For this month’s Point of View, we asked Kristin Ames, owner of Posy in North Vancouver to write about how she handles the administrative side of her business. As a former accountant, Ames shares her tips on how to manage the books in a floral shop.
There are so many financial aspects to setting up and operating a retail business, it can be almost overwhelming. I was lucky enough to have 15 years of experience as a professional accountant before I decided to open my own flower shop. I sometimes wonder how people without an accounting designation manage to run their businesses! It’s been almost two years now and while I’ve never looked back, I still draw on my experience in the
business world every single day.
Although it can be intimidating to tackle the financial aspects of running a business, operating without a sound accounting system in place is the single biggest mistake a business owner can make – how can you run a successful business if you don’t know your bottom line? There are some great tools available to help you; all you have to do is decide how much you want to take on.
Hire a great bookkeeper. If the thought of doing your own books is up there with washing buckets, the best thing I can recommend is to hire a competent and trustworthy bookkeeper who has experience with small businesses. He or she can design an accounting system tailored to your capabilities at a level of involvement you are comfortable with. By keeping your books up-to-date each month you will avoid bank errors, unauthorized fees and charges, uncollected accounts and overdue payables, all of which could be eating up your hard-earned profits. Furthermore, if you can provide your bookkeeper with well-organized and comprehensive information at the end of the year, you will end up saving money over the long run, as bookkeeping fees are much lower than those charged by professional accountants.
Do it yourself. If you’re up for taking on the accounting yourself, invest in a short course on small business bookkeeping and get a great accounting software package like Quickbooks or Simply Accounting. Maintaining accurate financial information will help you with your holiday ordering and staffing from year to year, track sales growth, and provide you with information to help you evaluate different parts of your business to see where you are most successful. It may take an investment of time to learn the basics, but imagine the money you’ll save doing even some of the work yourself.
Install a good point of sale system. Regardless of whether you do it yourself or hire a bookkeeper, the right POS system is an invaluable tool. In addition to tracking daily sales, customer account balances and processing orders, most packages include enhanced customer care functionality that will allow you to track customer purchase history and preferences, and maintain a reminder system that will prompt you to notify customers of special dates. At the bare minimum, you can access reports that you or your bookkeeper can use to track your sales and cash flow.
Even with my background, I had some accounting challenges in the first few years of business. I recommend that you give special attention to the following key areas:
Wire orders – Make sure you are only recording your own portion of the sale to avoid inflated sales numbers and inaccurate cash flow forecasts.
Inventory management – Recording an accurate cost of sales is key to determining your monthly profits. Monthly inventory counts, up-to-date payables and writing off old or broken hard goods will ensure that you build a solid history of usable data, which is very important to future planning in a seasonal industry like ours.
Payroll – There is a great online payroll program provided by the Canada Revenue Agency and at year end they have downloadable software you can use to create your T4s. It’s easy to use and will save you hours if you are currently doing it by hand and dollars if you are paying a payroll company to do it.
Accounts payable – Pay your bills on time to avoid costly finance fees and stay in your vendors’ good graces. My vendors have saved me countless times when I have had a last minute request; they always come through because they know I will pay them in full and on time.
My best advice is not to let the financial side of the business intimidate you. Just take the first step and don’t worry if you make a few mistakes along the way – we all have. Think back to when you made your first bouquet and how much effort it took compared to how quickly and effortlessly you can do it now; managing the financial side of your business won’t be that different – I promise.
Check out our web exclusives for links to great online accounting resource.
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