As a small business owner, you wear a dozen hats. You are the CEO, the janitor, the web designer, customer service agent, head of sales and marketing—and of course, the finance guru.
And while you know that managing your finances is an important piece of being a successful business owner, it’s common to let this task slip to the back burner. And who can blame you? Maybe you don't feel comfortable with numbers, or maybe or the process seems impossibly overwhelming. And after a long day, it’s the last thing you want to do.
Unfortunately, putting it off for one day can easily turn into a week and then months before you sit down and organize your receipts.
Maintaining healthy books doesn't have to be time-consuming. And although it seems daunting and confusing, today’s technology has made the process relatively simple.
My rule of thumb is that the moment you spend your first dollar on your business, you need to start tracking your spending.
When bookkeeping matters most
When it comes to your business, managing your finances using a bookkeeping program will change your business mindset. It will shift your perspective from treating your company like a hobby to honoring it like a business. A business that is meant to both support your current lifestyle and help you work toward your dream. In addition to your mindset, there are three practical reasons why you want to keep a healthy set of books.When you want to secure financing
If you hope to get a loan or funding from an investor, they will want to see comprehensive financial reports that are as accurate as possible. A bookkeeping program allows you to run these reports quickly and demonstrates that you are serious about your business.During the quarterly and annual tax filing period
At some point, you'll want to hire a tax professional. The more difficult it is for them to gather the data from different sources like your Excel, credit card and bank statements and MINDBODY software, the more time the work will take them. And that means it will cost you more money to work with them.When you want to take your business to the next level
An accounting program keeps all of your information in one place, so you can figure out the best ways to grow your business and create a sound financial plan. Every business has seasons of great cash flow and lull periods. You’ll need to have this information on hand so you can make key decisions. Financial records are especially helpful when you're ready to expand and offer a new service or product. Expansion requires a significant upfront cost, and sometimes it doesn’t make sense if the cash won’t be there. Looking at historical data will help you create a plan and strategize how to best scale your business.
3 steps to keep your finances healthyBegin with separating your business and personal finances
Separating your finances makes it easier to file your taxes, but it's also important for creating a budget and designing a strategy to take your business to the next level. For example, if you are a yoga studio owner and you want to plan a big marketing push during your busy season, reviewing your previous years’ financials will give you an indication of when your community increases their yoga package purchases. You may think that January is your busiest time, with New Year’s fitness resolutions,, but after reviewing your books, you may realize that the spring is your most profitable season. Instead of spending marketing dollars during December and January, you should spread those expenses over into March and April as well.Choose a bookkeeping program
The next step is to use a system that will keep all of your financial information in one place. Using Excel or pen and paper will lead to human errors, and transferring that information to your accountant or to your tax filing form can be difficult. Using a program like Xero, which integrates with MINDBODY*, will give you the ability to do payroll on the go and reconcile your transactions anywhere in the world, including from the comfort of your own home.Establish a weekly bookkeeping date
The final step is to establish and stick to a routine of managing your finances. Separating your business and personal finances and setting up your bookkeeping program will only take you so far. Now, it’s time to maintain your books in order to keep your finances healthy. Choose one day a week where you will set aside thirty minutes to one hour to categorize your expenses, review and pay upcoming bills, and address any reconciled client accounts. Doing it once a week will keep everything manageable and less overwhelming.*The Xero + MINDBODY integration is currently only available to customers in Australia and New Zealand. It is coming soon to US and UK customers.