Maintaining your books is probably one of the most daunting and worrying things you will be doing when running your own business. In reality - with the right advice, support and guideance your potentail concerns can be negated.

What is book-keeping? 

Book-keeping, a business legal requirement,  is the recording of your business’s income, expenditure and all amounts outstanding.  It about keeping accurate financial records which are used to help you understand how well your business is doing, who owes you money and who you owe money to. 

Your systmes, no matther how simple or complicated (i.e excel or computer software like SAGE/OPERA/NAVISON) will provide you with the instuments to allow you to understand how well your business is doing. In additon to managing your business it allows you to produce end-of-year accounts or tax returns - but the benefits don’t end there.

Well-organised, regularly maintained and precise financial records are essential to sales and cash flow analysis, credit management and stock control. Your books should provide you with a reliable gauge of your business’s performance and financial health, enabling you to make changes where necessary. Failing to keep accurate, up-to-date financial records could lure you into making poor decisions based on misleading or insufficient information.

Most businesses find it easy to handle their own book-keeping needs. This requires understanding some basic principles and the use of a few straightforward methods. It is essential that you retain all receipts, sales and purchase invoices, credit card slips and bills. You also need to keep a close eye on your business bank statements to ensure that transactions match those recorded in your books.
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Getting the price of your product or service right is vital to the success of your business. If you set the figure too high potential customers will be put off and sales will suffer. Aim too low and you could be left committed to a loss-maker that drains profit from your business.

The key is to do sufficient groundwork that will enable you to set an optimum price. This will allow you to maximise profits after all of your costs have been paid for, while your product still remains attractive to customers.
Two methods are common. Cost-plus pricing involves calculating how much your business has to pay to develop, manufacture, market and supply your product or service. Expressed as a percentage of total costs, mark-up is then added. The alternative is value-based pricing. Put simply, this is determined by how much customers are willing to pay.
Always invest a lot of effort into setting a price. Review all of your prices regularly to keep them at an optimum level and be prepared to make changes – increases as well as reductions. When pricing a new product or service, begin by finding out more about the market.

Research : Unless your product is unique - check out the competition. 

• Find out how much your competitors charge.
• If you set your price too much above theirs you risk gifting them an important selling proposition. This could result in your losing custom.
• Set your price too much below theirs and you will be throwing away profit, while consumers might wrongly consider your product to be inferior.
• Find out whether your competitors offer price-sweeteners (eg ‘buy now, pay later’ deals). If so, consider whether you can compete.
• Try to understand their selling strategy. For example, whether they offer seasonal discounts or whether their prices are deliberately kept low to attract sales on other products.
• Never simply match a competitor’s price without calculating your own costs first.