Entrepreneurship involves numbers. It’s as simple as that. However, the way each entrepreneur interacts with numbers, especially when it comes to finances, varies from one individual to the next.
Even billionaires like Richard Branson have their struggles. Branson is dyslexic and struggled to grasp the difference between terms like net and gross. And yet, the man has built one of the biggest business empires in Europe.
Just because someone has entrepreneurial ambition doesn’t mean they’re comfortable with numbers. But it does mean they need to find the support people and tools to help them go the distance. With that in mind, here are a few ways numbers-phobic entrepreneurs can not just take care of small business finance but do so with ease.
1. Utilize Simpler Accounting Methods
There is small business accounting, and then there’s small business accounting. In other words, there are different accounting methods that you can use to manage your finances as a small business leader, and each option comes with varying levels of complexity.
Accounting methods are the rules, standards, processes, and overall methodology that you use to report your business’s income, expenses, and other financial elements. Investopedia highlights two primary methods for accounting: accrual accounting and cash accounting.
The accrual accounting method is common but also tends to be tricky to follow. It embraces tracking finances through sales, credit purchases, and the use of accounts payable and accounts receivable.
This is a nuanced and multi-layered accounting strategy that has its benefits — when used correctly. It is also required by the IRS …for companies making $25 million or more in sales for three straight years.
So, unless you’re an unusually revenue-prone small business, if you’re easily overwhelmed by numbers, chances are, you have the option to ditch accrual accounting for something more streamlined. Rather than try to make something as complex as accrual accounting work, scale back to the simpler cash accounting methodology for money management.
Cash accounting simply tracks all revenue and related business expenses when they occur. When cash flows in or out of your business, you track it. It’s a user-friendly way to keep your expenses under control and avoid the overloaded nature of running a system set up for credit transactions and AP/AR interactions.
2. Find User-Friendly Finance Tools
In the past, regardless of the specific methodology chosen, business owners had to crunch the numbers using pen and paper, calculators, and, in more recent history, the occasional spreadsheet.
Now, there are countless accounting and finance apps that can do this kind of work for you. Many of these are user-friendly and built for those who aren’t interested in understanding how finances work, so much as making sure that they’re executing their finances correctly.
User-friendly doesn’t just mean an application has nice features and an attractive color palette. In the modern, diversified tech landscape, there are literally endless options and nuances within each kind of technology. In the case of a finance tool, there should be no problem finding an app that caters to your specific needs as a business.
Thryv is a perfect example of this. The small business SaaS provider designed its ThryvPay solution for more than just retail businesses (which tend to get the focus of payment processing applications). You can tailor the company’s platform to any business model’s finances — including your own specific money management needs, from storing payment information to adding convenience fees to easy-access QuickBooks integrations.
If a tool like this fits the bill, go for it. If your particular financial activity is set up for something else, look for a tool that meets those specifications. The options are out there. Use them to offload the number-crunching aspect of your company to the machines.
3. Outsource Selectively and Work With the Right People
It’s a small world, folks. Business leaders are no longer restricted to hiring full-time financial employees from their immediate geographic vicinity. They can diversify, fractionalize, and outsource their small business finances to a variety of different individuals across their region, nation, and even the world.
Most of the time, these individuals come from three different categories of the labor force: freelancers, contractors, and employees. Let’s see how each one can help you with your finances.
Financial Freelancers
Financial freelancers are individuals who can provide specific, targeted services when needed. For instance, a freelancer might help create a financial plan, consult on the execution of that plan, or even audit existing activities.
In most cases, these are isolated services, and you can call on the support of a trained and experienced freelancer if and when it’s needed. It’s the ultimate safety valve for a business owner who still wants to do as much of their finances as they can on their own.
Financial Contractors
In many respects, a financial contractor functions in much the same capacity as a freelancer. They offer specific services such as auditing, consulting, or planning your company’s financial activity.
However, contractors tend to be a better option when there is a recurring need. You might hire a financial contractor to consistently help you execute a financial plan or operate as a financial assistant in an ongoing capacity.
Financial Employees
Finally, if the need is great enough and you have the resources, you can hire a financially-focused worker as an employee. This is a good idea if you find you want to fully pass off your company’s finances and you can’t trust or depend on a third-party solution.
Keep in mind that an employee is a larger expense. You have to pay them a full salary, train them, and provide benefits. Nevertheless, when financially feasible, having a CPA or other employee on staff to help with money management is a great way to avoid having to make numbers-related decisions as the business owner.
4. Create a CTS
Money management is complicated. This is true even when you’re using cash accounting and have the tools and individuals in place to help keep things humming along. When your financial responsibilities build-up, using a CTS is a great way to restore a sense of order in the chaos.
In the second chapter of his book Redeeming Your Time, author and ex-tech entrepreneur Jordan Raynor discusses the need for busy people to use a CTS or “commitment tracking system.” This is a productivity tool that helps with a variety of work and personal activities.
The concept is that when an unresolved thought (called an “open loop” in the book) is bouncing around your head, and you can’t tend to it right away, add it to your CTS. Then, when you have time, you process these open loops into various categories, such as ones that you can address sooner, as well as other larger projects or long-term responsibilities.
Again, a CTS is a Swiss army knife of an organizational tool that can help with countless different scenarios. One of these is finances. If you find the numbers game leaves you feeling overwhelmed at times, a CTS can give you a place to catch those open loops and tend to them on well-understood deadlines. It helps reduce stress and avoid fretting over future responsibilities and is a great way to reduce the negative impact of managing finances as a small business leader.
5. Hone Your Financial Literacy
Finally, don’t use outsourcing and financial management tools as an excuse to avoid learning about how to handle finances as a business owner. In the Richard Branson interview referenced in the introduction, the billionaire clarifies that even though you shouldn’t let academic shortcomings hold you back, you should still take advantage of the tools, resources, and support systems available to learn what you can.
While he is talking in reference to dyslexic individuals, in particular, the advice rings true for anyone who is numbers-phobic. At one point, he specifically says to “get help to get some of the basics with the particular thing that you’re struggling at.”
As a counterpoint, Branson follows this up with the important line, “Don’t fret too much about it.” Both pieces of advice are critical for the ongoing development of financial literacy in the number-averse. You want to be willing to learn what you can without letting your educational journey stress you out.
As a final word of warning, beware of excessive confidence sparked by the path to financial literacy, too. Many who struggle with financial literacy often operate as if they don’t. When that happens, misplaced self-confidence can not just hold you back. It can hurt you. Stay humble and willing to learn as you work your way through your company’s finances.
Managing Business Finances Without Becoming Overwhelmed
As the example of Branson and many others proves, it’s possible to be wildly successful at running a business without being a math whizz or teaching a master class on financial literacy. All that’s required is a little resourcefulness and a willingness to take advantage of the support lines available to you.
Keep your accounting methods simple. Use tech tools that line up with how your finances function. Hire freelancers, contractors, and employees based on your specific resources and needs. Use a CTS to track your financial responsibilities. Invest in improving your financial literacy over time.
If you can implement these tips, you can crush your small business’s financial goals with ease, all without personally stressing out or becoming overwhelmed in the process.
Featured Image Credit: Photo by Yan Krukau; Pexels; Thank you.
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