These days, I am lucky enough to have a bookkeeper (a.k.a. Nick, my husband) to do the increasingly voluminous finance data entry that comes along with a growing business.
He is usually spot-on, doing it every day – but this weekend he was away, and has to catch up. And you know what?
I’m feeling twitchy!
Every night when he does the numbers he’ll update me on the current totals. Money-in, money-out.
I love this.
I love knowing what’s happening with my cashflow. I love knowing if I’m hitting goals, I love seeing the $$ tick over, and I love the feeling when I reach a new income milestone (as I did last month).
I also love being in control, and knowing what’s happening with my business expenses and income is really important to me – it helps me stay on top of whether I need to be promoting more, whether I’m spending too much on supplies or ads, and whether this is all worth it, (financially, of course).
Do you feel this way about your business numbers? Or do you neglect them, or even ignore them?
Is keeping track of your finances an important part of your business?
Because, to be honest, if it’s not, then I would question if you’re really running a business.
Keeping track of this stuff – regularly, not just when tax time rolls around – is vital to knowing how you are going, and if you’re going in the right direction. I know most of us with a crafty biz are in this for the passion and love of it – but passion and love won’t pay your bills or feed you (or pay for holidays, hey, lets aim high!).
So – do you need to pay more attention to the numbers?
{Image by Le Petit Poulailler}
Wow you are a lucky lady having your books done daily! Would love to have that, currently we can only do our accounts quarterly and our accountant provides a breakdown but we do all our budgets and monitor targets accordingly.
I find as a creative person, numbers are incredibly challenging and overwhelming to get my head around.
I do agree it’s important to know your business inside and out, even when we have to ask our accountant to ‘visually explain’ something it is so important for us to spend the time to do so and understand and have control of what we do.
thanks for sharing 🙂
About 3 weeks ago (scratches head), maybe 2 weeks ago??? … I spent a bunch of nights entering all my receipt details into an excel document. I used some of your advice to set it up, and with my Admin/excel background I got really fussy about it until I was satisfied. Kicking myself for not doing it sooner! I have an overview tab that grabs all the info from each month so I can get a clearer big picture in one glance. Doing this had made me rethink any purchases. It’s also motivating me to use the supplies I have on hand before I order any more. My day job has helped me financially, but still I was surprised with how much I had spent previously. Now I can look back over 10 months and decided where to focus next. I feel like my decisions now are going to be smarter. Before this I was keen to spend money on stationery. The excel document was screaming NO. It was clear just how few sales are happening. What would the point of fancy With Comp slips be if there were no customers to send them to. So I’m spending that money on advertising & professional business cards. I also like that I can set clear goals & track those using this document. I think even if you’re telling yourself ‘I’m doing this for the love and the journey’ you should still put in the time to do the numbers!!
Sarah, I can relate to that! I’m not a lover of maths, but I’m reasonable at it, and it doesn’t scare me, thankfully (and hey, excel adds stuff up for you, bonus!). But visuals do help – Nick puts together an overview spreadsheet for the year that graphs income and expenses, which gives a great visual of how things are going!
Jeanie – GREAT to hear! It is fabulous to hear that doing this has had a positive impact on your business planning and focus 🙂
I started selling jewelry locally about 7 years ago. It grew out of a hobby without any sort of business plan, so I have to admit my bookkeeping is a mess. I was just buying supplies and not keeping track of how much I spent on them versus how much I sold. At least I’m an obsessive receipt saver, so I could actually sit down and figure out what I have currently. It’s something that I need to do in the next few months.
I’m almost ashamed to admit that I haven’t touched my books since the end of last year…I’ll be going through the numbers for 2010 again this weekend (yay, tax time!), but the receipts/invoices for 2011? Haven’t even sorted them into anything beyond a pile that’s labelled ‘DON’T THROW OUT!’.
I’m still at that point where I’m putting a lot more money into the business than getting out. At some point, that has to end; either the scale has to tip back in favour of the business, or I’m going to have to pack it in and take a pretty substantial loss. Not a fun place to be in 🙂
Robin, it’s good to hear that you have at least kept all you receipts! 😉
Stacey – absolutely. It’s expected that a start-up will make a loss, but how long you’re willing to let that go on for is a personal decision. For me, the whole point of working from home etc is to keep costs low so that I can turn a profit – and I’ve done so since the second year (while it was still a hobby). Good luck!
OMGoodness! I so need to do this. I’ve been running my biz for about a year now & I know I’m making more money because I’m selling more & spending more, but how much? I have no clue. I’ve just now gotten to the point of wanting & needed to keep up with it. I have no clue how to go about doing it easily myself though. I’ve got to figure it out before I have to file my first quarterly tax thing. See I don’t even know what it’s called! I’m so new to this! Thanks for the kick in the pants!
Yay for $$! Last year I didn’t do ANYTHING. This year I’ve been doing my #s at the beginning of each month and it’s so reassuring to see plus signs!
I also just started using Metricorn to keep tabs on my numbers for me. I have 6 Etsy shops so it was getting to be too much to do on my own. LOVE them! I’m actually giddy for tax time to roll around so I can see how much I OWE! That will be exciting, since last year I didn’t make anything at all.
Another benefit of keeping realy accurate books is it will reduce how much you spend at the accoutant. The more you do and in a format they can handle will reduce their work and therefore the hours they charge, especially at tax time. Alan and I have always had a scheduled Wednesday night business meeting, it helps keep home and work separate especially when we work together.