Flying your business blindfolded?

Do you know someone that is a small business owner? Or maybe you own a small business. Either way, I think everyone has probably heard the mantra of “you should have a bookkeeper, you need to look at those financial reports…blah..blah..blah.”

Here is what I have found after owning an online accounting company and working with lots of small business owners over the last 10 years.

It’s true that many small business owners think that bookkeeping is optional and it is just another overhead expense. Below I share a couple scenarios where I this is true and your flying blind in the process.

Here is why

If you are only looking to have bookkeeping for compliance purposes, like you need to file your taxes, and your tax preparer does not want your box of receipts you have been saving for the last 12 months. Yes, you will more than likely be of the mindset of “I want it fast and cheap…oh, and don’t let me show a profit”.

There is very little value to everyone involved with this approach, other than…just get-er-done, and you don’t have an interest in what the business did in revenue, or how to improve the situation.

So what’s my bank balance today?

The other scenario is that you may just be logging online to your bank website daily to see the health of your business by what your account balance looks like today. I refer to this as ‘cash on hand accounting’. (more often than not, this is a disaster waiting to happen). You don’t know what checks have not cleared, payments coming due, or what to budget for the next payroll. (beware, bank overdraft fees are coming…)

So yes, I agree with the small business owners that see bookkeeping as just another expense if there is no interest in what the information being prepared shows them and how to better manage the business.

However, running a business like this is super stressful because you cannot see where you are going…it’s like your are flying blindfolded, making the business not very profitable, and most of all…very EXPENSIVE to operate.

A price too high to pay?!?

I have witnessed firsthand the kinds of issues that surface with a business owner following the school of thought that bookkeeping is optional or is just another expense:

A single business owner paying over $7,185 in bank overdraft fees for 12 months.

A local business owner has 11 banker boxes of receipts (stuffed into freezer bags, binders, and months of unopened mail), 26 months of no bookkeeping records, and 6 corporate tax returns past due.