When someone is contemplating investing in a sports team, a racehorse, or any similar celebrity-filled, performance-based business venture, there’s plenty of glitz and glamour that can effectively cloud the decision-making process, resulting in inadequate negotiations and poor choices. But a smart business person is going to look past all the high-gloss shine and pay closer attention to something much more important: the record of success.

No matter how many star players, product endorsement contracts, and sold-out season tickets a given baseball or football team has, if they’re not winning games – and they haven’t been for a while – a smart businessperson knows they’re not worth top dollar as an investment. Likewise, no matter how much a given athlete or racehorse has won in the past, if they’re past their prime, they’re not going to attract the top dollar from savvy businesspeople who are paying attention to the record.

Those facts well illustrate why keeping accurate financial records for your business can dramatically increase its value when it comes time to sell the business or to seek out additional funding for growth.

What it means to keep accurate books

Keeping accurate books doesn’t necessarily have to include reams upon reams of accounting records going back generations. It doesn’t necessarily have to include the very latest and greatest software packages or help of a prestigious accounting firm that everyone will recognize.

Rather, keeping accurate financial records means just that: maintaining a thorough, neat, accurate record of all financial transactions involving the business, along with clear documentation of where funds are coming from and where they’re going on a day-to-day basis.

If that information can be easily translated into pretty graphs and charts, all the better. But even when looking at the financial records themselves, glitzy charts and graphs won’t be able to hide a less-than-stellar record from a savvy businessperson.

Why accurate records boosts business value

Whether you’re considering selling your business or you’re seeking out investment or traditional funding from a bank, the people capable of helping you reach your goal aren’t going to be interested in how sleek and modern your office is or how well-produced your latest web video is. They’re going to be interested in one thing and one thing only:

Is this business financially viable, and will it likely stay that way?

Clear, accurate financial records can answer that question better than any other sign of your success, and – unlike many others – they can’t be faked. At least, not without breaking the law.

Those businesses that can clearly prove in black and white that they’re successfully bringing in revenue, gaining and retaining customers, and turning a healthy profit will enjoy a higher valuation than companies that can’t do so. Anyone with the means to either buy or invest in a business wouldn’t dare look at any other factor unless they’re satisfied on this front.

If your company doesn’t currently have clear, accurate financial records you can share with these individuals, or if the records you have show that the company has been struggling financially, your best bet is to avoid selling or seeking funding at that point if at all possible. Focus instead on building the financial strength of your company and establishing at least several months of records to prove you’ve done so.

Then head back to the bank or to market with positive records in hand.

How to keep accurate books for your business

Keeping accurate financial records really comes down to being organized and being consistent.

You must have duplicatable systems in place for handling all financial transactions, and you need to insist on having a paper trail under all circumstances. Then, on a routine basis – preferably daily or at least weekly – all transactions need to be accurately entered into whatever recording system you’ve settled on, and the books need to be reconciled to confirm every penny is accounted for.

Once these systems are set up and everyone involved in handling the company’s money gets use to the process, it should be fairly simple to keep the practice going over the long term.

This seems like Small Business 101, but the fact is many small businesses – especially home-based businesses – seem to give the keeping of accurate financial records little priority. They often find themselves unprepared for circumstances where clean books are needed, and they can miss out on opportunities as a result.

So if you’re currently running a profitable business and you’re maintaining accurate financial records, keep up the good work. You’re going to pat yourself on the back down the road when someone studies those records and agrees your company is worth investing in.

If you’re not keeping accurate records at this point, don’t hesitate another moment. Whether you’re doing well financially or not, tracking and remaining aware of your company’s financial situation can only help optimize that situation, and you’ll appreciate having taken the time to do so when it leads to a higher business value in the future.