Starting a small business is more than having a light bulb moment where you see yourself as your own boss, working when you like, with whom you like, and selling what you like. It’s also more than coming up with a catchy shop name, finding a location and opening the doors.
All of the above is often the “fun” part. It’s what lurks beneath the “own-your-own business” bliss which can often stump many small business owners. Tasks such as taxation, financial planning, budgets, business plans and record keeping are often the backbone of the business’ financial management.
Without a firm knowledge of your business operations and financial management you could find yourself heading for failure even before you have begun to succeed.
However, one of the latest new releases from McGraw-Hill publishers is proving to be a valuable resource for small businesses when it comes to information on record keeping, financial planning and management.
The book, written by Professor Alan Williams, and called Keeping the Score – Record Keeping, Financial Planning & Management for Small Business, provides relevant, up-to-date and easy to understand information.
The book is heavy on action, providing information on what needs to be done and how to do it.
“Most small business owner/managers greatly undervalue the worth of keeping books and records,” according to author Prof. Williams.
“The reality of record keeping is quite simply that, to be able to properly manage your business and make it a success, you need to know whether your business is increasing or decreasing in its net worth and whether you are heading in the right direction.”
Tips for keeping your records in shape
The book takes readers through everything from the basics of record keeping, double entry record keeping and single entry record keeping through to record keeping for specific types of small business and preparing Business Activity Statements. It also details how to plan and manage your financial resources, how to analyse and interpret financial statements, the basics of financial planing and financial management.
The following are hints from the book and should help keep your business records in good shape:
- Plan your bookkeeping system before starting your business
- Leave plenty of tracks. Write down everything in a logical and consistent way. Don’t rely on your memory
- Don’t use scraps of paper to jot down figures. Use the proper forms in bound booklets, which are not likely to get lost
- Deposit all cash received daily if possible. Make all payments by cheque or if small enough, out of petty cash
- Don’t take cash from the cash register or till for personal use. If this is unavoidable, leave a clear record and draw a cheque as soon as possible
- Reimburse your petty cash regularly by cheque, not out of the cash register
- Keep very careful control over all cash. Never use the cash register to pay expenses
- Check prices, extensions and totals on all accounts payable and initial them as proof of having done so
- Attach together all related forms such as delivery dockets, invoices and statements
- File all records and original documents in a logical and systematic way
- If at all possible do a physical stocktake every six months
- If using a computerised recording system, always use backup data storage
- Keep your business and personal financial records as far apart as possible.