Just about everyone is going to tell you that you’ve got to set up a complicated accounting system when you start a business. If you’re doing a true BootStrap—small amounts of cash, big amounts of heart, and a chunk of your time, you can waste a lot of time and money chasing your tail on this one. As far as the banking and accounting process what you really need is to closely track your cash. How much is coming in? Where is it coming from? How long can you keep the cash that comes in?
Be as detailed and aggressive with the money you spend. Track in great detail what comes into your business as a result of spending money. If you invest in a marketing campaign, create a specific, detailed way to measure the results (coupon, special offer, etc.). The goal here is to know down to the penny how many customers, how many sales, sales of what size happened because of the money you spent.
Money that you do need to spend on printed materials, hard goods (items purchased to be used in the business but not consumed such as furniture, computers, and such) keep track of how long they last, how much you use them, and if you actually get a result from the usage that grows your business.
Do you believe Internet access at the office is essential? It might be. Then again, for your business, it might not be. Your cell phone might be much more important so a BlackBerry and service might be more valuable than an Internet drop into your office.
It’s important to have an intimate understanding of the money moving into and out of your business. Why and how it moves, what are the cash flow cycles? The more of this information you have the more you can actually control and respond to the rhythms and demands of your business.
My wish for you is that you reach a point with your business that the involved accounting procedures become an asset for your business. You will need the ability to combine accounting information by outbound (Accounts Payable) and inbound (Account Receivable)—and it’s really not more complicated than that at this stage of the game.
Wishing you Success & Heart,