Holly Howard runs Ask Holly How, a small business consulting company based out of Williamsburg, Brooklyn that works with a wide variety of businesses from restaurants to retail to art studios and pretty much everything in between. Her clients report increased income and profit, decreased expenses and a significantly better quality of life. Holly heads up the Small Business Book Club at McNally Jackson Books.
Want valuable insight into how to grow your business? Holly hosts FREE 30 minute strategy sessions at The Yard in Williamsburg. Email her to set up a time firstname.lastname@example.org or to ask a question for the next Ask Holly How.
I run a metal fabrication shop. I’m having a serious cash flow issues in my business. I have to admit, I’m not too consistent when it comes to keeping records and I never really invested in keeping detailed records. I’ve just been so busy and at the end of the day, it’s the last thing I want to do. And, quite frankly, I don’t understand quickbooks or many of my financial statements. I realize that something has to change, but I’m not even sure where to start. I don’t consider myself to be a “numbers” person so can you give me some advice on how to get this under control so I can know whether or not I can afford to expand my business?
Great question! So many small business owners think that they’re not a “numbers” person so they avoid their finances and this is a huge mistake! I’m glad you’ve decided to get a grip on this before it’s too late. Here are a few things you can do to take charge now.
First and foremost, you want to work with an accountant that you love. Too often, I hear people say that they don’t like their accountant, or they don’t really have a relationship with their accountant. That’s a big mistake. As a small business owner, your accountant is one of the most important team members in your business. Make sure to find someone you feel comfortable asking questions and spending time with.
Your accountant should be more than happy to educate you, the business owner, about your financial well being. If you don’t understand what your P&L, balance sheet, or cash flow statement are, or what they tell you, your accountant should be the one to educate you. If they don’t take the time to help you really understand what’s happening with your hard earned money, then this isn’t someone you want on your side for the long haul. Ask for detailed explanations of your records and have an ongoing and open discussion about your financial health as a small business owner. For even extra learning, I recommend reading the book, Karen Berman’s book, Financial Intelligence for Entrepreneurs. Take responsibility for your future!
Second, learn to love quickbooks. Again, too often as small business owners, we think that if we’re not “numbers” people we should just hand this off to someone else. And yes, it’s likely that you need a book keeper, but you don’t want to be blind to the situation. You need to be able to track your book keeper and make sure that their work is accurate. So take the time now to learn the basics of quickbooks- take a class, read a book, or if you have a great accountant, they’ll teach you what you need to know. That way, when you hire a book keeper, you will be able to check on their work and make sure things are being entered accurately.
Unfortunately if you haven’t been keeping records, you’ll need to do some catch up work in order to truly understand what your cash flow is going to be this year. Prioritize your time. Organizing financials and record keeping tends to be an after thought to most small business owners. Turn this around and make it your priority. Maybe you have to come in to the office early or stay late until you get on track, but it will be well worth it. You’ll never have the clarity of your financial health if you skip this and without that picture, you’ll never know if you will have the money to grow. Let this be a lesson in the importance of doing the dull task of maintaing records. Invest in catching up and you can turn this around sooner than you think.