracting a bookkeeper means you get to lead your company instead of being stuck catching up on the books. It means you won’t miss a beat, not only during tax time, but every day. They’ll help you avoid repeat audits and use your financial data to grow your business. Bookkeepers are partners in helping you develop your dream further. While bookkeeping might seem dry and boring to you. To them, it’s an opportunity to help business owners achieve more of their goals. 

    Sound Accounts is your ideal bookkeeping specialist. We help businesses reach the next level of their development with comprehensive bookkeeping support. Contact us today to get started.

    For quick answers to bookkeeping questions, check out our FAQs below. 

    FAQ

    Why is bookkeeping so important for small businesses?

    Bookkeeping ensures organized records, prepares you for taxes, helps you avoid mistakes and penalties, enables you to make better financial decisions, gives you a clear view of performance and all aspects of your business, and equips you with the knowledge you need to move forward more objectively. 

    Is hiring a professional bookkeeper right for me?

    Most of the time, yes. Professional bookkeepers take care of managing your books and financial reports, allowing you to focus on management and leadership concerns. This lowers your stress, frees up time, helps you avoid costly mistakes and keeps you informed on performance and areas of opportunity. 

    Which is better for me, an in-house or outsourced bookkeeper?

    There are several things to consider: the amount of work needed, your budget, your ability to outfit a new office and pay benefits, the desire to have someone down the hall or across town and much more. 

    In-house bookkeepers can be great, but outsourcing is often the right move. You get all the upsides of a dedicated and experienced bookkeeper without having to pay a full salary, benefits or preparing an office with all its expenses. Bookkeeping service providers already have their own equipment and technology and establish their reputation on providing consistent service and a trustworthy relationship.