According to the SBA (Small Business Administration) Office of Advocacy, around 30 million small businesses are operating in the United States. This translates to one business per every 11 people, which is an astonishing figure. With the business environment this saturated and competitive, survival for small businesses has become much tougher now than it was, let’s say, 20 years ago. In fact, only 50% of small businesses manage to make it past the 5-year mark, with only 33% managing to survive for over 10 years.
As the opportunities for attaining a competitive edge are so rare in today’s market, small business owners need to capitalize on every advantage they can find. For many SME owners, some of those advantages can match the benefits provided by Intuit’s revolutionary business accounting software: QuickBooks.
Good Financial Management is Key
Effective and efficient management of finances is critical to the success of any business. The main reason why most small businesses fail to survive for long is bad financial planning and inefficient allocation of resources. An analysis by CB Insights revealed that 29% of startups fail because they run out of cash, and 18% fail because of costing/pricing issues.
Many people set up businesses because they have the management skills required to keep a business running on a day-to-day basis. However, this is only one part of operating a business. In addition to business operations, you also have to focus on accounting and bookkeeping practices, which are critical to keeping your business efficient and profitable. Here are some common financial management mistakes made by small business owners.
Poor financial record keeping
Poor financial record-keeping is one of the most common mistakes made by new business owners. While efficient record keeping can add to your expenses, it’ll pay for itself many times over in the long run.
Overinvestment
Many small business owners overdo it when it comes to purchasing inventory, particularly if the company experiences success initially. Although a larger inventory is certainly a potential revenue source, it all depends on sales. It’s all good if you manage to main a high amount of sales. However, if sales drop, the extra inventory just becomes a stagnant asset, and you don’t want that. When you have too much money tied up needlessly, it can cause cash flow issues for your business.
Lack of contingent funds
Knowing the importance of having a contingency fund reserve is a vital part of knowing how to run a business successfully. You see, things don’t always go according to plan, and you have to be prepared for when they don’t. If you make one or more of the financial mistakes mentioned above, your business will probably lack the funds for contingencies such as bad debts and asset depreciation. Your business might also not be able to afford insurance against fire, flood, and other accidents.
How QuickBooks Can Help Achieve Long-Term Organizational Success
The financial mistakes we’ve mentioned above are mainly a result of bad financial planning and data organization. When your company’s financial data is not organized properly, the owner is unable to get a comprehensive insight into the business’s financial conditions, which ultimately causes them to make bad business decisions. Moreover, when a business’s finances are all over the place, it has an adverse effect on the workflow, causing bottlenecks and hurting efficiency and productivity. QuickBooks is a solution to all of these problems. You see, QuickBooks is much more than just a digital bookkeeper. It can improve your inventory readiness, your customer relations, your cash flow, and your business’s future.
If you’re currently using or you’ve ever used QuickBooks in the past, you already know of its superb bookkeeping abilities and how they enhance an organization’s financial and accounting processes. The software essentially organizes all of your business’s financial data and combines it into a single, convenient interface. By consolidating organization-wide data, it basically puts all of your business’s finances at your fingertips, allowing you to make informed business decisions. It allows you to save time, save money and reduce errors and mistakes. When a vendor or customer calls you with a query or you require some critical details to solve a problem yourself, QuickBooks provides you with the information you need instantly.
The benefits of QuickBooks include a lot more than just getting the numbers and figures right. When you use the software to its maximum effect, you realize that its benefits are way more far-reaching than you originally expected. So how does QuickBooks accomplish all of this? Let’s find out.
Helping you find the right balance between expenses and income
Attempting to improve your business’s cash flow is futile until you have figured out where the financial bottlenecks are. QuickBooks puts that information right at your fingertips for both expenses and income, and the information is delivered in a variety of ways as well. In addition to letting you easily view all your past-due invoices, QuickBooks allows you to send reminders automatically. The process of delivering is also automated by QuickBooks.
One of QuickBooks’s most useful features is its Reports feature, through which you can generate accounts payables and accounts receivables reports. The detailed reports generated by QuickBooks, such as Uninvoiced Time, Accounts Payable Aging Details, Open Invoices, and Unpaid Bills, allow you to assess where you stand with your vendors and customers effectively. If you’ve determined that late payments from customers are your biggest cash flow problem, you can set up an online Merchant Account through QuickBooks. It will enable you to accept bank transfers and credit card payments.
Improves customer interaction which leads to more repeat business
Your customers are everything to your business, and in order to establish a solid relationship with them, you need to have a crystal-clear, updated picture of their payment history and details, their transactions, and all your past, current and future transactions. With its Customer Information Records template, QuickBooks not only provides all of that, but it also provides customer contact information and real-time status updates of their payments and invoices, time activities, activities, etc.
A profitable and stable inventory of goods
If your business is about selling goods, smart inventory management is vital to your success. If you overstock, you’ll just end up having a big part of your resources tied up needlessly. Understocking, on the other hand, will turn away potential clients, and you’ll inevitably lose future business. However, QuickBooks helps you to have just the right amount of stock in your inventory. Its inventory tracking feature gives you a comprehensive insight into your stock levels and sales so that you know when it’s the right time to order and also the amount you should be ordering. QuickBooks can also generate a wide variety of inventory-related reports. These include Sales By Service Detail/Product, Inventory Valuation Detail, and Physical Inventory Worksheet.
Keeps your business ready for growth
You may never want to expand your operations, move into a bigger office or acquire another company. Nevertheless, it isn’t very often that a business doesn’t prefer to be in a position to grow. The thing in business is that the opportunity to expand can present itself at any time, and expansion requires additional capital. Would you be ready when that moment comes?
If you’ve ever pitched proposals to investors or applied for business loans, you know that these things require you to provide a large amount of detailed financial information in a variety of formats. In addition to the regular financial statements, your potential lenders or investors can ask you for specific types of reports. QuickBooks has templates for a wide array of financial reports and statements, such as Profit/Loss Statements, Balance Sheets, Cash Flow Statements, etc., and it can generate them for you instantly.
Conclusion
So, in addition to being a powerful bookkeeping tool, QuickBooks can help you streamline a wide variety of business processes. By consolidating your data into a single user interface, it provides you with 360-degree visibility of your company’s finances, which allows you to make more effective and efficient business decisions. All of this helps your business to grow and be successful over the long run.
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