To quote an old advertisement for financial software we agree that, “Of all the hats we wear as a small business owner, the accounting fedora itches the most.” We all market our time – so I hope all of you have put those 2005 taxes to bed and are focusing your time on the high priority, high pay off areas of your business in particular, making a profit. At the heart of maintaining a profit is your accounting system. (Ugh, Ugh). Most people get confused and frustrated with their finances and the major cause of the confusion is lack of good financial information.
Your accounting documents provide the structure for helping you make good decisions based on complete knowledge and hard facts. Do you know what your critical numbers are? You need to know them like you know your own birthday.
This is the time of the year to begin the planning process for 2007. The budget is the tool that helps you identify what you plan to spend money on and determine the income potential you want to commit to. Your businesses biggest expense is the money you could be earning but aren’t. Your accounting documents allow you to look backward to the extent required to give proper perspective on your current situation. When you know the profitability of your business and manage it well, then you are in a power position.
It is a perfect time to take a look at how you set your fees or prices on your products; evaluate the hard costs and expenses to run the business and review areas of the business that are out of sink. Don’t wait until January to start making critical decisions, seek the help of your CPA or financial planner. Remember this, more income could be lost, than earned, if you fail to take time to see the difference between what you could have earned and what you actually have. Besides, the value of what you get from your business, can get lost when you feel mired in the unknown.
The Challenge: Make a list of what you think you will need to spend on the business next year, ( New equipment, marketing, software, web site, a new product) so you can start getting quotes or prices to plug into your budget.