In this day and age where accounting has been made a lot easier and financial information more transparent, how should business owners approach their numbers?
Here are some things we figured out:
Proper accounting is more than just compliance. It's an opportunity to paint a picture of your business - where its strength and opportunities lie, as well as its risks and challenges which, in turn, can help business owners make better decisions.
But accounting is a technical skill and not all business owners are necessarily savvy in this field. This is where a good accountant can come in.
More small and medium sized businesses are leveraging accounting solutions like Xero to get yesterday's data. Back in the day, this was an accountant's job. It would take us days to collect information from a client and the bank before we could present the numbers. But because cloud accounting solutions do all this already, we accountants get to take a more strategic role as advisors, reading and interpreting the numbers into actionable advice.
This is important because business owners don't always think about this. They see positive numbers and think they're doing well, so no need to bother checking what's under the hood, right?
We knew one business in particular that didn't realise 82-83% of their revenue was coming from one customer. They knew it in their heads, but didn't have a concrete number for it. When their relationship with that customer soured, they had to scramble to get back on their feet.
Had an accountant stepped in to provide advice beforehand, whether that was to take care of that customer or to focus their efforts into acquiring other big customers, the business wouldn't have had to rely on a single major source of revenue.
Back then, many accountants saw themselves solely as the people who could help business owners pay less tax and comply with the law. But now, thanks to new solutions and emerging technologies, we get to be so much more than that.
Having worked with plenty of startups over the years, we've noticed how the approach to their numbers varies. Some don't prioritise accounting and financial transparency, while others inflate the importance of fundraising to a disproportionate degree.
As business owners ourselves, we have enough experience to know what business owners need to grow and scale. And we know firsthand about the stresses that business owners go through. Call the team at Collins Hume in Ballina or Byron Bay on 02 6686 3000 or go here to read how we help and support business owners with more than just their accounting.