In a world of start-ups and entrepreneurial ventures, it’s easy as a small business owner to get fixated on the end goal – making the best product or service and getting it to market by any means possible. The strive to succeed in an ongoing competitive environment takes precedence.
This mentality can end up being an entrepreneur’s biggest downfall because vital tasks, such as accounting and bookkeeping, become side projects that are either outsourced or pushed to the last minute. This can create unnecessary stress on your business that could have been prevented.
An entrepreneur doesn’t have to be fully versed in translating accounting spreadsheets and financial statements to run a successful business, however they must be able to understand financial information and use it to make sound business decisions. Having an accountant or bookkeeper who develops a working relationship with your financial data and acts as a trusted advisor, can mean the difference between watching your business grow strong and steady or going down the path of no return when it becomes too late to correct your course. A great financial data relationship is empowering and crucial to helping you make more strategic goals, commitments and progress.
Plan for the Future
The ability to get people on board with your business idea is a large part of the job of an entrepreneur. Setting goals requires an understanding of financial and operational data. By making quantitative goals, not only do you have measurable proof points for your investors, but they are motivators to yourself and those who work with you or for you.
Using this data can also help you to set qualitative goals to work towards and motivate your team. Having the right accountant or bookkeeper on your side who provides these insights, can help you set future goals. The factor that makes this piece of the relationship successful is the ability for the business owner to link this data to real-world situations.
Make More Informed Commitments
There are three common pain-points that keep the small business owner up at night:
- Cash flow and how much money is coming into and leaving the business
- Accounts payable questions or who do I owe money to
- Accounts receivable questions and who owes me money
Understanding your financials and the calculations provided to you from your accountant or your accounting software can resolve these pain points and help you make more effective commitments of time, energy and money to attract customers and deliver goods and services at a larger and more efficient scale. It is important to track and understand these pieces of your financial landscape as all these promises impact the growth rate and stability of your small business.
Commit to Continued Progress
All the pieces above combined, will help you to measure and reassess your progress so you can reward and encourage profitable behaviours, report progress to third parties and revise your business decisions if necessary. Staying on top of your analytics is important as measuring the predictions that you made earlier and comparing them to your actual progress helps to keep you transparent and on track.
This creates an accountability factor in your relationship with your accounting data – measuring trends in revenue can help you gain and exploit opportunities down the road. Understanding the areas that maybe aren’t so productive become easier as well, because you’ve likely caught the bottleneck early enough that it can be corrected before it poses a real threat to your business.
Strategize on the Benefits of Technology
As a small business owner it is important to understand and converse with your financial data, instead of fearing it. You are busy and likely on-the-go for most of the day with a chock-full schedule and competing priorities. Having a trusted advisor that empowers you and ensures you have tools to be agile in making strategic business decisions, will ease this predicament.
As an entrepreneur, you need to look at your financial data at a granular level in order to understand what is selling, what’s not, expense details, etc. It’s important to have an advisor you trust on your side that can help you see the bigger picture and find the devil in the details to help you understand how to plan for the future, make informed commitments, commit to progress, and strategize on the benefits of technology.
We’d like to thank Calgary-based chata.ai for their expert insights provided in this post. If you have any questions or comments, please share them below.