Being a small business is tough! Founders must wear a lot of different hats when they get the business started! As a business increases in revenue and becomes increasingly complex, demands are great and time is limited. At this stage, it is too early to bring on full-time accounting staff, but time to involve professionals. Here are 5 reasons to stop doing your own accounting and consider outsourcing.
As mentioned in the introduction, time can become a very precious commodity. Every hour spent bookkeeping, paying bills, or invoicing is an hour not selling, marketing, building a product, or delivering a service.
Too often, small business leaders see accounting as a necessary evil to fulfill tax or government requirements. What they miss is the opportunity to gain insight from their financial information. Insight is built on good financials processes. Without proper processes, the insights necessary for profitable growth are difficult to achieve.
Every investor or lender expects clean and accurate financials upon which they can analyze a business’ health. They will want to know that the business leaders have a clear understanding of financial status and able to articulate key metrics. Finally, they will want a clear cap table reflected in financial statements.
With growth comes the need to gain or maintain control of spending. Financial discipline includes regular review of financial statements and an understanding or profits, balances, and cash flow. Expense management becomes necessary with more employees and delegation of spending. Finally, budgeting can be the difference between wise and wasteful spending.
With financial discipline, a business is ready to be strategic. It starts by analyzing the financials. Key truths in every business’ financials include identifying best customers, areas to optimize cash, and the impacts of additional investments. These answers can be invaluable, but difficult to answer if the books are a mess or you don’t have time to analyze the financials. With financial analysis, a business can begin forecasting and do cash management. These two processes are found in every successful, growing business.
With every business, there is a time to do your own accounting, a time to hire accounting staff, and a time to outsource. Be wise and know when to stop doing your own accounting so you can achieve the benefits outlined above.