Well, a new year is almost upon us once again.
And just like last year (and the 5-10 before that), you’re probably thinking of making some kind of resolution around the areas of money and finances.
Talk to anyone running a woodworking business, or any biz for that matter, and one of the biggest areas of frustration is keeping track and staying on top of the finances. Bookkeeping just isn’t your idea of a good time, for some strange reason.
So, this year, how would you like a new approach that will minimize the hassle, and take it from overwhelming and complicated to simple and automated? Thought you might like that.
Before diving into the system itself, let’s look at why this area of business causes so many headaches.
Money feels complicated so you treat it as such.
For most of you the word “money” automatically conjures feelings of pain, fear, and lack. It’s easy to constantly focus on how much you don’t have. And working on your bookkeeping is just another way to remind you of that apparent lack. I know I used to avoid it like the plague for this reason.
Also you’re probably using software and tools that are actually designed for larger businesses. It’s bloated, confusing, and a real pain for you to do the simplest of tasks for your small business. It makes everything feel overwhelming. That fact alone makes it really easy to let your bookkeeping pile up.
The way out of the overwhelm and frustration is to ditch all the unnecessary steps and pare your financial tracking and bookkeeping down to a simple uncluttered system.
The simpler you can make it, the easier it will be for you to really stay on top of the numbers and make your finances a valuable gauge to your success as a woodworking entrepreneur.
A word on simplicity
As a small one person operation, it’s easy to get reeled into thinking you need the biggest most powerful accounting software out there because, you might need all those bells and whistles if you suddenly grow, right?
Also it’s easy to acquire tools like that because you want the feeling of being successful, and buying what the successful companies use will surely make you just as wildly successful. Right?
Wrong on both accounts. Approaching anything like this will mean more time and energy spent on tasks that aren’t supposed to be complicated and will actually cause you to fail at this crucial area.
So, what is the ideal setup for a small one person woodworking operation?
The real key is to assemble a virtual bookkeeper that will track as much of the daily ins and outs as possible, thereby keeping you free to maintain the big work you’re most interested in (like making $10,000 exotic wood pepper grinders).
So here are my recommendations for setting up a simple uncomplicated system for your finances. I use this system and couldn’t be happier after switching from the complicated process I had in the past. Oh, and a several of these will cost you NOTHING.
Online Bank Account
These days having an online bank account is a huge advantage. It can connect with all kinds of payment and shopping cart services, as well as the services listed below. You can transfer money between it and your home town bank, and it makes it much easier to take payments online.
ING is one of the best I’ve seen. Enrollment is simple, there’s no hidden fees and you can add additional savings accounts for trips, new equipment, etc. Just with a few clicks.
Transferring your business account to an online bank account will save a lot of time, hassle, and problems when it comes to setting up and selling your work through your web site. Plus, it makes bookkeeping a snap as most major online accounts easily sync with the services listed below.
Accounting and invoicing software.
If you deal in any type of service (i.e. restoration, refinishing, certain commissions), than you’ll need a way to issue invoices and track payments (I’ve moved away from this entirely, but more on that later).
Quickbooks is usually the go to software for solo-preneurs all the way up to larger corporations. But it’s almost $200 off the shelf and you need to spend that much every two years or so to maintain the current upgrade. There is an online version but that runs almost $160 a year.
Also, another web based system is Freshbooks. They came out a few years ago and have been going strong ever since. It’s a robust set of tools and reports that really give Quickbooks a run for their money, but the yearly cost (around $240) is a bit prohibitive.
There are many alternatives all around the web. Some are free and open source, and others have a small fee. The best alternatives to the expensive and complicated programs like Quickbooks that I’ve found are:
Harvet – Harvest is amazing. It’s a simple invoicing and time tracking system that allows you to send invoices and take payments online all at the same time. Plus it integrates with a ridiculous amount of applications and services, including everything from your Google Apps account. It also has a very robust mobile app for the iPhone that even lets you scan receipts.
Ballpark – Ballpark is another simple invoicing and time tracking system. It doesn’t have the ability to integrate with everything that harvest does, but at $6 a month, it’s definitely worth a look.
Billings – If you run your business on a Mac, then this is the go to solution. Billings is sleek, simple, and sexy. Tracking time, creating and sending invoices, and even organizing overdue customers are just some of the features of Billings. It’s won awards for its simplicity and the mobile version for the iPhone continues to impress users. You can either buy it up front for around $40 or pay as you go for less than $6 a month.
Like I said, invoicing is necessary if you’re offering services or working on private and corporate commissions. But what if you’re just starting out and you’re only looking to sell directly from your site?
Bookkeeping has never been so easy.
If you’re primarily going to sell online or at shows and not going to offer any type of service or don’t need invoices, then this is the solution for you.
Outright is a free super streamlined service that tracks all your money going in and out.
It connects with accounts like banking and PayPal. It automatically inputs every transaction, keeps monthly records, generates P&L statements, and even calculates all your taxes for you. Without you lifting a finger. And, it’s FREE.
As I’ve moved away from offering services and have been selling primarily through my own site, I’ve used Outright as an alternative to Quickbooks for quite a while and couldn’t be happier.
All you have to do is log on and take a look. Nothing to input, nothing to type, nothing to forget and let pile up. Plus if you still need to include services and invoicing into your business, Outright integrates very smoothly with Freshbooks, Harvest, and others. Making the tasks of bookkeeping almost 100% automatic.
This is the best service out there to keep track of personal spending and it’s free.
It connects to your bank account, and for the most part, automatically organizes your spending into categories based on the transaction. You do need to go in and occasionally give something a new label or category. You can set up budgets, and make savings goals which automatically tell you how much to put aside each month.
It connects to checking accounts, savings accounts, and even investment accounts. Plus it compiles everything into a super easy to read graph and makes it very simple to see where your money is going and where to plug the holes that are draining your savings.
This service has saved me money as it exposed where I was spending unnecessarily. Not bad for a free web service. Plus there’s a great mobile app.
As you can see, setting up a bookkeeping and financial tracking system is a lot easier and more affordable than you thought.
(Now just because this system will do a lot of the work for you doesn’t excuse you from keeping a sharp eye on it and maintaining awareness of your money coming and going.)
Using a combination of my online bank account, Outright, and Mint, I’ve managed to make my bookkeeping extremely hassle free and have it set up to be almost 100% automatic.
This frees me to take care of work that I’m much better at and also gives me incredible insight to how my money is working for me and my business.
This type of system will take the overwhelm and hassle out of the process and actually give you a greater advantage and insight into your money and how it is working.
This new year, you’ll find yourself looking forward to checking your finances rather than dreading it and putting it off until the tax man comes knocking.
Over to you now. Have you needed a simpler approach to bookkeeping and finances? What are some of your favorite tools and software for your woodworking business?
For a simple approach to setting up your business in 2011, grab your copy of the Woodworking CAN Pay Your Bills E-course today.
photo credit: o5com
