Business owners need to understand that in business cutting costs arenít always the key to success is accounting outsourcing. Industry Canada says that 50% of all businesses will fail in business within the first five years. Out of all of those businesses, 42% of them will say that the inability to attract customers was the reason their business failed, making the inability to attract enough customers the most common reason for business failure. Business owners who are struggling financially become fixated with minimizing expenses, even though minimizing expenses will not allow them to succeed. The reason for this is minimizing expenses can only go so far in business, the biggest piece of the puzzle is increasing revenue. Since the number one business problem is not attract enough customers, businesses needs to figure out a way to attract more customers rather than cutting the cost.
Since time is the number one resource that a business owner has their disposal business owners need to effectively prioritize what they need to spend their time on first no business owners will be able to, and they will not be able to everything perfectly, so figuring out what to spend their money on first is important says accounting outsourcing. What business owners need to spend most of their time on solving the number 1 Business Problem in Canada which is the inability to attract enough customers. Therefore advertising and marketing to be some of the most important things that business owners spends their time. They need they need to be marketing their business, as well as figuring out what marketing efforts are important and what marketing efforts are working. They can also spend a lot of their time on increasing productivity within their business and improving margins.
It is important that a business owner can lower the impact of expenses on their bottom line, they just need to know how to do it in order to be able to do it effectively says accounting outsourcing. What a business owner should do is organize their income statements in numerically descending order. The reason for this is they will be able to easily see what is making the biggest impact of their bottom line by looking at the top half of their income statement. The bottom half of their income statement is making the lowest impact, and generally not what business owners needs to be looking at all.
The top three things are a bit on that income statement will be rent, administration labour and gross margins. Spending time addressing these three costs, business owners will be able to affect their bottom line as quickly as possible. Since rent is very hard to change because most business owners will be looked into a lease, the next thing they should focus on our administration labour and gross margin. By controlling their spending on labour and gross margin, business owners can spend a small amount of time controlling those expenses so that that can allow them as much time as possible working on activities that will increase the revenue.
Business owners who are struggling financially says accounting outsourcing often become obsessed with minimizing their expenses, even though minimizing expenses will not allow them to succeed. The reason that minimizing expenses will not allow them to succeed is because as much as they can cut expenses, none of those activities will help them increase revenue. Increasing revenue is the key to making more money, is where business owners need to spend most of their time.
By organizing your income statements in numerically descending order starting from highest to lowest, business owners can easily see what is making the biggest impact on their bottom line. Often says accounting out sourcing the top three items on this list will be rent, gross margins, and administration labour. Since its very difficult for businesses to affect the price of the rent, because theyíre locked into a lease, this is something that business owners donít need to spend much time on. Unless they are in the wrong location or wrong space for their business. Once they find the correct location for their business, they will be locked into a lease.
Administrative labour is the next highest cost on the list and other than rent is the overhead that makes the biggest impact on their bottom line. By reducing the costs of the administrative labour whenever possible, business owners can be assured that they are spending time on something that will have a positive impact. Ways they can cut administrative costs is reducing hours or eliminating positions, or retesting administrative staff to billable activities such as Accounts Receivable or advertising and marketing. Often administration would rather be tasked to a new job rather than get downsized says accounting outsourcing.
The third highest impact on a business owners overhead is gross margin. This is the direct cost of labour including subcontractors supplies and materials. Accounting out sourcing says by spending time minimizing costs here, cannot only impact their bottom line but help increase their profitability for the business.
Once a business owner has minimized their expenditures, then they are free to spend the rest of their time on revenue increasing generating activities such as advertising and marketing. We can also spend their time increasing the productivity in their business. By generating new revenue and finding ways to make the business they already have the system more profitable, business owners can be assured that these the activities that will help them see success by increasing their revenue. While frugal spending is important, itís important for business owners to know that saving money on items on the lower half of their income statement such as office stationery, accounting services, phone bills and utilities will not help feeling businesses succeed. They will help a successful business become more successful says accounting outsourcing. But it will not save a business. Once business owners learn what they should be spending time on in their business, they will be able to attract more customers and overcome the number 1 Business Problem in Canada.