Bookkeeping Is a Key Ingredient to Your Success
There’s no doubt that your business’s books are more complex and important than the cleaning Rosie carried out in the Jetsons’ home. But I stand by my analogy because bookkeeping software is able to manage its duties with such technical execution. It’s almost like Rosie got thousands of software updates and is finally realizing her full potential.
Managing the books is a crucial element to any business’s success. When your books are accurate, you’ll have the clarity needed to develop strategies and track results. You’ll have the details required for financial accuracy, tax readiness, and legal compliance. You’re empowered to make prompter payments and also collect on your outstanding invoices.
Additionally, your books can become your calling card when seeking financing. If they’re buttoned up and tell a compelling story, you’ll stand a much better chance of getting approved by lenders.
Despite all the reasons that bookkeeping is crucial for small business success, there are still plenty of entrepreneurs who neglect it. Handling sophisticated numbers and formulas doesn’t come naturally to most people, so the prospect of running your own books can be downright terrifying. But it’s a situation where the stakes couldn’t be higher.
“Here’s a sobering statistic: About 20% of small businesses will fail within their first year,” explains a Forbes business finance report. “Worse, nearly 50% of businesses will fail by the end of their 5th year, according to data from the US Bureau of Labor Statistics. The most common culprit? How a small business handles its financial resources, whether it’s a lack of capital, inadequate business planning, or mismanaging their cash flow and marketing budgets.”
That’s not to suggest that the businesses that fail each year do so solely because they neglected their finances. Many of those business owners undoubtedly did everything in their power to keep their books updated and accurate. However, finances are the biggest reason most businesses fail—so if you aren’t taking them seriously, you’re begging for trouble.
Turn Your Bookkeeping Over to Technology
Now that we’ve reinforced the importance of bookkeeping, it’s time to proclaim the benefits of bookkeeping software. Going back to the Jetsons analogy, it doesn’t matter if bookkeeping is a natural talent of yours. You can simply turn the duties over to your own personal “Rosie” and let the tech solution handle it all for you.
A top-notch bookkeeping program offers you the following advantages:
- Reduced chance of errors
- Improved data security
- Higher efficiency
- Better compatibility with other programs
- More accessibility
- More consistency
From a growth perspective, it’s also important that your software creates statements and documents such as balance sheets, profit and loss statements, cash flow statements, and statements of retained earnings. These assets will help you in the general management of your business and are mandatory when your business seeks financing. Lenders will almost always require these statements and documents before they’ll even consider your application.
In the past, some small business owners felt that software solutions would take away from a personal touch in their business. A bookkeeping system might have felt more like something a major corporation would implement. But this thinking is flawed because the benefits of a proven tech solution allow a small business to be its best self.
“Using accounting software saves hours of time compared to handling the books manually or using a spreadsheet,” says a bookkeeping article from The Balance Small Business. “Accounting software reduces or eliminates redundant data entry, such [as] entering the customer’s address on the quote and then adding the work order and invoice. It’s a booming industry, with 1 study projecting that the global accounting software market will reach $11.8 billion by 2026. If you are a sole proprietor with modest income, you may not need accounting software, but small business owners who carry inventory and are juggling a large number of customers and employees will save time and have more accurate records if they use accounting software.”
Of course, there’s a wide range of bookkeeping software products—so you’ll need to find the right solution for your needs. Otherwise, you’ll miss out on the customized details that truly make software powerful.
Bookkeeping Software: Shopping With Confidence
The first step in the selection process: identifying your unique goals for the software. Your business has its own challenges and initiatives, so you should ensure that your bookkeeping solution aligns. Will it help you meet your customers’ needs and make the most of your data?
“A successful company has customers at its core,” says Entrepreneur. “Long gone are the days of one-size-fits-all advertising and competition based solely on price. If you want to get—and keep—customers, you need to be interacting with them and building relationships on a one-to-one level. But that isn’t enough. As a successful modern enterprise, you’ll be using data-driven insights to understand your customers’ needs in a rapidly evolving world, enabling you to proactively evolve your products alongside those needs. Many of the successful new ‘disruptive’ businesses—including Uber and Airbnb—are using data and its analysis as the cornerstone of their entire business model. Against this background you don’t want to risk being left behind, possibly disrupted into oblivion by a more data-savvy competitor or even one of many new startups driven by data-focused entrepreneurs.”
When your bookkeeping software connects with your business’s strengths and helps to make up for its weaknesses, you’ll be getting the most from your investment. It’s essential that your software syncs with all your other programs so everything is integrated and data can flow freely. This integration allows you to manage every part of your operations simultaneously.
You should approach your search for bookkeeping software the same way you would for any other important purchase. Look carefully at your pricing options and contrast them with the features you require. Your goal should always be to score a solid value without compromising on the benefits your business needs.
Here are some of the top considerations as you’re reviewing the various bookkeeping software on the market:
The Software’s Ease of Use
If you can’t use your software properly, then there’s not much it can do for you—so your goal should be to find a bookkeeping system that’s intuitive to use. There will always be a learning process involved with new software, but if it takes too much time to learn, you’ll be losing value in your investment. And if you never master it, your return on investment will never be realized.
