Most businesses fail to grow, with a vast majority remaining tiny, one or two-person entities. Even if a business isn’t destined to be the next Google, Amazon or Facebook, it can still become a thriving, mid-market company. Here are three barriers you need to bust through if you want your business to grow.
1. The Business Owner Won't Let Go.
According to a recent study, this is the primary reason that only 5% of businesses break the $1 million revenue mark and only about 12% of those businesses reach 10 million in revenue. Either the owner thinks he’s the only person capable of getting things done or he tried to delegate in the past but got burned by a bad hire and can’t trust anyone again. The only way to get through this is to find people who can do things better than you and who don't need to be managed. Will the people you hire mess up sometimes? Yes, but you just have to deal with that. If you suffer the short-term challenges of bringing someone up to speed, your life will get a lot easier and your company will be able to tackle bigger projects and contracts.
2. Being Too Cheap
In the startup phase, when you’re not making much money, you’ve got to be careful with even the small expenses. But there comes a point where you have to invest in your business or it won’t grow. You don’t have to break the bank, but at some point you’re going to have to upgrade some of your systems, whether that means your accounting software, phones, IT infrastructure or office space.
Probably the most important step you can take is to find a great accountant or CFO. Most entrepreneurs think they should spend money on making or selling stuff, like they did in the startup phase. However, as your business grows, you need detailed data about where you're making money - or not - to make the right decisions. Hiring a great accountant or CFO will cost you, but it will help you make money in the long run.
3. Not Adjusting to Changing Markets.
If your business starts to grow, you’re going to find yourself with more competition. For example, the big guys will realize you're on to something, get angry when you ruin their quarter, and try to knock you down so you don't steal any more market share. Meanwhile, your customers are going to want price concessions as they do more business with you.
When your business is in the beginning stages, it’s easy to get sucked into day-to-day operations but this is precisely when you need to start paying more attention to your market and begin delegating internal matters to a strong team. As CEO, your job is coming up with the right strategy to keep growing your business. It’s only when you are willing to adjust your mindset that your company will be able to grow.
Bean Counters Bookkeeping is a virtual bookkeeping business; so that you can focus on what is important, your business. www.thebeancountersbookkeeping.com
Who's Watching Your Money?
If bookkeeping is not your forte, hire someone to do it - you will save so much in frustration - just be sure to keep your fingers in the books. If you choose to hire a virtual bookkeeper, keep the following in mind:
1. Get QuickBooks
For ease of use, I highly recommend using QuickBooks and hiring a QuickBooks ProAdvisor. QuickBooks ProAdvisors have taken certification exams to insure that they know the system. I have used QuickBooks both for myself and my clients and highly recommend it for its ease of use/understanding.
The online version is great in that you can see the latest version of your books at any time and eliminate the annoyance of emailing files back and forth and wondering who has the latest version.
2. They must see both the forest AND the trees
You want your virtual bookkeeper to be detail-oriented AND to see/understand the big picture. They need to know what happens consistently - every month - and update your books without bothering you for items they should know about.
At the same time, they needs to be astute enough to see the larger picture and warn you of any impending problems before they happen. If you purchase a piece of equipment, she should know how to properly enter it into your bookkeeping software to avoid problems - and therefore save time and money - with your accountant (and the IRS) later on.
3. They must know your industry
You don't want to have to train your bookkeeper on your industry language, standard industry income or expense categories or other basics. The more up-to-speed they are, the faster they can hit the ground running and the sooner you will have good data. If they don't know your industry however, be sure to give them a rundown of lingo and how you refer to your customers/clients/tenants in order for you to get the most meaningful reports out of the gate.
4. They must provide timely reports
In hiring your virtual bookkeeper, insure that you put in a provision for when you want to see monthly financials. The date will depend on when your bank month ends - give them a few days after that date to reconcile your accounts and produce reports. At a minimum, you want to see a profit & loss, balance sheet and cash flow statement.
Take the time to review the reports so you can spot any irregularities before they blossom into problems. Not sure how to read a cash flow statement? Get a check/electronic funds transfer (eft or "auto debit") transaction detail instead. It will help you see where the cash is going.
5. They must know accounting terms and still speak "English"
Your virtual bookkeeper needs to know the difference between assets, liabilities, income, expenses and equity and be able to provide your accountant with the necessary data upon request. At the same time however, if you are not "numbers oriented", they also need to be able to explain the financial statements to you in plain English.
6. They must be trustworthy
Hiring someone to keep track of your bookkeeping requires a level of trust between you both. You need to feel comfortable that they will keep track of your information and maintain your confidentiality. At the same time, if they pay your bills and have access to your bank accounts, you must also trust that they will not abuse that privilege. And make no mistake, it is a privilege to have someone (particularly in a virtual relationship) trust you with their finances, their checkbook and their business. Good business sense demands that you protect yourself "just in case".
7. They must have great communication skills
If your bookkeeper will be communicating with your clients and vendors, they must represent your business as you would. Whether virtual or in-house, it's critical that your bookkeeper be a positive force that further enhances relationships. The question of money can, at times, be a sensitive matter. You need someone who recognizes that and communicates appropriately.
Always remember - these are your books and this is your business. While you may hire someone to manage the details of tracking your finances, and should do so if this is not one of your strengths, the ultimate responsibility for oversight is yours.
This article presents tips that are intended to help you complete your tasks in an organized manner through proper preparation. “Fortune favors the prepared mind”, as Louis Pasteur said, so keep that quote in mind as you peruse this array of pre-work prep tips.
