Archive for Accounting

Data Overload

Businesses run on data and we live in a data-saturated world these days.

Even for those of us who are information junkies like me, there are days when it can be overwhelming.

Sales revenue, marketing costs, social media A/B split testing, cost of goods, lead conversions, email campaign bounce rates…the list of available business data is immense.

As small business owners, we have to figure out how to assess which data is important & useful, and which is not.

If we’re overwhelmed, the data we accumulate isn’t going to do us any good because we’re not going to process it effectively or use it timely.

Data vs. Information

Here’s the secret to surviving this mountain of data:

  • Learn to distinguish between data and information.
  • Identify the information that you need to run your business today and focus on getting that in a format you can use.

Every Business is Different

Even if they’re in the same industry, individual entrepreneurs run their day to day operations differently and will have various Key Performance Indicators (KPI’s) that tell them how well their businesses are running.

As an entrepreneur, the trick is to decide what your business’ KPIs are and focus on tracking and analyzing them regularly. Doing so will support better decision-making and promote your business’ success.

Identify the Information You Really Need To Know

Start with looking at the type of business you are in and assess the data what will help make it profitable.

For instance:

  • If you own a construction company, your ability to estimate, monitor and control job costs will be critical. What numbers do you need to track that accurately and timely?

  • If you’re in Real Estate Sales, you’ll want to know how successful you are at converting new leads into sales and what the typical timeline is to do so. You’ll also want to know how much it costs you in time and money to close the sale.

  • If you’re an online retailer, you’ll need to know how your website is performing:
    • how do people find you, how long do they stay?
    • how long does it take for your pages to load?
    • are they new or repeat site visitors?
    • how many pages do they view?
    • do they buy or leave?

And that’s just for a start.

Customize Your Reports

As small business owners, we need to make decisions quickly, but effectively – which means we need clear and accurate information. Whether it is up to the minute sales reporting, current conversion rates on an online ad campaign we’re running or accurate cash flow forecasts, we need the information to be available and easy for us to evaluate while we’re juggling all our other responsibilities.

So identify your key information and design report that help you, as the business owner, to manage and make quality decisions.

These aren’t necessarily the built-in reports your accounting software will generate or that google analytics will supply. You’ll need to customize reports to your needs.

It’s well worth investing some time in this…it’ll save you time in the long run and make it easy to see what you really need to know.

This way you’ll also be able to spot opportunities and problems early. Old data isn’t much help in our rapidly moving business climate, so it also needs to be easy for you to access. Whenever possible, try to automate the report so you get it on a timely basis.

© AskConny.com

Should You Hire a Bookkeeper?

bookkeeping ledgerThe answer is probably yes – particularly if you don’t have any knowledge of accounting or how to deal with more challenging topics such as payroll taxes. Bookkeeping software can make it deceptively easy to think you are keeping good quality accounting records, but accuracy involves much more than the ability to enter checks and deposits. Cleaning up a badly organized or incorrectly set up file later can be both costly and time consuming; much better to get it off to the right start when you set it up.

Spending the money to hire or outsource quality bookkeeping services is some of the best money you can spend. Not properly accounting for your revenue, expenses and capital expenditures can cost you money in any number of ways, including:

  • missing expenses you can deduct for tax purposes, effectively raising your tax bill
  • not sending invoices and statements out on a timely basis means it will take longer to be paid and negatively impact your cash flow
  • falling behind on the bookkeeping will result in you not having an accurate snapshot of the financial state of your business
  • spending so much time on the details may blind you to the strategic issues for your business – the old “can’t see the forest for the trees” analogy definitely applies here
  • errors with mishandled payroll or sales taxes can result in significant fines and penalties
  • using your time to do bookkeeping probably isn’t the most productive use of your time from a business growth standpoint

Use a good quality bookkeeping software program such as QuickBooks and hire or outsource the task of using it to someone qualified to do so and who understands how to use the program to its best advantage for you. QuickBooks also offers you the opportunity to backup your data online so that you are protected in the event your business suffers a disaster. If you can’t find someone locally, consider the options available on a “virtual” basis from services like Elance. You don’t have to lose control of your data, just provide access to the file for the person providing the service.

And using a bookkeeper will also provide you with someone who can keep all your financial records in good order so that you don’t have to and make it easier to prepare for your taxes at the end of the year. If your books aren’t accurate, you can’t effectively manage your business, so don’t be penny-wise and pound-foolish about this.