Two Important Terms Business Owners Must Understand

No matter the business type, the product, or the company mission, the two terms business and money go hand in hand.

So, as mentioned in the title, today we are looking at two terms businesses and business owners should be familiar with. Or, have on their list of ‘things that can help the business’.

Bookkeeping

While no doubt a familiar term for most, it is hard to ignore the importance of proper bookkeeping in a business. 

Bookkeeping is no doubt the backbone of every business. And, at times can be an area that may be overlooked in a business, especially one starting out.

Companies often find themselves dealing with many moving parts at once. This may include products, processes, business development and people. So, it’s fair to say that bookkeeping may not be at the front of mind.

Unfortunately, at times, we meet business owners who did not address this crucial matter early enough in the process when building the business. That is the very reason we are placing this term as number one on the list.

No matter what business one operates, the understanding of bookkeeping best practices is one of the keys to keeping a smooth-running business.

A common practice amongst small businesses is to have one of the current team members handle accounting tasks.

Unfortunately, in most cases, we see that as a bad practice, and we highly recommend hiring an in-house bookkeeper or accountant for the business.

Or, outsourcing the accounting tasks to a professional company who will be there every step of the way.

Either way, whether it’s invoices, receipts or credit card statements. It is crucial to handle bookkeeping properly.

A number of great cloud-based platforms out there including QuickBooks and Xero.

The first step however is understanding exactly what your business needs.

This is likely a conversation business owners would want to have with a professional. A great place to start is by simply asking about best practices and tools.

Succession Planning

Although succession planning relates to every part of the business and not necessarily just the accounting side of it, we are placing this in the ‘must know list’.

Reason for that is, succession planning is a fairly common practice in businesses.

Whether it’s training the next generation to take over the business or selling the business externally, it is crucial to have the proper plan I place.

Not only that, but to ensure a company is sold for the maximum and can continue running smoothly, a succession plan would no doubt include all the accounting and finance procedures and details.

The best succession plans for businesses include development of staff skills, training, and allowing full transparency.

This includes all the accounting and finance details of the business.

This is another reason why well-kept accounting books is crucial for companies.

The ideal timeline for building and implementing a succession plan would be two or three years. This ensures that every part of the business is ready.

The best place to start is by focusing on the employees of the business, their roles, and their retention.

In a previous blog we wrote about other recommendations and steps businesses should implement when it comes to succession planning.

There are many other terms, policies and tools we recommend business understand and implement. However, the two above are common ones that can create a great difference for companies, small and large.

For any questions or if you are looking to get in touch with our accounting and finance team, contact us at Eventum Consulting, we would be happy to help.