🛠️ Tools | Moving Past the Paper Napkin #01

3 tools to help you track your finance/accounting as an early-stage business owner

Photo by Debby Hudson on Unsplash

It’s one month after you started your business. You’ve been selling and receiving payments. You’ve had to pay your vendors and contractors. It’s just you running the show for now, so there are no employees yet. Maybe your friends decided to help out a bit throughout the month. You feel like you’re making money because the customers are lining up out the door. But, are you really, though?

How do you know how much and when to start paying yourself as the owner? You feel like you have enough cash, but do you??

Today, I want to show you 3 free or low-cost tools you can use to quickly know how your business is doing outside of a paper napkin or your brain.

1. Google Sheets/Excel/Spreadsheets

2. Mercury

3. Wave

Google Sheets/Excel/Spreadsheets

Yes, spreadsheets can be intimidating, but they can also be a place for you to have your questions answered. I always say that you can build your whole dream in a spreadsheet and test out different scenarios and possibilities for your business before implementing it in the real world. Honestly, there’s a whole lot you can do with just plus, minus, and division functions. Here is where you can start detailing every sale and expense you’ve had during the month. Then, you simply subtract total expenses from total sales to get your net income (how much money you’ve made).

Your net income is how you can determine if you have enough money to pay yourself. You can then start seeing the trends from month to month to determine whether you’re truly bringing in enough sales to pay your expenses and yourself as the owner. A business owner can’t say they don’t know their numbers. Your numbers are there to help you confidently talk about the story behind your business. Whatever feelings you have around numbers and spreadsheets are valid, but it’s up to you to know your key business metrics and data.

Mercury

If you’re a startup, Mercury could be great for your banking needs. It’s easy to sign up and it connects to any other financial software that you might think to implement in the future. It allows you to categorize your transactions and also gives you access to virtual and physical business credit cards. They have a great early-stage founder community and technology perks. If you still don’t want to jump into an accounting system and don’t want to deal with a spreadsheet to track finances, this could be a good median. It’s a great way to get used to categorizing your transactions at the beginning stages with a great user experience. But, spreadsheets will never truly go away 😂.

Wave

Wave is a free accounting software that’s a step up from spreadsheets. I would recommend Wave if you’re tech-savvy and aren’t afraid to jump into the software. It’s an easy-to-use software that connects to your bank account. It automatically syncs your bank transactions and allows you to categorize the transactions with their ready-made chart of accounts (how you categorize your transactions into different buckets). Using Wave will allow you to have your financial reports already populated: Profit & Loss Statement, Balance Sheet, and Cash Flow Statement.

Profit and Loss statement is where you’ll see your total revenues and total expenses. Balance Sheet shows you how much money money you have in assets, how much money you owe other people or vendors in liabilities, and how much your business is worth in equity on paper. The cash flow statement shows you how much cash you truly have to spend after factoring in all potential income, liabilities, assets, and expenses. The cash you see in your bank account doesn’t always factor in expenses that are upcoming or pending during the month, as well as how much cash you have just sitting in inventory.

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At the end of the day, these tools are there to further help you manage your business and make sure you’re growing in the right direction. Knowing your numbers is one of the powerful ways to tell your business story. Imagine being able to talk about your revenue growth, why you were able to hire more people, and how much your profit is growing month-to-month. My whole goal is to empower the business owners and leadership teams I work with to feel comfortable with the numbers and be able to make any changes they want. Because it’s your dream we’re working on, so let’s make it as successful as you want it to be.

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🔜 Next post will be about leveling up your finance operations tech stack after 1 year in business. Business has become more complicated, and it’s become harder to continue using free/low-cost tools to track your finances. You have a better idea of what metrics you want to track, so what tools will take you to that next level without breaking the bank?

📥 Office Hours is on! Use this anonymous form to send in any finance and accounting business questions you may have.

😁 Now, I'm not your employee or finance consultant, so all business decisions are yours to make.

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Woolichooks provides finance digital transformation services, which include setting up finance software systems and processes to enable companies to scale for growth.