According the Small Business Association approximately 50% of businesses fail in the first five years, and poor record keeping and financial controls are sited as top reasons for failure.
In thinking about small business, it is like a three legged stool each having it’s own function:
- Marketing is the function of bringing customers in the door
- Production is the function of maintaining client relationships as well as maintaining and/or improving products and services
- Accounting is the function of gathering and interpreting financial information from all aspects of the business
With out one of the legs, the stool falls over. Therefore, the key to a successful business is having all three of these functions working together. Many business owners have a handle on marketing and production, but often times the accounting function is neglected.
Many business owners want to manage this very important function because they either want to maintain complete control or they simply do not want to spend the money. The reality is business owners simply do not have the time to efficiently manage this function. Here are five reasons to consider outsourcing your accounting function:
- Save time and money. As a business owner you are an entrepreneur, who, in order to maintain a competitive advantage, is constantly looking for ways to improve products and services. If you spend as little as 10 hours a month at an average of $50/hour on your accounting, it will cost $500 of valuable time. If you took that time back and spent just 30 minutes a day with potential customers, what is the impact to your sales?
- Monitor the health of your business. Not only would you get the piece of mind of knowing your record keeping and financial controls are taken care of, but you gain access to valuable financial information and analysis. Information such as profit and losses, as well as value of assets and liabilities. This type of information can be used to help find innovative ways to drive sales and improve profitability.
- Lose the infamous box of receipts. So many times, business owners simply do not have the time to maintain and analyze their income and expenses. As a result, financial documentation such as receipts, invoices, and bank statements pile up. Eventually, all of that information is necessary to be used in the tax preparation process. Partner with a professional all year long, and stop letting it pile up and start understanding the finances of your business on a consistent basis rather than one time a year at tax time.
- Manage cash flow. Cash flow is one of the biggest challenges small businesses face. As business owners, you are faced with the daunting questions of…. Will I have enough in income to cover my bills, to pay my employees, to pay myself??? Understanding the movement of cash in and out of your business is critical to the survival of the business.
- Develop future strategies. Many business owners dream of the day they can expand products and services. With time back in your schedule, and understanding your profit and losses and where you cash flow stands, now you can develop future profit building strategies for your business. With a true accounting partner, you will be able to budget those strategies into your financials and it will set you up for success.
How do you choose the right accounting service? Certainly you want to partner with someone who can provide qualified, confidential and personalized services. All businesses are different, but the accounting process is the same. So, you want to partner with someone who can develop an accounting system you can understand and use to make smart and profitable business decisions. And of course, you want someone you can reach out to conveniently when needed.