There are many things that entrepreneurs can do to help increase their chances of succeeding says Edmonton bookkeeping. And one of those things is to learn some basic business financing. Many entrepreneurs do not have a basic knowledge of this when they open the doors to their business. Which can cause them to make an informed decision?
Since half of all entrepreneurs fail in Canada. Industry Canada conducted a survey to find out why. And found out that 29% of all failed entrepreneurs in Canada. Said that the reason why they failed was that they ran out of money.
If business owners are able to understand their business finances better. They will make more informed decisions. That can help them avoid running out of money. This is White’s important that they learn how to do some basic bookkeeping. So that they can learn more about business finances. From a hands-on point of view.
One of the first things that business owners should do if they are committed to learning how to do some basic bookkeeping. He purchased some accounting software. If they have an Edmonton bookkeeping company. They should be checking with them to see what accounting software they use.
Based on what accounting software they use, businesses may find it beneficial to use the same software. That way, when they send files to them. It can be in the same format. Which can minimize errors?
But also, if they have any questions, they should be able to call their Edmonton bookkeeping company in order to get some basic questions answered.
Chances are, that the software that they will end up using is the most popular software. So that they are bookkeeping company can appeal to the largest group of business owners. And while most popular does not necessarily mean best.
If business owners are ever going to hire a staff member to help them with some of the basic bookkeeping duties. They will have a better chance of finding an employee who knows the most popular software.
When they start using the software, business owners will learn a lot about their business finances. And that is going to significantly help them understand how to make better business decisions.
For example, a business owner will be able to see how much their overhead costs are and direct costs. So that they can ensure that their pricing is adequate. For example, many entrepreneurs believe that all they have to do to succeed. It is cover the direct costs with their pricing.
However, business owners also need to cover overhead costs. So they must mark up each of their products to cover their overhead costs. But then also know how many products they need to sell in a month so that their overhead costs are paid for completely.
When business owners learn some basic bookkeeping. Understanding things like this will become much easier. And they will be able to make better business decisions. Such as what their pricing should be. So that they do not end up selling many products, but still failing in business because they ran out of money.
Do You Need Help Finding Edmonton Bookkeeping?
In order to help business owners make better business decisions, Edmonton bookkeeping says they should learn how to do some of their own more basic bookkeeping. This can help an entrepreneur learn very quickly what they need to know to stay viable in business.
Since many entrepreneurs struggle with their business finances. And the number one reason why businesses fail. Is because they do not have enough customers to grow their revenue.
If business owners learned some more basic business finances. Especially early on in their business ownership. They would be more likely to be able to understand things like how many customers they need in order to break even. Or if their pricing was reasonable. Or if they need to minimize costs.
Edmonton bookkeeping recommends that entrepreneurs start with understanding how to read to their financial statements. So that they can understand not only the health of their business. But the profitability of a specific time period as well.
The balance sheet is the first financial statements that they should learn to read. Because it is the first financial statement that entrepreneurs should review on a biweekly basis.
The balance sheet is going to tell the entrepreneur what the overall health of the business is. By showing them a list of their assets, liabilities, and equity in that order. An entrepreneur was away able to understand the health of their business by comparing their assets to their liabilities. If they have more assets than liabilities. Then their overall financial health is fairly positive.
If their liabilities are larger than their equity. They should look at the reason why. Is it because their liabilities were helping them purchase assets for the business. If so, then they need to understand that those liabilities are necessary to help their business grow according to Edmonton bookkeeping.
The next financial statements that an entrepreneur needs to learn how to read. Is the income statement. This is going to break down the overall profitability of the business within a specific frame of time.
Typically, the statement will be in what is called a six-month comparative statement. Which means it is going to show six-month at a time in separate columns. Because this will show a business owner more information.
When comparing several months to each other. It can help an entrepreneur see if they are increasing their revenue month over month. Or if their revenue is falling. So that they can either figure out what they are doing to help them succeed. Or what they can do to stop their revenue from declining.
When entrepreneurs understand these financial statements. They will be able to have a better grasp of their business finances. So that they can make more informed decisions. And can help them increase their revenue. And avoid making poor financial decisions that could be very costly to them as well as their business.
The sooner business owners are able to learn this. And the greater chance they will have at succeeding in their first year. Especially since 15% of all entrepreneurs fail within this first year. Succeeding through it is critical to an entrepreneur’s success.