Many small business owners use spreadsheet programs such as Microsoft Excel to track income and expenses. While spreadsheets can work for small startup businesses, as your business grows you will benefit when you switch to a dedicated accounting system. A spreadsheet lacks flexibility and cannot grow with your business. Here are four situations that might indicate it is time to mature your business beyond spreadsheets.
When you spend a lot of time changing spreadsheets.
Eventually, the business will grow and you will find that tracking the spreadsheet and performing basic accounting tasks will cut into the time you need to devote to growing your business. Some business owners fall into the trap of sticking with an accounting spreadsheet for too long. They are so busy struggling with the old system that they do not have the time or resources to upgrade and transfer their data into a more robust accounting system that would solve their problem.
When you can’t immediately spot mistakes.
The possibility of errors rises when more than one person does the accounting, which is one of the reasons many small business owners start out doing the books themselves. If you only need to keep track of a few transactions per week, it’s easy to verify the income and expenses of the business in a spreadsheet. But what about when you need to delegate, or the number of transactions grows to dozens, or even hundreds per day?
What happens when you calculate the totals for 1,000 rows and the spreadsheet comes out with numbers that are obviously wrong or don’t match your expectations? Finding the problem can be like searching for a needle in a haystack. Even if all the numbers match up, the mistakes can come in the form of an error such as a changed formula or calculation override. These mistakes are no joke. In 2012 an Excel calculation error cost the bank JPMorgan $9 billion in revenue.
When you need reports to find problems or look into the future.
There’s a lot of valuable information in your accounting data, including sales patterns, possible causes for waste and expense, and employee productivity numbers. You can use all of this is information to make projections that are essential to the future of your business. It’s easy to miss them in a spreadsheet because recognizing them is challenging and time consuming. Accounting software has tools and reports that call out these patterns and help you isolate and solve problems and make critical decisions based on the correct information.
Your business starts to diversify.
Savvy business owners keep track of each stream of income separately. This means as you begin to offer more products and services, the number of spreadsheets will multiply rapidly. If your business is new, it might seem easy and just a matter of keeping a single spreadsheet; but when your business grows, you will suddenly have dozens of spreadsheets all vying for your individual attention. This will mean more time working on spreadsheets and more opportunities to make mistakes.
Maintaining spreadsheets is costing you growth.
Try an experiment: Keep track of the amount of time you spend managing your spreadsheets versus growing your business, then figure out how much more would be coming in if you were to spend all your time on your business. This is the amount of money your spreadsheet accounting system is costing you (the Excel Opportunity Cost). Odds are it’s more than you thought.
There is a solution to your spreadsheet situation.
Cougar Mountain Software offers accounting solutions for your growing business. Our Denali Basecamp package provides only the products you need and is a great first accounting system for business owners that want to mature beyond Excel and want a system that will grow with their business. Click here to review our Denali Basecamp package and schedule a one-to-one demo today.