Bookkeeping: The Old-School Habit

As human beings, we tend to forget things easily. That’s why it’s always wise to write things down — especially when it comes to money and finance.

Have you ever wondered how our parents and grandparents managed to run a household with three or four children, handle all expenses, and still save — all on a limited income? If you’ve noticed, many of them maintained a small diary or notebook. They recorded every expense, no matter how small. They always knew how much they earned, how much they spent, and how much they had left. Based on that simple habit, they managed finances, that too without any credit cards, loans, or digital apps — just discipline and paper.

When you run a business, the same principle applies. You need to track your daily, monthly, and yearly financial progress. Without it, you have no way to measure your performance or decide whether to continue, expand, or shut down. This process is called “accounting and book-keeping.”

You may know that Reliance Retail — including its fashion arm, Reliance Trends — recently closed around 2,200 underperforming stores in FY25. Why? To streamline operations, improve profitability, and prepare for a potential IPO.
How did they identify which stores were underperforming? Because they maintain detailed books and accounts for each outlet.

So, what exactly is book-keeping? It might sound complicated, but at its core, it’s as simple as 15 - 10 = 5.
Let’s say you buy a pen for ₹10 and sell it for ₹15 — you earn a profit of ₹5. Most people know this basic math, but very few actually document it. And that’s where problems begin.

My father once told me a true story that perfectly explains why basic math and record-keeping matter.

True Story:

My father’s friend, Shamim, had a son who wasn’t interested in studying and couldn’t get a job. Hoping to secure his future, Shamim set him up with a small leather belts and wallets shop in Kanpur. He bought the initial stock himself and showed his son how and where to restock later.

Business started well — sales were strong and the shop was always busy. The son was happy and confident, thinking he was doing well.
But after four to five months, he went to his father asking for more money to restock. Surprised, Shamim asked how the money had run out so fast. It turned out the son had been selling items at prices lower than the purchase rate. He never calculated profit and loss or kept basic records — he just sold based on guesswork.

That story still reminds me how a lack of basic math and book-keeping can turn a growing business into a loss-making one — no matter how good the sales look.