1 Make a list of your tasks for the day.
A simple checklist of the things you need to do can be surprisingly helpful at keeping you on track. Aside from ensuring that you don’t forget to do any of the written tasks, when you see how much left you have to do, you can get serious about work. This can also help you avoid forgetting something and embarrassing yourself.
2 Check your agenda for the next few weeks.
There are times when tasks that have deadlines weeks from the current date will require preparation. As such, it is the best policy to always know what you should be doing within the next few weeks, so you can manage your time and resources properly. Remember to stay flexible, as changes can happen within those few weeks.
3 Use an app to keep track of your checklist.
Put your smartphone to work and use it to keep track of the things that need doing for the day. Apps like these can also help you prepare your schedule for weeks in advance. Remember that a smartphone is only as smart as the person who is using it.
4 Set up reminders for meetings and tasks.
When you set up a reminder on your cellphone, you are reducing the risk that you will run late or miss appointments and tasks altogether. Setting a reminder can also take a load off of your mind and allow you to concentrate better on the task at hand. Do make sure that your reminder ringtone won’t bother nearby people, or you could be lessening their productivity.
5 Prepare all the materials that you need.
Though arguably this can be considered part of the work that you do, for argument’s sake let us put it in this category. Having all the tools and supplies close at hand makes it easy to complete tasks because you won’t have to break your concentration (or spend time) going to get something.
6 Set your cellphone to silent or vibrate-only mode.
Loud ringtones don’t just break your concentration but also that of the people around you, unless you have your own office or something to that effect. Besides, it would be a bit embarrassing if you were surprised by your own cellphone. We don’t quite recommend turning your cellphone off because there may be urgent matters that can only come to your attention through your cellphone.
7 Have a personal phone and a work phone.
If you can afford it (and if you have a high volume of message / call traffic on your cellphone), then get different phones for your work and personal lives. The idea is that you pay attention when the work phone rings, and can choose to ignore the personal phone until you have the free time to check it.
8 Choose neutral ringtones.
This is a little less obvious. Using humorous ringtones or ringtones that carry some sort of emotional significance for you can be distracting. It can also bother nearby people. Using “neutral” ringtones – ringtones that simply notify and do not entertain – means that there won’t be emotional baggage with every ring, and you’re less likely to bother other people.
9 Manage your e-mail settings.
Setting a filter to redirect and categorize your e-mail messages can be helpful, especially if you use one e-mail address for your work and personal life (which is not recommended, especially if it is a corporate e-mail address). This way if something pops up in the personal e-mail inbox, you can let it slide ‘til later, while something that comes into the work inbox deserves at least a cursory glance.
10 Have the right Mindset for work.
Sometimes, all it takes is the proper mindset to keep working. How could you finish that report when your mind is wandering? With this in mind, it is best to prepare your brain for work the night before you go to the office. When it is finally time to work, you will go straight to business without wasting precious time to motivate yourself while the clock starts ticking.
What would you add to this list? Leave us a comment and share your thoughts!
Depreciation is a term we hear about frequently, but don't really understand. However, it's an essential component of accounting. Depreciation is an expense that's recorded at the same time and in the same period as other accounts.
Long-term operating assets that are not held for sale in the course of business are called fixed assets. Fixed assets include buildings, machinery, office equipment, vehicles, computers and other equipment. It can also include items such as shelves and cabinets. Depreciation refers to spreading out the cost of a fixed asset over the years of its useful life to a business, instead of charging the entire cost to expense in the year the asset was purchased. That way, each year that the equipment or asset is used bears a share of the total cost. As an example, cars and trucks are typically depreciated over five years. The idea is to charge a fraction of the total cost to depreciation expense during each of the five years, rather than just the first year.
Depreciation applies only to fixed assets that you actually buy, not those you rent or lease. Depreciation is a real expense, but not necessarily a cash outlay expense in the year it's recorded. The cash outlay does actually occur when the fixed asset is acquired, but is recorded over a period of time.
Depreciation is different from other expenses. It is deducted from sales revenue to determine profit, but the depreciation expense recorded in a reporting period doesn't require any true cash outlay during that period. Depreciation expense is that portion of the total cost of a business's fixed assets that is allocated to the period to record the cost of using the assets during period. The higher the total cost of a business's fixed assets, then the higher its depreciation expense.
When an accountant measures profit on the accrual basis of accounting, he or she counts depreciation as an expense. Buildings, machinery, tools, vehicles and furniture all have a limited useful life. All fixed assets, except for actual land, have a limited lifetime of usefulness to a business. Depreciation is the method of accounting that allocates the total cost of fixed assets to each year of their use in helping the business generate revenue.
Part of the total sales revenue of a business includes recover of cost invested in its fixed assets. In a real sense a business sells some of its fixed assets in the sales prices that it charges it customers. For example, when you go to a grocery store, a small portion of the price you pay for eggs or bread goes toward the cost of the buildings, the machinery, bread ovens, etc. Each reporting period, a business recoups part of the cost invested in its fixed assets.
It's not enough for the accountant to add back depreciation for the year to bottom-line profit. The changes in other assets, as well as the changes in liabilities, also affect cash flow from profit. The competent accountant will factor in all the changes that determine cash flow from profit. Depreciation is only one of many adjustments to the net income of a business to determine cash flow from operating activities. Amortization of intangible assets is another expense that is recorded against a business's assets for year. It's different in that it doesn't require cash outlay in the year being charged with the expense. That occurred when the business invested in those tangible assets.
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