5 Simple Questions Most Small Business Owners Can’t Answer

Many small business owners don’t like looking at their finances.  They’re usually afraid, ashamed, overwhelmed, or don’t know how to make sense of the numbers.  Or, they’ve signed up for an accounting tool that all their peers and CPAs are using, but find it too confusing and don’t even open it since they’re too busy running a business.  If you’re not using any accounting software, using Excel, or just relying on logging into your bank account and credit card statement to see if you have enough money in the bank, then you’re missing out on simple ways to automate your business finances and understand basic financial questions that every small business owners should and need to be able to answer.  By getting an accounting tool that you can understand and use, you can gain access to daily (and immediate) views to reports that will help you understand the most important business question of all, “Is your business making a profit?

5 Questions that Most Small Business Owners Can’t Answer:

  1. What is your year-to-date profit (or loss)?
  2. What is your most profitable product or service?
  3. What are your total monthly operating expenses?
  4. Where are you spending the most money?
  5. Who is your most profitable client?

Is Your Business Making a Profit?

Why Every Business Owner Needs to Know the Answers to these Financial Questions:

  1. What is your year-to-date profit (or loss)?   
    • Being able to create a Profit and Loss statement will allow you to determine if your business made a profit or not.
    • By understanding the revenues and expenses, you can stay out of debt by making decisions based on the profit and loss in the business at any given time.
  2. What is your most profitable product or service?
    • Focus your time and energy marketing the most profitable product or service that you offer.
    • Retire products or services that are not profitable or not popular.
  3. What are your total monthly operating expenses?   
    • It’s easy to forget about subscription or services that you’ve signed up for, and no longer use or get a return on investment.
    • Most business owners are shocked when they realize how much they are spending per month, and can easily shave off a few hundred dollars once they have a better idea of their spending.
  4. Where are you spending the most money?
    • Once you know how much you spend per category, you can determine if you need to adjust your spending.
    • Being able to categorize your expenses is necessary for a CPA to compete and file your taxes.
  5. Who is your most profitable client?
    • Focus your attention and energy on the clients who bring you the most business.
    • Happy clients can turn into your best referrals.

If you now know how important these questions are but can’t answer any or all of them, then it’s safe to say that you’re probably running your business by the seat of your pants and are having a hard time confidently making business decisions. If that’s the case, a simple accounting tool can help you finally gain control and will allow you to answer each of these questions in a matter of seconds when clicking to see reports.

Which Accounting Tool Should You Use?

(*Note  – This page may contain affiliate links. This means at no additional cost to you, we may receive commissions for purchases made through links.)

  • If you’re a service-based entrepreneur, freelancer, or contractor and don’t have a lot of physical products or need to track inventory, FreshBooks is one of the more user-friendly, simple accounting tools that I’ve tried.
  • If you run a retail shop and need to track detailed inventory, you may want to consider a different tool. Read the blog post to find the other tool that I’ve tested:  Best Accounting Software for Small Business Owners
  • Most of my clients end up switching over to FreshBooks. I had one new business owner recently tell me, “It’s really simple to use.  I really love how it synchs all the bank and credit card transactions!”
  • Another client wrote, “Sylvia introduced me to FreshBooks, and I couldn’t be happier, the ease of use and understanding was amazing.  My credit cards imports are a no brainer and now with my accounts imported every transaction is automatically linked to my FreshBooks account.  I can now view profit & loss, issue reports, create and send invoices in no time at all!  Thank you, Sylvia, for introducing me to FreshBooks, what a time saver.” – Catherine Cotta, C.A. Cotta Corporation

If you’re ready to make a change in your business and want to see how simple and convenient is to have an accounting tool that will automate and generate every type of report that your CPA needs to file your taxes, then check out FreshBooks.

I’d love to hear from you!  If you’ve tried this accounting tool, leave a comment to let me know how it’s changed how you run your business, or feel free to reach out for any questions.  I’d be happy to help! 

 

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