PREPARING FOR THE NEW VENTURE LAUNCH: EARLY MANAGEMENT DECISIONS (Continued….)

Entrepreneurship MGT602

Lesson 38

PREPARING FOR THE NEW

VENTURE LAUNCH: EARLY MANAGEMENT DECISIONS (Continued....)

RECORD KEEPING

It is necessary to have good records for effective control and for tax purposes. The entrepreneur should be

comfortable and able to understand what is going on in the business. With software packages, much of the

record keeping can be maintained on a personal computer. The goals of a good record keeping system are

to identify key incoming and outgoing revenues that can be effectively controlled.

Sales (Incoming Revenue)

It is useful to have knowledge about sales by customer both in terms of units and dollars. The entrepreneur

of a retail store might try to identify the profile of the type of customer that patronizes the store. Retailers

also like to have information on specific customers. Credit card purchases can be tracked for information

on the type and amount of merchandise purchased. An Internet venture can maintain purchase history data

on the types of produces purchased. Customers' e-mail addresses can be requested so the customer can be

notified of sales. Some Internet firms have established a free membership as a means of following up. In a

service venture, records would need to be maintained on when a customer paid their monthly fee. As cash

flow problems are the most significant cause of new venture failure, good payment records are necessary.

Record keeping of payments can either be handled by a computer software package or a simple card file

system. If payments are late beyond a reasonable time, it may be necessary to hire a collection agency, but

only as a last resort.

Expenses/Costs (Outgoing Revenue

Records of expenses are easily maintained through the checking account. It is good business practice for

the entrepreneur to use checks as payment for all expenses in order to maintain records for tax purposes.

Canceled checks provide proof of payment. In the early stage, it may be desirable to make all payments on

time to establish credibility with suppliers. The entrepreneur should maintain information about employee

either in a software program or in a card file. It may be necessary to maintain records on all assets owned

by the business.

Other Records

The entrepreneur should maintain information about employees either in a software program or in a card

file. Records on all assets owned may be needed. With a good record keeping system it is easy to maintain

controls over cash disbursements, inventory, and assets.

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