Yaaaas Suneera, we hear you!
The key to your business lies within the accounting, finance and understanding of the numbers of your company. Understanding where your incoming and out coming cashflow will help you make better decisions moving forward to avoid failure.
Not everyone can afford a chief financial officer but as you scale, you will need one. Whether you contract one or hire one on staff, the guidance in priceless. As a small business owner, understanding your accounting and finance is crucial to decision making.
Here’s how accounting and finances impact your business management.
KEEP FINANCIAL RECORDS
Accounting is essentially a record of a company’s financial activities.
A company’s ledger is where accountants and small business owners can track the income and expenses of a business’ daily operations. An accurate record of a company’s finances can help a business manage their financial future and understand the cash flow.
AVOID LEGAL PROBLEMS
Keeping an accurate financial record helps follow important business laws. Overlooking a minor detail could have major implications on your tax management.
Financial managers need to understand what expenses to deduct, how much taxes to pay and when to pay those taxes. Poor financial recording could lead to your company being audited and could land you in unnecessary legal trouble.
Additionally, an oversight in finances improvements to your facility could mean that you’re not following the regulation of safety laws.
MAKE A BUDGET
Using your financial records and understanding your cash flow can help you create a budget and budget is what keeps your business on track. A budget gives you a current view of your financial standing and helps you navigate your business towards future growth and development. Good accounting sets up a blueprint for the management of your business and offers a solid foundation for stability and success.
Successful business owners are always checking in to see how their business is doing. A company can assess their financial position by looking at their historical and current records of liabilities and assets and other financial records. A business owner can use this information to gauge how the company is doing.
These records are an opportunity to learn from past mistakes and make more informed decisions about planning for a more lucrative future. Knowing your current financial standing can also help you identify new areas of growth that help you achieve your bottom line.
The communication of financial information is important when dealing with external parties.
Clear accounting and finance management can be useful when getting a loan from a bank or attracting potential investors. Good financial management makes it easier for you to provide financial statements to external stakeholders. External users will assess these reports to decide how to proceed with their involvement with your business.
Because knowing where to start can be challenging, Idiya has tools to help make writing a business plan less intimidating and time consuming. Our small business resource academy offers a free module for a business plan that helps simplify the process.
If you want a more hands-on approach, you can get assistance from a coach to help complete your business plan. Working with a coach can help with all aspects of starting, growing or expanding your business.
"The way to achieve your own success is to be willing to help somebody else get it first." -Iyanla Vanzant