The Benefits of Record Keeping to a Small Scale Business
As a researcher, I have often been asked such questions as: What do you expect me to write down on that business?, how can one create any record for this petty business?,etc. And I have also gotten responses like: I can’t keep any record please, it’s a waste of time; My business is so small that I can’t afford to write anything down on it; I don’t have any accounting skills, etc. But are these enough justification for neglecting record keeping? Isn’t it proper to opine that the benefits of a task dictates its value,and hence the will with which it is executed?.What then are the benefits of record keeping to a small scale business?
According to Dictionary.com, a business is a profit-seeking enterprise.
- Profit has precedence over personal considerations. It is a fact that profit is a future result of past actions, which invariably means that today’s actions builds up to tomorrow’s profits. As a result, if profit is to be determined properly, records must be consulted, human memory alone is insufficient. The major aim of a business is to make profit but what if the business fails to achieve this,what if loss is being made instead of profit. It is through records that this can be determined especially the magnitude (monetary value) of the loss.
- Records are useful in monitoring your costs. This will enable you to determine the minimum price to sell your output in order to offset the cost and also make a reasonable profit.
- They are also helpful in increasing sales and income. Take for instance a situation whereby your neighbour sells her produce at #200/unit (Two Hundred Naira per Unit), you as a seller of the same produce may determine from your records that at #190/unit (One Hundred and Ninenty Naira per Unit) you can still make a reasonable amount of profit. You therefore stands a better chance of making more sales and consequently more income than your neighbour.
- Records help in making such decisions as when and with what magnitude should the business be expanded.It is not advisable to just wake up one morning and decide to increase your 50 birds to 100 birds without consulting your records as to whether it is feasible or not.
- They are useful in attracting loans,aids and grants from financial institutions and the government.They also help to show that you are committed to your business. Though it is not advisable to advance credit to customers in small scale business,more often,one finds such requests difficult to decline.It is through a properly kept record that one can determine the credit worthiness of a customer, and it is also through that that one can know how much credit was advanced and on what date and time so as to minimise cases of argument.
- Managerial deficiency or efficiency can also be brought to the fore through the use of records. If after comparing records with that of your neighbour who is in the same business,you realised that he produces more output per given unit of input, all other things being equal you are bound to realise that he’s more efficient and as such seeks to know the secret of his better performance.
- The keeping of records can lead you to better performance not only in terms of profit but also in terms of trouble shooting and problem solving.
From the foregoing, I have presented some of the benefits of record keeping to small scale business owners.As from today, the onus is now on you-the small scale farmer-to start keeping records in order to be able to tap from the numerous advantages derivable from proper record keeping. Make it a duty to always write in a book(not pieces of paper) any item bought for the business and any item taken from the business even the ones you consume or give as gifts.Do not find it odious to record the names of those owing the business,what they bought, when it was bought,the amount they are owing,and the date they promised to pay the business.
You cannot afford to take your business lightly, all feasible and proper resources must be channelled towards its advancement. Your business(as small as it is) is important for the advancement of this country,you therefore must not rest your oars in paddling the business to its rightful place and spontaneously paddling Nigeria to its rightful place in the comity of nations. Long life you the small scale farmer; Long life your business; Long life Nigeria.
Omofaiye, A.M is a practicing Agricultural Consultant. He can be reached through the use of any of the following:
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