Six key areas small business owners should focus on to maintain control
Special to the NNBV
There’s a lot to consider when you have a small business in the process of growing and improving, and it’s not always easy to know where to focus your efforts. In fact, often it might feel like your business just won’t cooperate and you’re losing control.
How do you stay on track and help your business live up to its potential? Here are six areas that are critical to establishing a solid foundation for growth.
Sales figures can help you determine revenue and inventory purchases, so keeping accurate records is important. Implement detailed policies and procedures for all types of sales, whether it be cash, checks, credit cards or online sales.
Consider using an invoicing system when shipping goods and having proof of delivery. Be sure to check invoices against sales and payments to ensure everything matches up.
2. Accounts receivable
Income from your operations keeps your business going, so making sure you collect—on time—is very important. Establish collection policies in writing, and make sure to follow through on implementing these policies. Here are some ideas:
• Establish a solid system for billing, such as numerical or batch processing
• Have a timely review process for all accounts
• Keep your accounts receivable separate from cash
• Have security measures in place for communicating
3. Accounts Payable
Keeping up on payments to other businesses can help you establish a trustworthy reputation. Unfortunately, AP is an area many businesses struggle with.
To stay out of hot water in this area, consider setting up procedures for cross checking payments; always check pricing options from competitors and vendors; and be sure that billing amounts are being entered correctly.
Businesses that accept cash (especially lots of cash) are at a high risk of loss due to theft or other discrepancies and errors.
Keep your cash in control by having employees balance cash at the end of their shifts, have controls in place to ensure employees can’t pocket the cash without entering the transaction, check and reconcile bank balances regularly, keep all cash payment methods secure, and pay attention to your business’s cash flows.
5. Human resources and payroll
Technology has made it easier for hackers, scammers and even bad-egg employees to commit fraud or other harm to your business. To keep your people (and your business) safe, consider the following:
• Require password updates regularly for you and your employees, and make sure to keep all passwords safe and not written down.
• When it comes to payroll, review the details and checks/direct deposits to make sure pay is being disbursed properly.
• Pay attention to any differences between payroll expenses and monthly budgets. This could be a red flag that someone or something has gotten access to your books.
6. Physical assets
The physical assets your business owns, such as machinery or laptops, are of great value to your business. With laptops and other electronics, make sure they are safeguarded or locked up.
This can help prevent theft and data breaches or other cyber-crimes. Record asset purchases and monitor use and depreciation on them to stay up-to-date on their value.
Also consider setting a usage policy so assets aren’t falling into the wrong hands or being mishandled.
While there are many areas of your business that deserve your time and attention, these are some areas that can help you keep control over the growth and direction of your business.
Your business adviser should be able to help you set goals and policies to ensure that everything is running smoothly in your business. By talking through these and other metrics, you can put your focus back on your business and managing its success.
Dexter Ramsey is a CPA and tax manager at Eide Bailly who helps clients comply with tax laws and think proactively about their business challenges and opportunities. Learn more at http://www.eidebailly.com.