45. Bookkeeping Goal Milestones
July 19, 2019
This episode is brought to you by my bookkeeping strategy sessions. When it comes to your bookkeeping, you’re probably in one of three areas. Doing it yourself, outsourcing some or all of your bookkeeping to a professional or understanding what the reports mean and making better business decisions from that information. Each of these stages comes with different struggles and questions. I can help with all three. Bring your questions, and I’ll bring some solutions. To book one of these sessions, email me at firstname.lastname@example.org. Now, on with the show.
Like anything new that you are doing in your business, it takes a while for a habit to form. I really envy the people who are excellent at creating habits because they seem to have it all together. I am not one of those people, but I aspire to be.
So when you are creating this new habit of bookkeeping in your business, there is a lot you can do and a lot you probably should be doing.
I want to walk you through some of the baby steps that you can take to get some momentum rolling.
- Check your bank account every other day. Just that! Check it and see where your cash is, how much cash you have and if you’re bringing in enough to cover your monthly bills. Hopefully you’re already doing this, but if not, this is a great first step in getting ahold of your bookkeeping and cash flow.
- Send out invoices weekly. If you’re hand creating each invoice, I want you to make this a priority. Cash flow is one of the most important aspects of a business and why most businesses fail. You can send these by email or postal mail. I’d also add in sending reminders if someone hasn’t paid and it’s overdue. Don’t go too crazy on the reminders if it’s not due yet, but if someone is a few weeks behind, send them a reminder email. If they’re a few months behind, don’t feel bad calling and asking. Sometimes invoices get lost in email or they get put into a spam folder. Hopefully this won’t happen, but if it does, give your customer the benefit of the doubt.
- Pay your bills weekly. If you haven’t made this a habit yet, do it! Make sure that you are paying your bills timely. No one like to work with a company that doesn’t pay their bills on time. If you’re writing checks (yes, businesses still do this!) set aside time once a week to go through all your mail and bills and write checks and make payments. If you’re doing this online, most of the bills you’ll be getting are automatic, I’m assuming. That’s how it is in my business since most of the things that I purchase are a subscription. Either way, make it a point to make sure you don’t owe anyone money. If you don’t have enough to cover those bills, make sure that you have a plan to pay and that you’ve communicated with the vendor, especially if you know them personally. You want to avoid late fees!
- Reconcile your books monthly. You’ve heard me harp on this before, but truly you need to be doing this. This is the tale tale sign of books that are up to date and books that are not. If you’re not sure what this means, you can either google instructions on how to do this or be on the lookout for my DIY Bookkeeping PDF coming out August 12 and I will walk you through how to do this in QuickBooks. Basically, the jest is that you are verifying that all revenue and expenses have been recorded in QuickBooks.
- Run your reports monthly. Now here, I am talking about your profit and loss and your balance sheet. You can go a step further and check your aging report which tells you who hasn’t paid and how long it’s been since you’ve sent them your invoice. This is important if you’re low on cash and want to know who to call and ask about payment!
If you’re doing these 5 things, then you are on top of it! I want you to set these goals for yourself in your business because it truly will make a difference. This doesn’t even touch budgeting, forecasting, analyzing, or strategic planning. These are just a few tasks that you should be doing each month to know that once you’ve hit them, you’ve been keeping up.
So let’s talk about some more of those advanced things that you can be doing.
- As Dave Ramsey says, this is assigning your dollars a job before the month begins. Depending on how long you’ve been in business, you may be able to budget for the full year, but if you can only budget month to month, that is ok. (Side note: this is different than goal setting. If you have a goal of making 100k this year, but you only have enough client work to make up 50k, don’t budget 100k! You can go back and change this later, but I want your budget to be realistic with where your business is. I also want you to have goals, just keep them separate.)
- This is also goal setting, in my opinion. With forecasting, you’re looking far ahead and thinking strategically. If you are releasing a new course, you probably have a goal in mind for how much money you want to make and how much profit you want to retain. A forecast will do just that for you, it will tell you how much you think you’ll make. I would do this in excel because it’s easy to maneuver the numbers around and it’s not going to mess up your bookkeeping like it would in QuickBooks.
- Once you have your financials, you can compare them to your budget (realistic numbers), your forecast (your goal numbers) and your actual numbers. When you get to analyzing you can look at your profit for each client or program, your overall growth, your expected growth and what’s working.
- Strategic planning. You’ve done a budget, you’ve created a forecast, you’ve analyzed, now you can take all of that and move into your strategic plan. Most business owners do this for different aspects of their business. I would highly recommend taking all of this information to your strategic planning meetings to compare what the business wants to do with what is actually possible. If your business wants to make a major technology upgrade, is there enough cash to do that? What can you do to bring in more cash three months in advance to have enough to pay for it? Do you need to hire someone new? How much will their salary/benefits be and how much will it cost to have another employee? Do you have the monthly cash flow to cover those expenses? How much ROI does that employee need to bring in to make their role worth having?
Those last 4 are really going to be the cream of the crop. If you’re able to do that, then you’ve hit some major milestones in using your numbers and growing your business.
Those things that I talked about may have been very very overwhelming for you. I feel the same way when someone talks to me about marketing. If you’re not sure where to get started, please book a bookkeeping strategy session with me. I can meet you right where you are and we can make a plan on the next step you need to take in using the financial information you already have available.
I’d be honored to work with you. To get started, email me at email@example.com with the problem you’re having and we can discuss the best way to get to a solution.
If you are ready to use your numbers to help your business, please subscribe so you will be notified when the episode drops.
I would love to connect with you. You can find me on Instagram @lydia.miller.mba and always by email firstname.lastname@example.org.
So until next time, go, make it happen.