Every small to mid-size business has had them: those months when the balance in the checking account seems hardly able to cover all the bills and other expenses. It is usually those months when something else comes along too: an annual lump-sum payment, an unexpected repair, or some other unplanned for expense, and you wonder what corners you will have to cut to make it through. These are the type of situations where having quality bookkeeping services can really help you weather those stormy financial times.
Although tight months are inevitable in some ways, there are a few common mistakes small business owners make that lead them to that place more often than they should be.
No/Poor Planning – if you find yourself regularly getting down to the end of the month with no cash left to spare, it may be due to your planning habits (or lack of). Making a big purchase without knowing estimated income for the remainder of the month and other obligations that need paid can be a major financial fiasco.
Bill Pay Times – many small business owners pay all their bills on one day of the month, regardless of their respective due dates. This is understandable, especially for those without bookkeeping services, because it is simply easier to sit down and pay all the bills at once. Here is the problem: some bills may accrue interest for each day they are overdue. While each one may not amount to much, the accumulative effect, month after month, can have a significant effect on the bottom line. Additionally, spacing payments out according to income and cash flow can help ensure you have money in your account when it is time to pay the employees, or something else.
No Budget – just like with a family, budgeting is important to the business. Without a good budget, you may spend way more on advertising than you should and come up short somewhere else.
Flying by the Seat of Your Pants – this is a common blunder for small business owners caught up with trying to make their business successful. They just don’t have time for all the numbers and figures. Unfortunately, this often is their greatest undoing, and one of the strongest reasons for choosing reliable bookkeeping services.
If you want to keep your business from becoming another small business failure statistic (and who doesn’t), there are a number of solutions available to you.
Handle it Yourself – this is not a great plan, because it is likely not working for you already. Besides, you are the one with the vision for your business, which gives you special drive to make it successful. Saddling yourself with all the bookwork may cause business to suffer.
Hire an In-House Bookkeeper – this is a fairly good solution, but can be expensive for a small business who cannot justify a full time staff bookkeeper. Also, a bookkeeper by himself may not have the expertise to provide you with vital financial planning assistance.
Choose a Bookkeeping Service – for many small to mid-size businesses, this is an excellent option. Not only does it ensure that you always know exactly where you are financially, but an outsourced bookkeeper/financial advisor brings a lot of experience and knowledge with them that can give your business a competitive edge. Outsourced bookkeeping services allow you to contract an expert just for the work you need done, without paying a full-time salary for someone with less experience.
Many small business are making the outsourced choice, and finding the savings in cost combined with the excellent service and outstanding financial planning services can help take their business to the next level and make getting through those tight months a little easier.