In business, it’s only natural to be looking out for that magical new idea or that new way of doing things – anything that will transform your business and it’s bottom line.
However, searching for a “quick fix” or a “get rich fast” solution can often mean we miss the fact that small, less glamorous, yet achievable, improvements within your business can have a dramatic effect.
In Part 1 of this series we covered the first two of six critically important reasons why in business you must have an effective, and efficient, accounting and reporting system and how, believe it or not, it can be the difference between achieving the success you dream of, and doing nothing more than surviving (if that).
Those critically important reasons are –
1. It’s the minimum price of entry (to real business success)
2. If it’s hard, you are doing something wrong (when it comes to your tax and reporting obligations)
Now on to critically important reasons three and four –
3. It’s not just for the taxman
Unfortunately, far too many Australian businesses consider their accounting and record keeping purely as a necessary evil in order to keep the taxman happy, but it actually serves a much higher, much more valuable function.
What many of those business owners fail to recognise is that your accounting system is first and foremost there to provide you with vital information about the performance and position of your business.
In fact, accounting as we know it was invented during the 1400s as a means of recording the methods used by the merchants of Venice to amass their great fortunes, so it can be safely assumed that modern accounting came about because of a much greater need than to simply prepare activity statements and lodge tax returns!
Modern accounting was invented in the 1400s by the merchants of Venice, clearly it serves a higher purpose than just activity statements and tax returns.
4. You’re flying blind without it
It’s important to remember that what’s in your bank account is not always an accurate indication of how your business is performing, and without the right records, it can be difficult to get a clear idea.
For example, we were recently engaged by a new client who had built up a substantial bank balance in their business in a remarkably short period of time, and naturally, they were very excited by this, and spent accordingly.
Unfortunately, once we looked a little deeper into their affairs, we found a whole world of expenses and liabilities they had incurred but were unaware of. Their second-rate accounting process and the information it provided was useless, it sent them down the wrong path, and drastic changes had to be made.
While it took some work to get things in order, a new system meant that they then had the information needed to make informed decisions.
Watch out for the concluding Part 3 of this series over coming days…
If you missed Part 1 click here