It’s important to read through the most detailed product reviews you can find. Pay attention to users’ comments regarding the user interface and functionality of each software system you’re considering. There are plenty of review websites, such as Fit Small Business, G2 Crowd, and Capterra, which connect you with a range of opinions.
Better yet, talk to your colleagues. There are certainly other businesses in your industry that have similar goals to yours and have found a good software match. You can also seek the opinion of your business mentor. Firsthand knowledge usually leads to top-notch decisions.
The Availability of a Free Trial
Even after you’ve gathered intel from reviews and colleagues, there are still plenty of nuances to experience before knowing whether a system will work for you or not. It’s similar to car shopping, where you could read every glowing review published about a certain vehicle, then realize after a test drive that it doesn’t work for you on a personal level.
Many of the best software options provide a free trial for prospective clients, allowing you to look under the hood and see how the product lines up with your business. You can use the reviews and opinions you collected earlier to guide your investigation into the software.
Just don’t forget to cancel your trial. Most free trials require you to enter your payment information, so once the trial period ends, you’ll be charged. You can easily avoid unintentional charges by putting a reminder in your calendar. If you end up liking the software, you can just delete the reminder and move on with confidence—but if the software is a bad fit for your business, that little reminder will be absolutely worthwhile.
How the Price Meshes With Your Goals
There’s no doubt that the right bookkeeping software can save your business money—but that doesn’t mean that all software products will deliver the right value. If the price is too high, your careful savings will be diluted.
The good news: many of the best software options on the market offer tiered pricing models. This means you can choose a level that delivers the features your business requires while hopefully not adding too many that it doesn’t.
You might want to start at a lower tier to familiarize yourself with the software. For example, you can create a free Sunrise account and get a suite of crucial bookkeeping tools. As you identify the additional features you’d like to add, you’ll then be able to upgrade strategically.
The Time-Saving Potential
One of the great promises of technology is that it will remove responsibilities from our plate and let us focus on more important matters. I happen to have a Roomba (I couldn’t find a store that carried a Jetsons-style Rosie), and it’s always satisfying to hear the robot cleaning my floors while I read a book in the basement. It almost feels like I have a little cheat code for life.
Will your bookkeeping software deliver this same impact? Ideally, it should automate numerous tasks that would otherwise be carried out manually. As long as the system is efficient to use, this transfer of duties should save you lots of time each month.
The Reporting and Tracking Capabilities
While there are certain functions that every legitimate bookkeeping software product should offer, you’ll find that the real differences lie in the details. This is because small businesses differ greatly, and there’s no way that 1 solution could possibly provide the features that all the world’s entrepreneurs seek.
So it’s your duty to gather all the requirements you have for your software in advance. Then you can run through the system during the trial period to ensure that everything is provided and aligns with your business style.
Here are some of the most popular reporting and tracking features that you should look for:
- Accounts receivable
- Expense tracking
- Customer statements
- Profit and loss
- Balance sheet
- Tax summary
If you find yourself compromising in multiple ways to justify purchasing a certain product, you should turn and run. It’s like a bad relationship…if things don’t seem right in the early stages, when the stakes are low and everyone is on their best behavior, then it’s only going to get worse down the road when stress increases and problems arise.
The Cloud Storage Capabilities
Storing your financial records in the office can be comforting because it’s so traditional. Generations of business owners have used filing cabinets as their storage vaults. There’s nothing wrong with keeping paper copies of important documents onsite, but it can present major limitations when you don’t also incorporate cloud storage.
For starters, you have to be in your office to access those files, a major concern in our new era of remote work scenarios. Furthermore, your documents are less secure. You might have a lock on the filing cabinet, but that’s hardly impenetrable. Even if theft isn’t likely, human error often results in important documents being misplaced and even lost.
Cloud storage remedies these issues by allowing you to upload files to a secure server. You can then access the data from just about any place on earth where you can connect with the internet. Cloud security runs the gamut from porous to Fort Knox, so you need to ensure that the cloud solution your software offers is trustworthy.
“The cloud and the way you use it can grow and change as your business needs grow and change,” insists a tech report from The Balance Small Business. “Instead of having to invest in information technology to keep your file storage system updated and maintained, most applications that use the cloud automatically update themselves. Of course, there also are negatives to using the cloud. Security of data and loss of complete control over that data are serious concerns. However, there are ways to protect your data to ensure it remains accessible and secure at all times. In most cases, the benefits far outweigh the risks for small business owners. Also, if anything should happen to files stored on 1 cloud server—like a massive power outage—you can still access the information stored there through other servers.”
The flexibility and security of cloud storage really are special. Never settle for a software product that doesn’t offer this extra benefit.
The Right Bookkeeping Software for the Right Business
Even though bookkeeping software can bring dozens of benefits into your life, you shouldn’t rush the process of choosing a system. There are some great marketing campaigns out there for mediocre products, so just remember the old saying: “all that glitters isn’t gold.”
By using online reviews and colleague recommendations to guide your search, you can choose the best options for a trial run. The stakes are low during a free trial, and you’ll be able to get a feel for how the software could benefit your business. And, once officially implemented, it’ll be thrilling to see its rewards on a daily basis.