Statistics show that approximately one in two small and medium businesses never make it past the first five years on the market. Odds are—if you know another person who runs a business, one of you will close down before the five-year mark.
There are several reasons why a business can fail. Sometimes, the idea is simply not good enough, or the competition is too high. Sometimes, business owners don’t have the right mindset to run a successful company.
But even if you’re an excellent entrepreneur and you’ve found the perfect niche for your business, you’re most likely facing these 5 most common small business accounting issues. Let’s look at what they are and how you can fix them as soon as possible.
1. Incorrect Management of Cash Flow
To fix this issue, you need to properly track the stream of revenue coming in and going out to gain insight into profitability vs. cash. Don’t rely on traditional financial statements for this. Instead, use management reports and automate the billing and collections processes.
2. Inefficient Hiring and Retention Processes
While you can’t prevent the natural churn of employees, you can have measures in place that prevent this from becoming an issue for the company. Hiring and training a new employee is more costly than most business owners realize. Cutting down on these costs starts with ensuring you’re hiring the right people for the job.
3. Missing Standardized Processes
By having standardized processes in place in your organization, you can guarantee that you are delivering a consistent and high-quality product or service every time. This increases customer satisfaction and helps you know exactly how much each product or service cost. This allows you to bill your clients correctly and not risk losing money.
4. Faulty Reporting
As a business owner, every moment you’re not fully aware of your finances is a moment you are at risk of losing money. You must always have a clear understanding of what is happening in your business. This requires access to full reports in a timely manner. When you have a clear picture of the present, you can make strategic plans for the future.
5. Not Working with an Expert Accountant
Owning a business can be overwhelming. There are many moving parts to keep an eye on, and it’s not just inside the company (finding clients, developing products or services, hiring employees, etc.). But also outside of it (ever-changing laws and regulations, fluctuating markets, issues with suppliers, and so on).
Get A Small Business Accounting Expert
You need an accountant that understands your business and can take some of these responsibilities off your shoulders so that you can focus on growing your company. Here at Banks, Finley, White & Co., we do just that. Get in touch with us for a quote today!