Small businesses face challenges on a daily basis and many of those challenges are financial in nature including lack of cash flow, inaccurate reconciliation of accounts and many more. Asking the right questions and understanding the steps needed to keep problems at a minimum are crucial to running your business successfully. Some of the most common mistakes made by many small business owners include: poor cash flow management, hidden cost turnover, and making decisions without considering all of the financial variables. One sure way to become a profitable business owner is to begin with good cash flow management. This can be easily achieved by entrusting your accounting practices to a reputable accounting company. The knowledgeable experts at Mark Dicus & Company have provided the following good business practices to help improve your business cash flow.
For many small businesses, payroll is a big expense, often adding up to 70% or more of your company’s total expenditure. One of the biggest challenges is learning how to use your labor costs effectively by increasing productivity and minimizing loss of time. Instead of recording your payroll on one line consider using a software program that will allow you to utilize payroll expense by customers and jobs performed, and team structure. By utilizing a profitability margin for each column you will be able to see which areas are performing and which areas need improvement.
Attracting & Retaining Talented Employees
For many small business owners, the cost of training and building a team of knowledgeable employees is a huge expense. When an employee leaves it can cost $$$ and valuable time to train a new employee to be functional and productive on their own. While it is impossible to prevent employee turnover, there is also a good chance that you are not hiring the right people for the position to begin with. Understanding that your company values are built upon your staff sharing your vision and the skillset needed to drive your organization to success is a sound basis for long term success. When hiring good employees, don’t just think in terms of offering a higher salary, consider benefits, flexible schedules and how potential employees will align with your particular set of core values.
Lack of Standardized Processes
Every employee in your business model should be following a set plan to optimize the success of your business. It is impossible to deliver a quality service or product if your employees are inconsistent. Your accountant should also be following a clearly defined process to optimize your cash flow. For example, making sure that your payroll is coded correctly, your bills are not being paid too early or too late, etc. Addressing these and other issues will ensure that you are on top of your game.
Inaccurate Financial Statements
For every moment that you are unaware of your finances you are putting yourself at a real risk of failing. Becoming lackadaisical with your financial operations and failing to complete your bookkeeping duties in a timely manner can put your business at risk. It is impossible to conduct business if you are constantly in crisis mode. Real time reporting will ensure that you are making sound operational decisions.