The fourth step is to set up a record keeping and financial system.
Record Keeping is the process of compiling, recording, classifying and communicating financial information to management, investors, government agencies, etc.
Analyzing and tacking financial information is the beginning of developing good, sound management practices in a business.
What are the benefits of good record keeping? Below there are listed a few of them:
Help you plan, control and evaluate the company’s operations.
More efficient use of resources
Help you produce meaningful financial reports to determine the health of the business.
Facilitates the preparation of the income tax return.
Readily produce information to be presented to potential lenders and investors.
Help you measure performance of the business on a timely basis.
Enable consistency and continuity of the organization.
What are some of the characteristics of keeping good records?
Reliability – the records are a full and accurate representation of the transactions, activities or facts to which they attest and can be depended upon in the course of subsequent transactions or activities;
- Timeliness – Accessing financial information when it’s needed for making decisions in the business or presenting it to third parties.
- Integrity – the records present the reality of the organization. It has veracity and truthfulness.
- Understability – the information is useful, it can be understood and it allows users to see its significance.
Policies and Procedures:
Maintaining clearly and identifiable written policies and procedures on how certain tasks will be processed and the steps to follow to safeguard its assets will promote efficiency, protect the company’s assets and provide a sense of uniformity and consistency in the work environment.
Define your business structure:
Once you have identified your idea or dream and have determined that you have what it takes to be an entrepreneur, the next step is to define the legal business structures.
To continue with my series, this article written by #James Caan contains interesting information on the most important aspects to keep in mind when writing a business plan:
A new business starts with an idea, a dream, a vision. Sometimes those ideas become just a hobby and not a real business.
A few things that differentiate a business from a hobby is the amount of time dedicated to the activity,