Running a business can be confusing, expensive, and stressful especially for small businesses or those just starting out. It can even be more frustrating when you read the statistics of small businesses that fail. Some research shows that 29% of small businesses failed because they ran out of cash flowing and 23% failed because they did not have the right team and invoicing and payments system. 18% of small businesses failed because of pricing and cost issues and 17% failed because they lacked a business model. Getting your accounting right may not guarantee that your business will succeed but it definitely increases your chances.
You’re an entrepreneur, not an accountant
"I think tracking your finances is super important to ensure you are running a profitable business." - Zainab, Owner SolesNShades and Mint EyeWear
Running a business is so different from any other job in the world. Imagine someone said they wanted to be a carpenter, prepared to be a carpenter, then on the first day of the job, they had to fix all the pipes in the building. Running a business is exactly like that. Most business owners spend hours tracking sales manually in notebooks or excel sheets when accounting apps can make that process considerably easier. You would probably have to be a model for your business today, you don’t have to be an accountant too.
How accounting apps can help your business
- Budget Smarter
- Get paid by debtors
- Keep your bank account in check
- Make important decisions based on data
- Track profit and growth easily
- Get loans when you need it
Accounting Feature on apps like Kippa gives a deep dive into where your business stands financially and can help you keep an eye on what’s working and what’s not.
Let’s look at how to do it:
A budget is an overview of your business's finances. In short, it shows how your business is doing and what you plan to do with the money in your business. With a budget in place, you can plan for future expenses for your business to help with growth.
Imagine if you had to do this with a notebook or your excel sheet. It would be extremely difficult. Accounting apps show you at a glance what you are spending the most on, what part of your business is bringing in the most profit.
Get Paid By Debtors
How do you expect to get paid by all your customers and suppliers owing you money if you don’t keep track of it? If you are just starting out and are struggling to remember who owes you what, then imagine just how much more stressful this would be when you get more customers. You need a system to track debtors, send reminders, and ultimately get paid. At the end of the day, getting paid by debtors directly impacts how much you take home at the end of the month.
Keep your bank account in check
If you are a serious business owner, every other day, you check your bank account to make sure your calculated sales are equal to how much you have in your account. I see the look on your face and see that you don’t. It’s called Bank Reconciliation and accurate accounting is the only way you can get this done. If your financial statement shows a credit alert of #3,000 that you can’t remember, checking your accounting app is a great way to track that expense. Accounting Apps like Kippa also send you timely reminders to record all your expenses so you never forget.
Make Important Decisions Based on Data
To stock up on the black bag or to get more of the wine bag that you personally think is more beautiful? Your accounting app would answer that question easily. Because most accounting apps allow you to log sales and keep track of products, you don’t have to make such decisions based on vibes. Accounting apps help you track products, customers, sales, and financial data easily. Some apps even show you your best-performing products and customers.
Track profit and growth easily
Ah, Profit! The other reason you are running your business apart from passion. Without accounting, it would be kind of hard to gauge if your business is profitable or not. While your bank account may be popping right now, you may be losing money every month if you aren’t tracking. Tracking with accounting apps allows you to see inflow vs. outflow. And that’s how you know whether or not your business is profitable.
Get Loans When You Need It
A lot of small business owners complain about not being able to get loans from the banks. Guess what, one of the biggest requirements when it comes to getting access to credit is whether you have adequate financial documents. Surprise, surprise, when you use an accounting app, you can easily generate reports such as balance sheets and profit and loss statements that are critical to helping you make your case for financing. Bottom line: no bookkeeping means no loan.
Keeping business financial reports up to date for your business might be the most important aspect of keeping your business afloat. It’s not just important but with an accounting app, it’s convenient, saves you time, and can make you money.
Getting an accounting system like Kippa would make your business run more smoothly and give you access to necessary inventory management information.