Updated: Jul 1, 2019
Often small business owners have difficulty recognizing problems at their businesses, let alone admitting them. Yet, there is never a shortage of problems and in general, small business owners wait too long to admit they have problems; then even longer to act. In some cases we have noticed that the business owner sees the symptoms, recognizes the problem but does not know how to react. As accountants and a profit experts, we can ensure that you are aware of the problem and offer recommendations for improvement.
Symptoms of bigger problems commonly seen in troubled small businesses include the following (this list is certainly not all inclusive):
Cash is in short Supply. The bank account may not have enough money to pay the next payroll or current bills and vendors.
Collections of accounts receivable are slow to almost non-existent. Although people owe the business money, some for a long time, timely payments are slowing. This could reflect economic environment changes. Maybe it reflects no change from historical data but seems more critical now as cash becomes scarce.
Sales are stagnant or slowing down. Management has become complacent with current sales levels, or worse, products are not going out the door as quickly as they once did. Orders are slowing down. Backlog is dwindling.
Turnover is high. People are leaving constantly. Perhaps they haven’t been paid. Employees usually don’t line instability in their employment and will change to more stable businesses whenever possible.
Customer complaints are increasing. The products and services are not performing the way they once did or perhaps customers’ expectations have changed, and the bar has been raised.
Customers are moving toward competitors even though the perception is that the business products and services are better. Maybe the products and services are not keeping up with competitors.
The owner is working too much. There are too many fires to put out; some problems return constantly, and the owner never gets any time away from the business. This way is not new, but the stress level is increasing and the problem has become more compelling.
These symptoms are often expressed in statements from business owners as they think about them all the time:
"I work hard, yet I don't make a profit. Others seem to do it. Why can't I?"
"According to the books; I'm profitable, but the bank account doesn't show it. Why?!"
"Cash is always coming in but it goes out even faster. How can I better control my expenses?"
"Is my business progress positive or negative?"
"Is my business strong enough to withstand bad times- even one month with no cash coming in?"
"How do business professionals grade my company- my banker, for instance?"
Perhaps, as a business owner, you are grappling with these questions- but here's the deal: these issues deal with the concept of working on your business, not in your business, a distinction that is rarely made, especially when are focused on the wrong area- this is where the need for a Growth & Profit Expert (not only an accountant) becomes more important.
See, there are three degrees of Accounting Services; the Bookkeeper, the Accountant and the Growth & Profit Expert. While the Bookkeeper records transactions into the computer with direction and relatively little knowledge of how it impacts the big picture, the Accountant has a working knowledge of how the financial statements are created and what they mean. A Growth & Profit Expert is a financial adviser and a businesses consultant who has the skills of a bookkeeper and an accountant but the vision of a business strategist who also creates, enhances and turns around promising small businesses by providing direction in:
Controlling cash effectively.
Reducing, if not minimizing expenses.
Just as an athletic coach encourages players with numbers or statistics, we coach small business owners using the numbers and information we curate from the books. We work with other advisers of different focus to set your business on the right trajectory, and because we keep the bottom line and what affects in mind, we help by setting variables of a business in the right direction.
At MAK Bookkeeping, Inc. we help business owners maintain and run healthy businesses from the bottom up- that is from the books all the way through operations, to get you where you want to be, a successful business person and entrepreneur making an impact! We have the technical tools, models, processes and even the relationship skills to lead turnaround projects to successful outcomes.