So You Think You Can Avoid Accounting Software?

June 20, 2011

Yes folks – it’s a new reality show. We’ll watch real people, running real businesses, dance nimbly around the subject of knowing their true profit and loss by using quality accounting software.

dance-around-accounting-softwareFirst contestant is Joe. Joe is the owner of Big Bad Imports, the company that imports all your big, bad stuff. Joe knows how much cash he has in the bank (online banking, you know), and he’s able to process orders and invoice his customers using his business software system (circa 1986). When asked about his gross margin by product line, and his net bottom liner on a monthly basis, Joe laughs. “That stuff is for sissies,” he declares. When asked how much his business has grown is the last few years, Joe executes a perfect side-step and tap-dances away.

Next we have Lucy, the CEO of Top Notch Electronics Distribution. She’s having some difficulty paying her suppliers on time, but that must be their fault – right? Yes, cash is tight, but as long as her loyal customers keep buying from her (and they do), she’ll waltz along happily (at least until the bank calls in her line of credit). Lucy loves the ease of use and simplicity of her inventory management software, and the fact that it has no useful accounting modules is no problem for her. “After all,” she says, “I’m not an accountant anyway.”

As the judge, I’d have to say this one is too close to call. But anyone who thinks that business software need not include top-notch accounting software functionality definitely qualifies for our next business reality show: “Down The Tubes.”


Growth, Accounting Software and Fertilizer

June 7, 2011

So you want your business to grow faster? One of the following strategies will help – can you spot the right choice?

accounting-and-inventory-software

  1. Make more promises – even if you can’t keep them.
  2. Water your business regularly.
  3. Use steroids.
  4. Plan like a bigger company.
  5. Try fertilizer – similar to #1.

(If you selected #1 or #5, you’re a politician. )

So you realize the answer is to plan like a bigger company. See, if you always think like a small business , then every decision you make will colored with that thought process. When you consider investing is assets or projects, you’ll emphasize cost over utility and benefits, whereas to grow you need to consider the benefits of any activity before the cost – then evaluate whether the cost (or investment) is justified.

One example is your accounting and inventory software. A business with serious growth plans should be growing into, rather than outgrowing, business systems. Otherwise as you grow. your inability to handle the growth without band-aid solutions and / or hiring extra people will itself become a growth limiter.

But folks, this principle is not just limited to accounting and inventory software. Whether it’s the phone system, the people you hire or the warehouse equipment you put in place, visualize how your company will look in 3 years’ time, and ensure that what you invest in now will support that vision.


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