What’s one thing small business owners need to know and do to manage their money and cash flow to help them grow their business?
Sara’s Response:
About 6 million new businesses are launched every year and 20% of them will fail in the first year, by the 5th year 50 % will fail. 30% of those failures are because they ran out of cash. The accounting department and your bookkeeping system is the most critical tool to help you grow your business. Investing in setting up the bookkeeping system at the outset of the business minimizes the risk of running out of cash and maximizes the ability to make smart decisions that drive success. Too many owners wait until they “have money to manage” or do not use the bookkeeping and financial reports consistently to monitor and manage the business. Most of us were not taught to about money management and the thought of it can feel overwhelming. Hiring a professional bookkeeper or accountant, while it feels like an expense, will actually help the business make money. A good bookkeeper will manage income and expenses on a timely basis, file necessary reports, and alert you to important changes. Meeting with the bookkeeper monthly will help you learn how to read the financial reports and become confident in using them to measure business activity and manage growth. What we witnessed with the current COVID crisis is that small business owner’s who have accurate financial reports were prepared to respond quickly to both opportunities and to the unexpected. They also had the data necessary to quickly apply for the PPP stimulus money and other grants and loans.
The secret to money management is that isn’t just about math; there’s an emotional response to the topic of money. It is the emotional relationship with money that is one of the biggest hurdles business owners, and individuals, have to overcome to create a healthy money relationship. The lack of education about money brings up fear, doubt, judgment, and shame. Everyone, no matter how much money is flowing, has an emotional relationship with money, and those emotions are what often drive financial decisions. The good news is that learning how to manage money and learning how to work with our emotional relationship to it is something that can be easily learned. It starts with desire and improves with help and practice.
Some things to think about when interviewing bookkeepers: Is bookkeeping their primary business service? CPAs or tax accountants will do bookkeeping as a side service. It helps them do a better tax return. They do books for tax purposes and don’t always provide the level of detail owners need for business operations. An administrative assistant might be able to use the accounting software (QuickBooks or Xero) but they do not understand the financial reports (Profit and Loss and Balance Sheet) which is the end result of bookkeeping. Can they explain what they do in a way you understand? If not it is not your lack of knowledge, it is that they aren’t the right fit. A good bookkeeper provides information and as well as education about the flow of money. If you have a bookkeeper and you don’t know what they do – start scheduling weekly meetings and ask them to walk through the financial statements line by line. Over time you’ll want to know more and more details and that is where the magic happens! There are no dumb questions. With the technology of today, bookkeepers can do their work remotely and Zoom is a good tool for screen sharing and going through the financial details.
There’s no better time than right now to set up and work with your accounting system and use that information to manage cash flow and grow your business.
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ABOUT SARA J. BRONSON & ASSOCIATES
Sara J. Bronson & Associates helps small business owners improve their relationship with money so they can feel more secure and confident about their finances. Our services are a unique blend of practical bookkeeping and money coaching to unlock the feelings that are intertwined with the conversation of money. Managing money isn’t just about math, money is an intimate and emotional topic. Whether you are a start-up, need maintenance, or are expanding. Our bookkeeping services are tailored to your unique business and culture. We deliver accurate financial reports and teach you how to use them so that you can measure progress and managing success.
Our money coaching services offer engaging activities that unlock the unconscious emotions and beliefs we all have about money. 80% of financial decisions are made based on a feeling or emotional desire, want, or need. When we are conscious of what drives that decision, we are better able in the moment to align decisions with the financial goals we want. Participants think differently about money after just one session.
After 30 years in this business, we have seen how our services help business owners develop a new, more confident relationship with their money.
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