Accounting is kind of like the proverbial crazy Uncle when it comes to business. You tolerate him, but only because he’s family. If you didn’t have to have him around, you wouldn’t.
I’m an accountant. I know this. Because of taxes, banks, and other regulatory commitments, you have to take care of the books. You don’t want to, but you have to.
I realize I’m the crazy Uncle for your business.
I’ve spent the last 20 years of my career feeling like that crazy Uncle. I’ve worked places where the owners of the business bought a separate house down the street for the accounting department so they didn’t have to be in the plant. True story.
Here me out. The numbers from your business can be a powerful ally on the journey of growing a business. Here’s how:
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What’s working and what isn’t.
By taking the time to dig into your numbers, you can get a crystal clear picture of which horses are pulling the weight in your business. It’s not all about sales either. Taking a hard look at where you are spending your money (and time) can tell you which revenue streams are sucking up more of your resources. Then, you can have more than a gut feeling on where you should be focusing your efforts.
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The numbers are what they are.
I alluded to this above, but gut feelings can only get your business so far. Sometimes you need the data to back up the decision you are about to make. Numbers are surprisingly simple in this regard. They are absolute. Trust me, entrepreneurs love to make decisions based on feelings. While using the numbers can help bolster those feelings with cold, hard facts.
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Translators are out there.
You can’t discount the power of your numbers just because you don’t understand them. Thankfully, there’s a growing population of accountants out there (::raises hand::) who are tuned in to the needs of burgeoning entrepreneurs and solopreneurs. You don’t have to discount the power of your business data just because you are not “good with numbers”.
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You need a plan (that’s really a plan).
A plan can be a set of intentions that are vague, or it can be a set of actions you are going to take. If your plan is made of vague intentions, you are less likely to execute it. This is especially so when your business finances are involved.
Just “winging it” with your investment decisions (which is what I consider all spending investment) isn’t going to set you off in a intentional direction. Once you get your numbers involved, it’s much easier to set a clear financial direction for your business. Armed with your accounting data, you have a much clearer idea of how things are. Then, you can put a plan in place which will help you grow your business.
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Evaluate your financial decisions.
Now, let me tell you, the point here isn’t to judge yourself. The way we all grow as entrepreneurs is to learn from our failures and double down on our successes. Without a good clear way to look back on those decisions, we are left to allow opinion to evaluate them.
Your financial data is a fantastic way to look back on decisions and know what kind of payoff you got from them. You can’t do that if you paper a file folder with it. Test your assumptions you made by seeing the cold, hard dollars and cents impact of your choices. Know where you need to fine tune your judgment. Know where you nailed it.
As you can see, the accounting data for your business is an important part of your business analytics. Don’t bury it until tax time. Use it. Learn from it. Grow your business with it.
I once heard of accounting being referred to as the “language of business”. There’s some truth to that. Just as we can probably navigate a foreign country well enough without knowing the language, it’s a whole lot easier if you can speak that language or have a trusted translator at your side.
You don’t have to be fluent, but it is easier to be able to ask where the bus station is than walking around aimlessly, is it not?
Here’s to the growth and success of your business. I’m always cheering you on.
This article has been edited and condensed.
Joe Filipowicz founded Solopreneur Accountant to put his 20 years of accounting experience to work for solopreneurs and small business owners. A passionate entrepreneur himself, he believes in creating the business and life of your dreams, while using accounting as a tool to get there. He lives in Tampa, FL with his wife and son, where the craft brews, beaches and trips to Disney World all come together. Connect with @SolopreneurAcc on Twitter.
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