“What amount of value creation can be assigned to the efforts of management for a particular time period? That is the essence of accounting. Otherwise, it’s simply an appraisal process.” Charles W Mulford
Gone are the days of keeping track of your business expenses on excel sheets. Earlier on in my entrepreneurial journey we relied solely on excel sheets to manage accounts. However we were then introduced to Quickbooks, and it completely changed the way we viewed our accounts. With this software we were actually able to extrapolate a lot of data and zoom into key metrics by which we could monitor the growth of our business. Many business owners wait until they have an ‘established’ business before investing in standard accounting software. This is like wearing a helmet after you have experienced a fall. Undoubtedly experience is a great teacher and one should continue to learn from mistakes. There are however some precautions which should be taken beforehand, and getting software to manage your accounts is one of them.
There are many great accounting solutions available in the market today. These key questions need to be answered when selecting an accounting package:
1. What is your budget allocation for purchasing this software? (If a budget has not been allocated there are many free accounting solutions which one can find online)
2. Do you want the software to run locally on your computer or would you want web access to your data?
3. How many users will be using the software?
4. What is the primary purpose of purchasing the software? (Do you require a simple application which helps to track all of your incomes and expenses, or do you require one through which you can manage inventory, payroll, invoices etc)
5. What level of reporting will be required? (If one requires simple profit/loss, cash flow and balance sheet statements there are a lot of great packages out there. For more complex reporting, software like Quickbooks premier can generate detailed reports on sales report per employee and profitability per product)
Once these key questions have been answered, you will have a better idea for the sort of solution required and your search would have been made easier. When you have selected a software, assign someone or a group of people to continually update it to ensure access to the latest activity. This acts as a safeguard and protects over exposing the business to unnecessary risk as well as maximizing the opportunities currently in hand. I plan on creating a widget which will compile the answers to the questions above, and help provide a list of appropriate software or services. If anyone would like to help me out in creating it please let me know at blog (at) usmansheikh.net
As a maker of accounting software I definitely agree – as I spent more time on our marketing efforts part of that work is writing relevant blog posts, answering questions on Yahoo! and LinkedIn and each time I’m forced to think about the value I am bringing to our (potential) customers.
The more people I talk to (especially business coaches and accountants) the more I realize that many entrepreneurs out there are really not tracking their business very well, and if they did they could reap big rewards.
Often just reviewing your expense breakdown and revenue per client is enough to get a big “A-ha!” moment where you can eliminate waste from your business.
If you’re an entrepreneur or a freelancer, check out our easy-to-use accounting software Clarity Accounting – http://www.clarityaccounting.com . It’s very easy to learn and comes with great free customer support.