Dear Business Owner: Running a Business is HARD!
I understand the pressures of running a business and am in the trenches everyday with clients who run theirs. I’ve come to realize that it makes little difference whether your business is in its infancy, or you’re captaining a 3-generation mammoth from the early 20th century – running a business is still hard. The US Small Business Administration says that half of businesses fail in the first 5 years. If you’ve made it past that mark, I commend you. If you haven’t, all the more reason to read on.
I see great consistency with the tale of a business owner: An entrepreneur leaves a perfectly good job, scrapes together everything they’ve ever saved, borrows as much as anyone would let them, strains relationships with friends and family, stresses themselves out to unimaginable levels…
…all for a 50% chance of survival.
Why is it so hard? Because most new businesses don’t have good instrumentation, that is to say, reporting that is timely, accurate, and relevant, based on solid accounting. Running a business with bad numbers is like flying a plane through the mountains at night with no instruments. Running a business with numbers that are not timely is like driving a car by looking in the rear-view mirror. Implementing solid reporting and having good numbers isn’t cheap, but it doesn’t have to be expensive. Can you afford the cost of flying blind and crashing?
Through years of proven financial consultation, I’ve seen a lot of successes and failures, and would now like to share some critical advice to enable a business to run a little (or a lot) easier. Here are 3 things you can do:
Expect More from Your Accounting
Look at your reporting and draw up how you see things. Use a spreadsheet, visualize with a whiteboard, chalk on the sidewalk, whatever you need. Sit down with your accountant and ask them to modify how your financial statements are structured to meet your needs. Have confidence – the easiest thing sometimes is to just say “no”, or “that’s not possible.” 99% of the time it is possible.
Investigate Modern Reporting Tools
20 years ago, we couldn’t get on a cell phone and find every reporting tool imaginable available at the tap of a finger. As it stands, these tools are now very much at your fingertips (literally). Investigate these modern reporting tools. The old way of doing things – pulling reports, dumping data into spreadsheets- is obsolete. Studies show that if data is hard to access then managers are very unlikely to use it. There are a number of quality reporting and analysis dashboarding apps available that are great for unlocking your data and making it available to meet your needs for good instrumentation. Think about what metrics you and your staff need to see on a monthly or weekly basis, and work on automatically generating reports.
Track Your ROI
Make sure you are getting a good return on your investment for what you are spending on accounting. Look at the total cost of what you are paying for your accounting and bookkeeping (internal salaries and benefits, software, external CPAs, etc.). Do you feel like you are getting a good return on that investment? Ask yourself: do you feel like you have timely, accurate and relevant instrumentation for your business? Do you have confidence in your numbers? Do you feel like you can use your numbers to take corrective action quickly and effectively? If not, chances are you are not getting a good ROI on what you are spending. Investigate other options and have confidence that there are solutions out there to meet your needs.
I welcome you to visit my blog at https://www.cfonet.biz/blog or call me to talk more about your needs at 501.374.8123.
Owner, CFO Network