When businesses start to grow, they tend to grow quickly and require financial discipline. With growth, the demands of sales, customer satisfaction, and product momentum are critical and can easily create financial chaos. Unfortunately, your accounting and finances can get away from you if you are still doing your own accounting and it can be near impossible to achieve the discipline to move your business forward. It’s time to outsource your accounting.
Financial discipline starts with regular (at least monthly) financial reviews. The big three financial reports are the profit and loss, balance sheet, and statement of cash flows. From these statements, business leaders can see where they are making and spending money, how much they have and how the money is flowing. Keeping track of the high-level information in these reports helps make good business decisions and measure their impacts.
With a growing business comes more employees and more role specialization. It is no longer feasible to have one or a few people in charge of all expenses. Sales, marketing, and other staff members need the ability to support their activities with appropriate expenses. Unfortunately, excessive spending can occur without proper expense management policies, processes, and solutions.
Budgeting and budget management are the hallmark of financial discipline. Spending on intuition only gets a business so far before the bank account is empty. Budgeting enables a business to spend like Goldilocks: not too much, not too little, but just right. By spending judiciously, you can turn spending into smart investments and not ignorant expenses.
What do these areas of financial discipline relate to doing your own accounting. Put simply, these are hard and potentially time consuming if you’re not an accountant or doing these on a regular basis. Don’t be a glutton for punishment in this area – get help so you can focus on your business.