As I'm sure you're aware by now, each week I have been sharing a new blog post on the subject of entrepreneurs. As well as analysing and commenting on their behaviour, I have and will continue to highlight the behaviour traits which make them successful. In my book 'Drive like a real entrepreneur' I summarise 5 traits that I believe are required to achieve this. One is for the entrepreneur to be responsible and organised. While this may not be seen as the prime key to anyone’s success, in line with say, energy and drive and finding a great business idea, managing the business is just as important. Being organised is critical.
So why does bad bookkeeping = bad business? Anyone in business has to know where they are. How much they are owed, how much they owe and the stock holding. This also directly relates to what is in the bank. It all critically ties together. So, some tips;
1. Get organised. Keep files or open wallets and place file these items as they are generated/ when you receive them. This way you know where everything is -- when you do get time. There is no time wasted hunting for things.
2. Keep everything simple. Make sure you have a close control over your sales invoicing system. As soon as work is completed - charge it to the customer. The customer will be expecting the bill. Agree the rate and terms with the customer ahead of time.
3. Make time. Do not shirk and think anything else is more important. It may be Sunday evening. It may be a Tuesday morning at 8am. Allocate yourself the time and get the job done.
4. Continually review where you are at. Once you feel that the volumes are getting too big, ensure you have a computer system to organise your paperwork and accounting.
5. Read the reports and signals. Learn the basics yourself so that you understand a profit and loss and trading statement. Give it a reality check, did we really do that amount of business?, was it that profitable?
Without these controls, you will not know who owes you money and therefore you will not be able to keep a close control. Your business will suffer.
The top tip I give to owner managers is to review the aged receivables and aged payables. If these are accurate, then your books are accurate. The profit will be right. This is organised, simple, can be done weekly, a good regular review and also means you are understanding your business. This is also the food chain. You know at a glance who owes you and what you owe.
Next week I shall be discussing the difference between the entrepreneur & intrapreneur. In the meantime please do get in touch if you have any queries @entrepreneuruk1