Focus on the:
All the business related activities that a business does, no matter how large or small, finally gets translated into numbers. Hence the importance of accounting for any business. It is a numbers game and the following are the main numbers that are important.
The topline – Focus on your sales figure. The product / service you offer must be attractive for customers to purchase. Is there a demand for your product / service.
Margin – How do you decide on the price to charge for your product / service. You need to cover the purchase cost and be cover overhead costs and leave a profit for you ie. You need to have enough of a margin.
Transaction costs – These costs such as rent, vehicle expenses, advertising, accounting fees will be a constant amount across a broad range of sales eg. whether you sell 50 or 200 units your rent will be the same. These are costs that you have a choice in controlling eg. Rent can be controlled by deciding on location and space required.
In an accounting context, systems indicate a step by step procedure to complete a task eg. There will be a system for processing invoices payable. Some basic examples are given below.
Invoice the customer – One important system is to ensure that the products / services must be invoiced to the customer. Although this may seem obvious, a surprising number of businesses have missed out on sales simply because it was not invoiced!
Don’t mix business and private transactions – Another simple system to adopt is to keep business transactions and personal transactions separate ie. Use the business bank account and business credit card strictly for business transactions.
Is the business being conducted under the correct ownership structure ie. Sole trader, Partnership, LTC (Look Through Company), Trust or Company. The most suitable ownership structure will be dependent on the owners personal circumstances and the type of business.