In this post, we are setting aside some space to discuss keeping your finger on the pulse of your sign shop’s financials.
You might wonder at first, “Why is it so important to do this?”
The answer is more complicated than you might think. To distill it concisely, it comes down to being decisive in running your sign shop business. The ability to make decisions is vital in any industry, but the sign shop industry has its own set of challenges that require business leaders’ attention.
Staffing, marketing, operations, and purchasing materials are some of the areas where business owners have to make decisions every day.
If you always have your fingers on the pulse of your sign shop’s financials, then you can make those hard decisions without becoming unsure of yourself. You won’t have to wonder whether your decision will cause your business to succeed or fail; you will already know what is best.
Before we specifically get into profits and losses, we have some account setup to do. This can be a somewhat tedious process, but you will see its use as we go along.
First, set up an online QuickBooks subscription. In case you’re unfamiliar, this is online accounting software that you can use to keep all your numbers in order.
Next, you need a point of sale (POS) system that can map your chart of accounts (COA) to QuickBooks. Luckily, if you already have an account with shopVOX, you know that our print shop software already does this! However, there are other POS systems that can do this for you.
Then, you will need to have access to your business checking accounts and any credit card accounts associated with your business. You have to link up these accounts directly to QuickBooks.
Finally, your POS must connect to QuickBooks so it can begin logging all your transaction data. This can be a time-consuming process, since it involves you mapping the criteria that translates financial data from the POS to QuickBooks.
How do you accomplish that? You have to input everything involved with how your sign shop spends and makes money. That includes sales taxes, customer information, quotes, and actual orders. This data will then appear in the correct chart of accounts in your profit and loss statement in QuickBooks.
The last part of this setup is simply time! We recommend taking 30 minutes a week to get intimately familiar with your sign shop’s financial data. We explain more about this below.
Understanding Your Profit & Loss Statement
We now come to understanding your profit and loss statement. This is an area where QuickBooks can help. As long as you continue inputting your sign shop’s expenses and earnings into shopVOX or whichever POS you are using, QuickBooks will learn from that and automatically categorize the transactions into types.
For instance, based on your initial work in the POS system, QuickBooks will categorize your gas purchases for a company vehicle in “automotive expenses” or however you have your accounts set up. It will recognize the payee and do this based on historical trends in your system.
Essentially, what this process comes down to is this: all of the business transactions you enter into your POS system form your profit and loss statement. It is both accurate and current, since it is updated to the day, up to the most recent transaction your business made.
And, with the hundreds or thousands of transactions your business conducts each month, you should work on categorizing your transactions in the POS weekly, not biweekly or monthly. Those 30 minutes a week will eventually decrease, however, as QuickBooks gets smarter with recognizing transaction types.
Making Decisions Based on Your P&L Statement
So, why was all that important to your sign shop? Now that you have an accurate profit and loss statement, you know everywhere that money is coming into and going out of your business. It gives you a clear window into the financial health of your company.
Of course, a P&L statement also gets more granular. You can see your cost-of-goods percentage for the week, month, quarter, and so on.
Similarly, you can track your cost goals here, too. If you need to stay under a certain cost percentage, then seeing all your transactions in one place can help you to do that. The same goes for overhead costs: you will benefit from being able to track utility bills and advertising costs so you can see what you are spending and when.
All of this data comes together to help you make the best decisions for your business based on historical transactions.
Wondering if you’re overstaffed? Understaffed? Spending too much on marketing? The P&L statement created in QuickBooks will inform you of all of that.
Automating your Income and Expenses
We want to close by emphasizing the accuracy of this kind of business-management process. You will know your decisions are sound because they are based on the most up-to-date information that is found in your P&L statement.
The fact is that the shopVOX software works directly with QuickBooks to automate every transaction record as you make it. As long as you trained QuickBooks in the beginning to recognize transaction types, then every purchase and profit will be logged automatically in your accounting system.
As you can see, keeping your fingers on the pulse of your sign shop can go a long way toward helping you make sound decisions for your business. It’s all possible with a POS system like shopVOX.
Contact us today to ask any questions about our product!