7 Tips for Plugging the Profit Leaks in Your Small Business
By Joan Nowak
Quick Books provides small business owners with the data you and your accountant need for tax purposes. This is a necessary part of business ownership. But do you also use the information to help you make better business decisions, uncover opportunities and plug the profit leaks that cost money each year? You should.
7 Tips to Get More From Quick Books
- Stay Up-To-Date. Keeping records current does not require posting transactions daily. For many small businesses, weekly or semi-monthly is fine! Whether you do it yourself or delegate (outsource) it to others, keep your records up-to-date. Timely record keeping is often more accurate - and leads to better decisions, fewer customer complaints, faster payments, better inventory management and happy vendors who will go the extra mile!
- Reconcile bank accounts. In managing cash flow, some owners rely on their online bank statements or balances. This can be problematic because it doesn't include pending payments. But even with technology today, errors can still occur. You can uncover problems quickly with a monthly reconciliation.
- Manage credit cards and LOC's. Because it's easy to download credit card transactions right into Quick Books, some use this method. If you do, make sure transactions are properly posted (to expenses or customer jobs) and amounts are accurate when doing your monthly reconciliation. Don't assume.
- Invoice customers quickly. Why wait a week or more to bill a customer? With online invoicing and smart phone credit card capabilities, you can bill from anywhere. The sooner you bill, the sooner you get paid!
- Use time tracking. While we associate time tracking with companies that bill by the hour, any service business can use this tool to help evaluate labor costs associated with customer jobs. From lawn care and cleaning services to plumbers and HVAC services, knowing this information can be helpful when setting prices. More important, it can help you improve efficiency that impacts profit.
- Measure job or customer profitability. Stop wondering if you made money on a project or customer. Quick Books allows you to capture both income and related expenses, including labor and materials, at the project or customer level. Would knowing this information help you price more effectively or focus on certain projects or customers? The answer for most business owners is yes!
- Use Reminders. You can 'memorize' transactions and set low-stock inventory levels to trigger reminders. This is helpful for bills that occur periodically, tax payments, important or rarely used materials that have long delivery lead times, and future invoices for recurring customers or payment plans. It saves time and money!
In addition, Quick Books has a lot of different reports to help you analyze the data, manage your business and find the hidden opportunities for improvement. Many reports include a prior period or year comparison that is helpful for looking at trends! The P&L or Income Statement is used by most owners. But what about the Balance Sheet? It provides a snapshot (balances) of your assets and liabilities, including bank accounts, credit cards, LOC, accounts receivable, accounts payable, payroll liabilities, inventory and more.
Depending on your business or what you uncover on your P&L and Balance Sheet, you may want to dig deeper - and Quick Books makes that easy too. Some of my business clients find these helpful: A/R or aging reports, sales summaries by customer or representative, inventory report and job / customer profitability reports.
Joan Nowak is a results-oriented business coach, consultant and speaker who helps small business owners bridge the gap between knowing what to do and actually doing it! For additional information, visit http://www.hybridbizadvisors.com/about-us/. While you are there, subscribe to her monthly eNewsletter for new profit-building articles and exclusive business tools and offers,