Be That Business Newsletter #27: A 3 Helpful Shifts in Perspective for Entrepreneurs

This month I have three Perspective Hacks for you to help your business thrive!

1. You don't keep your business books for CRA: Even though CRA requires you to keep good business records, that's not the most important entity you're keeping records for. The most important entity you're keeping the records for is YOU! You cannot manage what you do not measure. You want to have the most up-to-date and accurate data about your business so your business thrives. With up-to-date data, you are able to make informed decisions. With up-to date information you are prepared for payable liabilities and manage your cash flow. And you are ready to apply for the next business grant that may come along. So is CRA the second most important? No! The second most important entity you are keeping your records for are interested parties, such as banks. You want to be ready to apply for that loan when it's needed! CRA has some pretty hefty consequences for not keeping the books, so they are still important. But if you only keep the books for CRA, you're not focused on the right goal. Sure, compliance is important, but it's the lowest bar.​
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2. Processes > Software: If you have bookkeeping software set up, that's a good thing, but, it's just a start. What you do in IRL effects the efficiency and the accuracy of the records. What is your process for storing & communicating the source documents? Is it easy to maintain? Missing information adds hours to bookkeeping, whether you are doing the bookkeeping, or if you have a bookkeeper. The less the info, the more the guesswork, and that's a recipe for bad data. Set up processes IRL that support the flow of information in the most hands-off manor so that it's easy to maintain. How that looks will vary from business to business; Maybe you'll have all bills sent to you from certain vendor email addresses to auto forward to a capture app, such as Dext, Dropbox, or even an email that an admin has access to. Maybe you'll take photos of your receipts with a receipt App as soon as they are handed to you (Dext is one, but there are others, even QBO has one). Or instead of going to Staples, you can order from Staples online, and the receipt that is emailed to you... and get's auto forwarded! As Stephen Covey wrote "Begin with the end in mind". Someone is going to need those details and documents, even if it's future you... what is the easiest and most efficient way to store & communicate them in real time? You can't rely on just software, you need to set up the processes.
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3. Without you it's just Data: Compliance is Cool! It saves money too! It also helps to reduce the chance of a CRA audit! But, as I mentioned above, it's the bare minimum. Without you it's just data. With you, it is the story of your business. You need to be interested in what that story is. The founder of Oracle NetSuite, Evan Goldberg says; "If you don't know your numbers, you don't know your business". Every month you want to see the numbers from the month before. What was the profit? Some Percentage of that profit will likely be payable in income tax (confirm your situation with your tax preparer). Compare the profit to how much you took out of the company that month. Is it on track with your goals? What is the sales tax balance? Be prepared to pay that at the end of the period. Is your cost of goods sold what you expected them to be? Is your overhead what you expect? Do you need to bring costs down, or raise prices, or are you on track? These are the basic questions to start off with. At first it may feel unfamiliar; you can ask your bookkeeper or accountant to review the financials with you. (Here's a link to download a quick guide from BDC about these reports.) The more comfortable you get, the deeper you can go. (Check out these financial ratios put out by BDC.) You've got this! You're not a regular person... you're an ENTREPRENUER!

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Friendly reminder: For those who are self-employed (or are the spouse of someone self-employed), though your Personal Income Tax Return is not due until June 15th, your due date to pay any income tax owing is April 30th! Happy Parallelogram Season!