7 Reasons Your Messy Books are Hurting Your Business

Clean books and regular reviews are the foundation of a strong financial position for your business. Here are seven ways messy books are holding back your business growth:


1. Risky Business

Risk comes in all sizes and shapes, but the number one risk for a business is running out of cash. Looking at your bank balance works while you’re small, but as you grow you need a more sophisticated method of knowing your numbers.


2. Reactive Tax Scramble

For savvy business owners, tax-ready books are de rigueur all year, not just in April. 

From accurate quarterly estimates to taking advantage of every deduction possible, your books are the foundation for smart tax strategy.


3. Bad Inputs, Bad Outputs

Your books are a little like Chat GPT: your inputs will determine the quality of your outputs. If your query is sloppy or not thoughtful, you’ll get the same back. 

Can your books answer these questions:

  • Can I afford new equipment?
  • How should I time my next hire?
  • Can I make payroll during the lean months?
  • How much can I afford to take as a draw?
  • What is my estimated tax liability?
  • Can I pay my staff a bonus?
  • How much working capital do I need?


4. Problems and Opportunities are Hiding

Numbers tell stories. You may discover extra capacity in one of your business lines, or a no-brainer product upsell that drives “free” incremental revenue. You might discover a pattern of overspending on operations and redirect that expense to driving sales and revenue growth. 


5. Investors and Lenders: Hard Pass

Neither banks nor investors like messy or nonexistent books; it’s a huge risk for them to lend to or invest in a business when they can’t make heads or tails of the numbers. For this group, clean, organized books are a sign that the rest of your operations are in order, and that they can invest with confidence and help you propel growth.


6. Not Knowing Your Numbers

According to Sage, 82% of small business owners who experienced growth in the past year cited effective financial management as a key factor. And NetSuite reports a 95% success rate for small businesses that look at financial statements weekly. 

Let us repeat: doing your own bookkeeping is not the same thing as having a strategic handle on your finances. That’s like saying you’re CEO of a plumbing company because you plunge the office toilet on a regular basis. 


7. Exit Ready?

At some point, you might be ready to hang up your hat and take an extended trip to the beach. Or, you just want to cash in a few of your chips and take on a partner or execute a merger. Any serious buyer (and their lender) will take a deep-dive into your books, and every questionable item they find will be a reason to reduce the potential purchase price. 

Like with investors and lenders, it’s a question of trust: Can they trust these numbers? And by extension, can they trust you?

Picture of Gretchen Roberts

Gretchen Roberts

Gretchen Roberts is CEO of Red Bike Advisors LLC. As a business owner herself, Gretchen has a deep understanding of the problems, questions, and financial pain points that business owners experience on a daily basis, and how strategic financial and tax planning is the key to "breakaway" business growth and success.
From Bookkeeping Chaos to Clarity
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