Good Bookkeeping Practices Facilitate
Informed Business Decisions ...
... with a little help from your accounting system. Informed business decisions lead to sound decision making which leads to long term profits.
Stephane Tremblay, CA with KPMG said in reference to the 1990-91 recession,
“ ... even in this period of grave difficulty, there is an upside. ... downturns are valuable opportunities ... The winners were companies that ... understood their strategic position and goals, ensured that costs were optimized, understood how they wanted to grow and they communicated that to their people.”
source: canadianbusiness.com/kpmg
... Now let's go a little deeper into making informed business decisions.
I’m going to start this topic discussing something that you probably think is totally off topic ... but grab your cup of tea and bear with me .... please.
Strategic Management
One of my favorite authors is Michael Gerber of the E-Myth series. If you own a small business today, you should definitely go to the library and sign out one or two of his books. His premise is that to stay in business, you need to work on your business not in it. It means you have to take a step back. Remove your hat that says you are the technician in your business. Put on your hat that says you are the strategist. From this vantage point, you can begin making informed business decisions instead of flying from the seat of your pants. That alone is a confidence builder ... knowing you are working towards a rational, quantified goal based on solid information (from your accurate bookkeeping records - of course).
As the strategist, you need to see the pattern, experience the vision, and understand the order to succeed.
YOU need to have more than great technical skills or professional expertise ... you need business management skills ... Ask any writer who has self-published their book and then has to do all their own marketing!
The Bookkeeper's Tip
Don't Be Discouraged
I received this tip from my first economics professor.
I was eighteen years old. First time living away from home. Totally overwhelmed by all the new experiences.
Each class, this professor would assign reading in this huge (I mean really thick) economics textbook. I honestly could not understand a word of the readings. It was ... w a a a a y ... over my head. His advice was to set aside thirty to sixty minutes every day. Just sit in one of the comfortable reading chairs around the campus and read the text assigned.
He assured me that if I sat and just read everyday, eventually I would begin to understand what I was reading ... and I did. Not right away mind you but over the years I got the hang of it!
So stick with it even if you don’t understand everything the first few times ... you will eventually “Get It” ... if you don’t give up. ;-)
Gerber’s major premise is that most small businesses fail because they lack processes and systems for doing business. It's very difficult to make informed business decisions without a system in place to do so. Systematize your small business to success ...
You can read about one professional bookkeper who designed an easy business filing system for her clients to use by clicking here.
Bookkeeping in a Box shows you the sytem one bookkeeper uses to file business receipts. I purchased the eBook so I could review it and see whether I could recommend it to you. I have to say ... it's very efficient, well thought out. You may want to consider investing in this product if you need help getting your business files organized.
A perfect example how informed business decisions can lead you straight down the path of success! I just wish I had thought of the idea.
Stephen L. Nelson, CPA and multi-book author says,
“ Sure, you didn't go into business to do bookkeeping. But you need to manage your money wisely if you want to make a profit.”
To strategize, you need to have a fairly good idea of the end result you want (otherwise how will you know if you have ever achieved what you set out to do?); and you need to figure out how to quantify your desired outcome.
Tie your Budget and Spending to your Business Goals and Business Plan. You've got a budget and a plan .... right?
Your accounting system can help. Take the time to set up your system to track your progress towards the goals you have quantified. Informed business decisions ultimately puts more money in your pocket in the long term.
Warm up your tea and let's keep going, shall we ...
See you on the next page ...
Your tutor
Home › Financial Plans are Road Maps › Making Informed Business Decisions