Doing good and changing the world does not excuse you and your social business from keeping track of your financial health! In fact, it should be part of your business strategy.
The Importance of Bookkeeping for Startups
You may have noticed that I am all for the philosophical and the emotional aspects of business and social enterprise. Nevertheless, I equally advocate for the importance of bookkeeping especially for start ups.
Having a product or service that you believe will make a major difference to the world is great. However, you need to ensure that you record all of your financial transactions.
3 Major Reasons Why Start Up Business and Social Enterprises Need Bookkeeping
It’s important to make recordings of all transactions such as income, purchases, sales and payments by your organization. You may be more excited about getting the operations of your business or social enterprise, but bookkeeping may bore you. It is significant for three main reasons:
- Financial Health – You need to keep track of how your organization is doing financially. Your finances are one of the major resources you have to be able to implement you strategy, and bookkeeping helps you stay on track with your finances. You don’t want to be surprised one day to find that your organization is making a significant loss and can no longer continue its operations!
- Accountability – Bookkeeping helps to prevent corruption, theft and other malpractices when it comes to money. Your reputation is very important, especially for start up businesses. By having a bookkeeping system in place, you are more able to show your investors, donors, clients and employees that you are on top of your game.
- Informed Decision Making – Bookkeeping helps to measure your financial performance. By doing so, you will be able to make more informed decisions about what the best actions are for the business or social enterprise.
Prioritising Bookkeeping in Your Start Up Immediately
I understand that bookkeeping may not be on your priority list when you are initially starting up your social business however it should be part of the long term business strategy. You will want to ensure that you actually have a viable business and social enterprise to begin with! However, once your business or social enterprise is receiving a regular income, and you are making payments and you can begin to see the feasibility of the entire venture, then you should begin at once that you have a system of recording your transactions.