Focus on Profits – Not Accounting for Them
Starting a new business is a major accomplishment. Growing its profits is even more impressive and challenging. No matter what type of business or if it is retail, consulting, or selling profits or services, there are a great many tasks demanding your attention if you are to succeed.
- Production and Delivery – A thorough knowledge of how you conduct your business, product products, or provide services is a given. You must also know how to get your goods or services to market, how to deliver or offer them. This is normally where your skills and knowledge are greatest and how you plan to make money.
- Budgeting – You must know your costs of doing business if you are to price your products or services to generate a profit. Following a budget and controlling costs is crucial to success.
- Marketing and Advertising – How will you present your business to the marketplace to generate income? You must carve out a niche, promote it to your chosen target market, and ask for their business. Most use some or all these methods or venues:
- TV or radio
- Email marketing
- Signs or billboards
- Brochures or print materials
- Direct mail
- Management and accounting – These are all the details and mostly annoying tasks to keep the business running and to report to various government or industry organizations. This includes the critical accounting function that must be both accurate and timely. Mistakes in this area can result in loss of profits generated by the other functions above.
With some possible variations, the items above are in that order of importance to the business making a profit. The least important for profitability is the management and accounting piece. It is necessary but does not generate income. It protects income in some ways, however. Unfortunately, many small business owners spend too much time and effort in that last piece that would be better spent in the others.
The problem is that they usually take a do-it-yourself approach to the accounting and tax reporting functions because they want to save money. They believe that doing it themselves contributes to the bottom line. Not hiring professionals saves money, reduces costs, and increases profits. The problem is that this does not take into account the “profit protection” value of professional accounting and tax services.
They are often missing the fact that they are wasting more money than they are saving. How?
- A great deal of time that could be spent in generating income is wasted on accounting functions.
- They know their business but not the accounting business. This results in mistakes that result in paying more in taxes than necessary.
- They are not experts at planning for business growth, income maximization while minimizing taxes, or financial planning for the future.
Often the services of an accounting and tax services firm are more of an income generation than an expense line item. Use the time and effort you previously spent in accounting functions to grow your business and profits.