Why MYOB and Quickbooks have been bad for business!
Increased productivity or productivity stealer?
Do you remember when computers started to become popular? All the talk about how people were to lose their jobs because of the increase of productivity with the introduction of the computer. There were even seminars to enable people to adjust to all the free time they would be having. Well that didn't work out as planned. Computers can be a great asset however; it could be argued that computers are the biggest productivity stealer around.
The same can be said about accounting software in business. With the introduction of GST one of the benefits mentioned about changing from a manual accounting system to a computerised system was the fact business owners would know more about their business and would be able to manage their businesses better. Also, it was stated it would make it easier for their accountant. Generally, I have failed to see these benefits eventuate in many small businesses.
I must admit at the time I thought the same. I enthusiastically installed and trained people on how to use accounting packages like MYOB and Quickbooks. Telling them they would have information at their fingertips and that the information from the software would lead to better control and ultimately increased profits.
Increased cost of doing business
However, instead of being a tool to help to grow a business, accounting software often gets in the way of business. Accounting software has added an extra level of complexity, increased accounting costs (bookkeepers, software updates and increased accounting fees) and is generally seen as a compliance tool and not a tool to grow your business.
Let's face it when you started your business you didn't want to be an accountant. You wanted to be an entrepreneur: a carpenter, a hairdresser or a coffee shop owner. If you are like many business owners the numbers overwhelm you and the extra level of complexity caused by accounting software increases your fear of the numbers. I can totally understand this fear. Sometimes I see Profit & Loss statements that are two pages long and with up to 100 different accounts. It even makes me wonder where I am going to start. However, this fear of the numbers will cause you to abdicate your responsibility as the manager to the bookkeeper and to the accountant.
If I only could sell more
You do this in the belief it will release you to do what you do best. However, what really happens is that you will work really hard and long hours but find you don't have any profit left at the end of the day. By allowing others to control their financial processes I find business owners don't know the critical numbers of their business and their primary focus becomes to win more sales and hope that business will get better. But experience shows that business will rarely get better. The business is continually in survival mode.
Accounting software is a great tool that can be used to maximise your cash flow and increase your profitability. However, you don't have to become an accountant or financial genius to use the software. To make the most out of your software you must have a strategy or a simple process of getting the right information that will guide you to work smarter not harder.
How do you make accounting software work for you?Do you remember when computers started to become popular? All the talk about how people were to lose their jobs because of the increase of productivity with the introduction of the computer. There were even seminars to enable people to adjust to all the free time they would be having. Well that didn't work out as planned. Computers can be a great asset however; it could be argued that computers are the biggest productivity stealer around.
The same can be said about accounting software in business. With the introduction of GST one of the benefits mentioned about changing from a manual accounting system to a computerised system was the fact business owners would know more about their business and would be able to manage their businesses better. Also, it was stated it would make it easier for their accountant. Generally, I have failed to see these benefits eventuate in many small businesses.
I must admit at the time I thought the same. I enthusiastically installed and trained people on how to use accounting packages like MYOB and Quickbooks. Telling them they would have information at their fingertips and that the information from the software would lead to better control and ultimately increased profits.
Increased cost of doing business
However, instead of being a tool to help to grow a business, accounting software often gets in the way of business. Accounting software has added an extra level of complexity, increased accounting costs (bookkeepers, software updates and increased accounting fees) and is generally seen as a compliance tool and not a tool to grow your business.
Let's face it when you started your business you didn't want to be an accountant. You wanted to be an entrepreneur: a carpenter, a hairdresser or a coffee shop owner. If you are like many business owners the numbers overwhelm you and the extra level of complexity caused by accounting software increases your fear of the numbers. I can totally understand this fear. Sometimes I see Profit & Loss statements that are two pages long and with up to 100 different accounts. It even makes me wonder where I am going to start. However, this fear of the numbers will cause you to abdicate your responsibility as the manager to the bookkeeper and to the accountant.
If I only could sell more
You do this in the belief it will release you to do what you do best. However, what really happens is that you will work really hard and long hours but find you don't have any profit left at the end of the day. By allowing others to control their financial processes I find business owners don't know the critical numbers of their business and their primary focus becomes to win more sales and hope that business will get better. But experience shows that business will rarely get better. The business is continually in survival mode.
Accounting software is a great tool that can be used to maximise your cash flow and increase your profitability. However, you don't have to become an accountant or financial genius to use the software. To make the most out of your software you must have a strategy or a simple process of getting the right information that will guide you to work smarter not harder.
1. Change your mindset - Accounting software has two main purposes:
* Providing financial information to manage your business.
* Tax compliance.
2. Take responsibility for the financial process. - This does not mean doing the actual work but managing the process for the benefit of your business.
3. Use appropriate accounting software - Use accounting software that is appropriate for your business and not just because it makes your accountant's life easier. Too often I have seen businesses using MYOB or other software that is too complex for them and this reduces productivity and increases costs.
4. Have a financial strategy - Develop a simple system that will be the map and compass for your business. Use the software to provide information that makes it easy for you to monitor if you are on track or off track. Reports are pointless if you can't understand them.
5. Have a great bookkeeper - A bad bookkeeper will cost your business in poor reports for decision making and increased accounting costs.
6. If you don't like the numbers, work with a business advisor - who will help you focus on maximising your profitability from what you do best. Life gets simpler if you have a financial strategy that doesn't rely on you becoming a financial expert.
4. Have a financial strategy - Develop a simple system that will be the map and compass for your business. Use the software to provide information that makes it easy for you to monitor if you are on track or off track. Reports are pointless if you can't understand them.
5. Have a great bookkeeper - A bad bookkeeper will cost your business in poor reports for decision making and increased accounting costs.
6. If you don't like the numbers, work with a business advisor - who will help you focus on maximising your profitability from what you do best. Life gets simpler if you have a financial strategy that doesn't rely on you becoming a financial expert.
Phone: 0434 972438
E-mail:info@beyondthenumbers.com.au
Business Advisors
Located in Brisbane, Queensland
Copyright 2010 Beyond the Numbers
