Mobile! The cloud! iPads and Androids! CRM! Web-based collaboration! Online storage! These are the technologies that everyone tells us to use. They say if we don’t use them we’re missing out, falling behind, not taking full advantage. And to some extent, this is true.
But there really is only one technology that is core to a small business’s success, your success. And that technology is the lowly, overlooked, under-appreciated accounting system.
Really taking advantage of technology begins with the books.
Boring? Yes. Obvious? Not to some. I meet too many clients and other business owners who get caught up in gadgets and tech yet still don’t have a proper accounting system. And they’re killing themselves. That’s because really taking advantage of technology begins with the books.
Are you a hobby or a business?
You’re just a startup? A one-person shop? A freelancer? You don’t need an accounting system? Bologna. Do you file a business tax return? A schedule C to your personal tax return? Then you’re a business. And businesses don’t run on spreadsheets. They run on systems. Without a system you’re just a hobby. If you want to be a real business, you need to get an accounting system.
Without a system you’re just a hobby.
Having an accounting system means you have structure, organization and a process. You have a central place where all of your important data resides. You can track key data – like cash, accounts receivable, sales to date, backlog – every day. You can generate reports of how you’re doing and forecast things to come. Outside experts -- including CPAs, bankers and attorneys -- can do a better job for you because you’re giving them timely and accurate data.
Plus, you have a system that’s shared by others from many devices wherever they are, in or outside of your company, to make sure that cash is collected, products are shipped, and important bills are being paid. You can’t do this with just spreadsheet or a manual ledger.
Choose a system that can grow with you
There are, of course, plenty of great systems to choose from. I personally like cloud-based options including GoDaddy Online Bookkeeping, Xero, QuickBooks™ Online, Sage and Intacct.® They are inexpensive, easy to use, and accessible from anywhere. And once you get your accounting system set up, you’ll be ready to take advantage of all those fantastic technologies that everyone tells you to use.
That’s because the makers of these products have an ecosystem of partners that build on the core data you’re keeping in your accounting system. For example, GoDaddy Online Bookkeeping’s Get Paid invoicing feature integrates with PayPal@ to make getting paid fast and easy. Likewise, Xero integrates with CRM, quoting, storage, collaboration, reporting, point of sale, time and billing, travel expenses, payments and other services. So as you grow, your system grows with you.
When you want to do things faster, like invoicing on the fly or accepting a payment at a trade show, there’s an app that will not only do that but make sure the data hits your books.
Most of the good accounting system vendors also have relationships with banks so that all of your transactions flow back and forth. Today’s cloud-based world means interconnectivity. You’ll probably never find that one system that does it all, but you’ll definitely find a group of applications that integrate together and will accomplish what you need. And they’re all built around your accounting system.
Show your online bookkeeping stripes
A professional accounting system is a sign of someone who people can do business with.
You can’t pretend to be a business without a real accounting system. Stop kidding yourself.
Having an accounting system means there’s value to your business. It means that you care enough about it to properly track its progress. It means you’re law-abiding and tax paying and that you conform to basic business principles. In other words, you are not some fly-by-night operation. Your employees, customers and partners have more confidence that you know what you’re doing. You’re tracking the money. You’re tracking the time. You’re benchmarking. You’re trying to do better. This is a sign of someone who people can do business with.
People frequently ask me what the best technologies are for a small business. And really, there’s only one technology that’s critical for any company: it is and it always has been a good online bookkeeping system. Start there and build.
Want to learn how to get more productive? Check out our recent Small Business Productivity Chat.