Simple Record-Keeping for Informal Traders

Many informal traders run their businesses from memory. They know roughly what sells and roughly what they made this week. But "roughly" can hide problems: a product that never makes a profit, money that disappears, or a slow month you did not see coming. Keeping simple records gives you a clear picture, and it does not have to be complicated.

Why records matter

• You know if you are really making money. Busy days do not always mean profitable days.
• You can price properly. Records show your true costs, which helps you set prices that cover them.
• You can plan stock. You see which items sell fastest and when, so you buy the right amounts.
• You can show your business is real. Suppliers, funding programmes and banks usually want to see records before they help you grow.
• You are ready for tax questions. If your business grows, you may need to register with SARS. Records make that much easier.

What to write down

You only need to track a few things consistently:

1. Money in (sales)

Write down what you sold each day and how much you received. If you sell many small items, you can record a daily total instead of each sale. Note how you were paid: cash, card or in-app.

2. Money out (expenses)

Record every business expense: stock, transport, packaging, rent, electricity, airtime, stall fees and wages. Keep slips and receipts in an envelope or a folder for each month.

3. Stock

Once a week, count your main stock items. Comparing what you bought, what you sold and what is left helps you spot waste, spoilage or theft.

4. Money owed

If you give credit to customers, write down who owes what, and when they paid. If you owe a supplier, record that too.

Method 1: The notebook

A simple exercise book works well. Rule each page into columns: date, description, money in, money out. At the end of each day, add up the columns. At the end of each week, add up the daily totals. It costs almost nothing and works during load shedding.

Method 2: A spreadsheet or app

If you are comfortable with your phone, a free spreadsheet app or a simple bookkeeping app can add up totals for you and keep your records safe if the notebook gets lost. Choose something simple you will actually use every day.

Method 3: Let digital payments do some of the work

Every digital payment leaves an automatic record with the date, time and amount. When customers pay you digitally, part of your record-keeping is done for you. On Bona Markets, the in-app payment gateway keeps a transaction history for both buyers and sellers. Combine that history with your notebook for cash sales and you have a complete picture. Read more in our guide to cash and digital payments.

Keep business money and personal money apart

This is the single most useful habit for any small business owner. When business money and household money are mixed, you can never tell how the business is really doing.

• Open a separate bank account for the business if you can, even a basic one.
• Pay yourself a set amount every week or month from the business, instead of taking money whenever you need it.
• If you take stock for your household, write it down as if you bought it.

A simple weekly routine

1. Every day: record sales and expenses before you close.
2. Every week: add up the week, count your main stock and check who owes you money.
3. Every month: calculate your total sales, total expenses and the difference, which is your profit. Compare it with last month.

It takes about ten minutes a day once it becomes a habit.

Reading your records

Records are only useful if you look at them. Ask yourself each month:

• Which products made the most profit, and which made little or none?
• Which days and times are busiest?
• Are any expenses growing faster than sales?
• Is the money I take home enough to live on?

The answers help you decide what to stock more of, what to drop and where to cut costs.

A note on tax and registration

Many small businesses start informally. As your business grows, find out whether you need to register with SARS for tax, and whether registering your business with the CIPC would help you work with bigger customers or suppliers. SARS has a simplified turnover tax system aimed at small businesses; check SARS's official website or visit a SARS branch for the current rules and thresholds that apply to you. Good records make every one of these steps easier.

Start today

You do not need a perfect system. Buy a notebook, rule some columns and write down today's sales and expenses. In a month, you will know your business better than ever before. For more practical guides, visit our blog, or read about Bona Markets and how it helps township businesses go digital.