Monday, June 21, 2010

Don’t Get Overwhelmed

A friend of mine began running a small business from her home last year and was doing really well. She was baking pies, cakes, and cookies for local restaurants and it really became a big success. Unfortunately she neglected to have any kind of accounting software programmed into her computer and the paperwork got really out of hand. That’s when she begged me to help her make sense of all of it.

I have an accounting business myself and have a degree so it really wasn’t difficult to explain to her what type of program she needed for her business. She needed small business accounting software that is easy to use and understand so that she could keep up with it herself and not have to hire somebody to do her books. She didn’t think she would be able to handle it but once I showed her the different programs there were and helped her pick the right one, she quickly learned how to use it.

This is the mistake many small business owners make when they start their business; they think that because they are running a very small business from their home that they don’t need any kind of professional accounting software. They think they can keep up with the billing and invoicing and orders on a pad of paper and use hand written receipts. The problem with that is you lose track very quickly and you don’t have any saved data to predict profit and loss. When you run a business you need to see what is working best for you and what isn’t. In my friend’s case, she knew her cherry pie was her best seller but she didn’t know by how much. She also didn’t know by how much her apple pie was not a big winner. I showed her how she can use the software to make charts and graphs to show which of her items is selling best and to show how much each item has profited her.

This type of information is very important in a small business because every penny counts and if you have a product that isn’t selling well and have a product that is very popular, you should invest more in the most popular product and drop the other. By using these simple business tools her business doubled in profit in just six months. She has almost outgrown her home bakery and is in the process of building a larger kitchen in her basement.

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