Is Your Book Keeping Up to Scratch?

Do you know how much profit your business is making?
By Wizard of Ads Partner & CEO/CFO of Wizard of Ads Australia, Angela Arthur 

"Revenue and profitability should be tracked on at least a monthly basis."

As an accountant, when dealing with small businesses, it never ceases to astound me just how many business owners have no idea of what sort of profit they are making or if indeed they are making any profit at all. They go about their business with limited knowledge as to how financially healthy it is. They work very hard in their business, but neglect to work on their business.

In this age of technology, it is amazing how many clients, still come to their accountants at the end of a financial year with manual cash books and bank statements. The accountant dutifully prepares a set of financial statements and tax return and the client trots off for another year of business. You could ask these clients at any time during this year how their profit is going, and they wouldn't have a clue.

If you really want to be successful in business, you need to pull your head out of the sand and start keeping creditable records.

Invest in Quickbooks or MYOB and either hire a book keeper or learn how to do it yourself. Revenue and profitability should be tracked on at least a monthly basis. Once you start keeping these records, you will be surprised at how useful this information can be. You will start to gain a better understanding of the ebbs and flows of your business and you will probably even start questioning aspects of your business. The information will also allow you to measure key performance indicators and compare them to benchmarks for your industry.

Once you are fully aware of what your profit is on a monthly basis, you are in a much better position to make business goals and plans for the future. You will have a very clear picture of where your business is today and this in turn will make it easier to set goals for one, five and even ten years time. You can then develop a business plan and piece together how to achieve it.