Ask anybody who spends their day in a furniture finishing spray booth, and they’ll tell you ninety percent of success in a paint job comes from attention to detail. Proper sanding, masking, tacking, priming, and so on are mandatory. So is a clean gun, properly mixed paint, and the right temperature in the spray booth. Skip a step or give it a half-baked effort, and you’re going to find sags, clouds, over-sprays, fisheyes, and other ugly features in your finish coat. Your attention to detail is what matters.
The same is true when it comes to running your business. Just as a perfectly-applied finish coat depends on what came before it, a successful business depends on dozens of factors other than the ability of the company to produce eye-popping work. Profit doesn’t just magically appear. It’s the result of constant attention to the large number of details involved in running a successful business. Unfortunately, like sanding between finish coats, most of these details aren’t things many people consider fun.
How much do you enjoy bookkeeping, for example? About as much as you like root canal, right? You know it has to be done, but you’d just as soon not do it yourself. I know plenty of company owners who approach the job of keeping their books by throwing all their receipts, invoices, and bank statements into a big box. When tax time rolls around, they dump the box on their accountant’s desk and wait for the bad news. This approach is about as effective as throwing an old sheet over a sofa and calling it re-upholstered.
As tedious as it is, keeping a timely set of books will help you run a company with much higher profits. And with the availability of easy-to-learn software, you don’t need to be a CPA to master the basics. Even if you’re lucky enough to have an office manager who handles the task, it’s a good idea to personally review the results every month. Good, timely bookkeeping will help you spot profit leaks before they become floods.
If you review your books in detail, you can plot the costs of materials or labor over time to see if there are any negative trends developing. You probably have a good sense of what’s happening, but it’s never a bad idea to have the specifics in front of you before you make any decisions. You can also spot cash flow glitches and accounts receivable problems before they occur so you can take the appropriate steps after considering all the alternatives. It’s always better to talk to your banker about a loan before you’re in crisis mode.
You may also have a nice surprise in store when tax time rolls around. If your accountant doesn’t have to wade through your box of dusty documents, he or she should charge you a lot less to prepare your tax return. And who knows? Your diligence throughout the year may actually enable you to lower your tax bill by shifting expenses or revenues—quite legitimately—from one year to the next, by making a timely retirement plan contribution, or by using other time-sensitive strategies of the tax-wise. You can only do those things if you’ve paid attention to the details of your bookkeeping.
Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for small business owners and managers in the Dynamic Manager's Guides, a series of how-to books about marketing and advertising, sales techniques, motivating personnel, financial management, and business strategy.