Throughout the course of running your small business, you’re going to encounter some problems, both big and small.
When you consider that approximately eight out of 10 businesses fail within their first 18 months, these problems may make your heart skip a beat or two. If you’re facing major challenges with your small business or consistently experiencing the same minor ones, you need to determine the source.
While it’s probably not the most glamorous part of managing your small business, bookkeeping is a critical component of keeping your business afloat. However, managing this responsibility on your own may not be the best solution for your business. In fact, it might be the root cause of your small business problems.
Here are a few signs that your do-it-yourself (DIY) approach to bookkeeping is causing your small business problems.
You’re Missing Payroll Deadlines
When your small business has employees on staff, you need to pay them and go through a complicated payroll process during every pay period. If you miss your payroll deadlines, you’ll have disgruntled employees, and that’s simply bad for business.
Examine the root cause of your missed payroll deadlines. Are you missing them because you don’t have the cash on hand to pay your staff? That’s a sign of severe cash flow issues. Are you just missing them because you’re too busy with all of your other responsibilities? That’s an indication that you should outsource your payroll to a third party.
You’re Missing Vendor Payments
Falling behind on payments to your suppliers is a recipe for disaster. This is likely to lead to your vendors putting you on hold or even refusing to do business with you in the future.
Without your suppliers, you don’t have a business. Again, ask yourself why you’re missing or late with vendor payments. Is it due to a lack of cash flow or an inability to properly keep track of your bills and their due dates?
You’re Struggling With Cash Flow Problems
If a lack of cash flow is causing your business to miss payroll or vendor payments, or preventing you from make necessary investments, your business is in a bad position and could fail.
Are your cash flow issues due to a lack of revenue or are you struggling to stay on top of your accounts receivable? If you’re not sending out invoices and reminders to your customers in a timely manner, you likely won’t receive payments on time. When cash isn’t coming in, you’re creating severe problems for your business.
DIY Bookkeeping Is Preventing You From Focusing On Your Other Responsibilities
How much of your time do you devote to your bookkeeping every week? How much time does that leave you to focus on the other aspects of your business?
Managing staff, doing competitive research, attracting new customers and brainstorming new ideas takes time, and it’s where you should be spending your energies as a small business owner.
If DIY bookkeeping is eating up a significant portion of your time, you’re likely to lose focus on building your business.
Leveraging the support of a small business advisor to manage your bookkeeping could help you solve your small business problems by keeping you on top of payroll, payables and receivables, as well as finding the root causes of your cash flow problems.
While it’s likely you’re attempting to manage your small business bookkeeping on your own to save money, doing so may actually be causing your problems and costing you more money than you’re saving. If this is the case for you, consider partnering with a small business bookkeeping professional in your area.