4 Reasons Profitable Businesses Need A Bookkeeper
In business, we have preventative and reactive actions. We have an emergency fund as a preventative measure. We sign contracts and keep good records as a preventative measure. When business pivots it can sometimes be reactive based on economic conditions outside of its control. Sometimes we see trouble coming and pivoting is preventative.
One area that can cause some reactive behavior is our finances. Managing the day-to-day operations of a business does come easy to some. We may even find ourselves in profitable positions, with our bank accounts slowly growing bit by bit.
It is encouraging to see and all the signs can be pointing you in the positive direction that nothing needs to change. Keep doing what you’re doing!
We want to also encourage you to take preventative measures. A business doing well financially is great, so let’s take care of your progress by protecting it.
The following are a few reasons why even if you are profitable and your business is growing, hiring a bookkeeper is going to be essential.
A Successful Business Needs An Experienced Team
Your business is growing and you are turning a profit! As you level up, it is time to start looking at the big businesses ahead of you. How are they operating? I am going to bet, they are working with an experienced accountant who is preparing them on how to grow their business even bigger.
The more successful your business becomes, the less you need to DIY. You can hire an experienced team member and purchase the more premium application. Part of your growing business should also be internal. Internally look at your team and dive into areas that can be improved. A great place to start is with the areas you don’t have a full understanding of.
In the early days of running your business, it was likely easy to manage your finances. The expenses were few and invoices you all sent out yourself. As you grew you may have handed tasks off to an assistant or manager.
Whether you are still managing the bookkeeping or you have handed it off to another team member, it is important the person handling the bookkeeping is prepared for its challenges.
Sometimes it may quietly slip by that your bookkeeping has gotten more complex. Maybe you upgraded some equipment that needs depreciating. Your long list of clients and invoicing may make it more difficult to track when one has gone unpaid. This can be even more challenging if your books are run on an accrual rather than cash basis.
These challenges can be somewhat easy to solve at first but as a business grows, so does the complexity of its bookkeeping. It may not be in everyday transactions, but having organized and accurate statements will become more difficult the more cash that flows through your business.
As your business grows and becomes more profitable, your needs are going to change. Small tasks the owner was able to handle in an afternoon now require a process with multiple people involved. Items that were easily tracked in an excel spreadsheet now require a separate application where you can manage many moving parts.
A bookkeeper is experienced in establishing processes that allow the business owner more time to manage their business and less time in the small details of their bookkeeping. By hiring a bookkeeper early on, you can establish processes that grow with your business. Compare this to establishing processes down the road that dramatically shift multiple areas of your business.
It May be Too Late
If you are running a business that is successfully growing but you don’t have the bookkeeping to back it up, you may be in trouble without realizing it. Cash always being in the bank account and consistent sales are not great indicators of success. Which is where accurate bookkeeping comes in.
When you do begin to notice issues, there were likely signs for months a bookkeeper could have brought to your attention.
Sometimes bookkeepers are brought in when there is urgent financial trouble. Coincidently, this is usually when it is too late for simple bookkeeping. Months of books need to be cleaned up and sometimes bookkeepers are unable to deliver clean financial statements in time for the tax return, loan application, or quarterly analysis meeting.
Which is another reason why it is good to hire a bookkeeper before you find yourself in a predicament.
By employing proactive measures you are decreasing the risk your business is exposed to. Working with a bookkeeper is another way of slowly growing your business internally and in ways that will build a strong foundation for future growth.