We are often called upon to help business owners bring their books up to date after they fall behind. As business owners, we often tend to think of our situation as unique. But the truth is, it’s common and predictable which is good news because that means that the solutions are not unique either. When we meet business owners who have fallen behind on their books, the reasons are always the same. It’s just the words that are different.
If we’re being honest with ourselves, there are two reasons that your bookkeeping falls behind, and they are time and money. You thought you couldn’t afford someone to do it for you. That’s money. You thought you’d do it yourself but you never got around to it because you didn’t get the time and you didn’t make it a priority. That’s time. So now that we understand why your bookkeeping falls behind, let’s look at the consequences.
Unfortunately, businesses face severe consequences when they find themselves behind on the books, which also means they have no clarity around their numbers and we know that there is no successful business owner who doesn’t know and use their numbers.
Keeping your bookkeeping up to date is a lot like baking a cake. You need a recipe, the ingredients and the perfect timing. Time and time again, I see business owners fail around their numbers and that is why they fall behind on the books.
Put simply, they are trying to bake the cake with the wrong ingredients. They’re not following the recipe and their timing is off. Today more than ever, it is easy to keep your books up to date and accurate thanks to technology.
And yet, more and more business owners are in a complete mess with their numbers, much more than they were years ago when bookkeeping was a manual job.
Here’s my recipe for keeping your bookkeeping up to date and Numbers 101 in order:
First, you need great technology. I recommend Xero for your accounting software and receipt bank by Dext to make your bills and expenses paperless. It will be handled by an AI.
Second, you’ll need a bank account reserved solely for business purposes. You won’t use that bank account.
Third, you’ll need to engage a strategic bookkeeper in some way, shape or form even if you are doing your own bookkeeping. At absolute minimum, you’re going to get them to check your file and keep you on track.
Fourth, you’ll do your bookkeeping and accounts on the go which will be easy with the right tech. You’ll keep your bookkeeping up to date weekly, if not, daily.
This is the basic recipe for getting Numbers 101 right and keeping your books up to date and accurate. If you don’t follow that recipe and you don’t do your bookkeeping daily or weekly, then you’re not going to get the same result.
The trap that business owners often fall into is believing they need to focus solely on revenue and generating sales. Unfortunately, this is a damaging misconception that leads many entrepreneurs to be broke. Running a successful business isn’t easy. It’s hard but there are many that have come before us. There is a lot that you can learn about best practices. Hundreds of business owners just like you have used these recipes to pull more time, money and freedom out of their business. There are a lot of recipes you can follow for success.
Our recipe for success around your numbers is
The recipe for success around your business operations is
Lastly, the recipe for success around your habits and mindset is
I am not going to sugarcoat it, falling behind on your bookkeeping is a disaster. If you are behind on your bookkeeping, I want you to think about that for a moment. You might be thinking why? Surely there are far more things, far more important things than having my bookkeeping up to date. If you were thinking that, I’ll ask you a question. What do you think is more important than up to date accurate accounting records for your business? Take a moment to write your answers down. I’m going to take a guess that you wrote sales or revenue down as one of your answers.
The belief that focusing on revenue is the most important thing in business is a damaging misconception that sends many businesses bark. When you first start out in business, you are probably hustling and scrambling for every sale you can get and ringing the bell when that money comes in the door. But you don’t stay in startup mode for that long. Before you know it, you’re thinking bigger. You want to play a bigger game? If so, why focus solely on revenue in the very early days? When you focus solely on revenue without prioritizing up to date and accurate accounting records, you are flying blind. You’ll likely be accruing obligations without realizing it and running your business on the bank account. There is so much more that I could explain but this is not a book, it’s a blog. And so what I would encourage you to do is believe me now.