Accounting Outsourcing | Decreasing Costs Is Not The Answer
Business owners who are financially struggling within their business, often become fixated with advising their expenses, even though minimizing their expenses will not allow them to succeed says accounting outsourcing. The reason it will not help them succeed in business is for the same reason why 42% of failed entrepreneurs will say that the inability to attract customers was the reason their business failed. Most businesses do not have a expense problem, but they have a revenue generating problem. They need to focus on increasing their sales, instead of focusing on minimizing expenses.
accounting outsourcing says itís not that minimizing expenses is bad, itís that most business owners do not have a good handle on what expenses they should focus on minimizing, often spending most of their time and effort minimizing expenses that have the least effect on their bottom line such as utilities, office supplies, bank charges, phone bills to name a few. Many business owners focus on these things because they are a familiar way to save money, and they know that they will be able to easily make a few changes with their effort. Instead, business owners should organize their income statement in numerically descending order, so that the highest cost items appear at the top of the list. That way I business owner can glance at the income statement and see on the top half of the sheet what is affecting their bottom line the most. Once they know what is affecting their bottom line the most, they can spend their time and energy on those items, instead of spending a lot of their time and effort on the things that will affect their bottom line the least.
The things they should focus on include admin labour and gross profit margin. Most business owners do not realize that administration hours are probably the number one item to affect their bottom line other than rent. By being prudent to ensure that admin hours are kept low whenever possible either through reducing hours, eliminating positions or redirecting admin staff onto billable tasks whenever possible, accounting out sourcing says business owners can minimize the effect of admin labour to their bottom line. Focusing on eliminating expenses on the gross margin will give them a good rate of return, looking at direct cost of labour including subcontractors, supplies and materials will help a business owner keep the costs of creating their products or services low which will help them increase their profits.
Business owners need to understand that the reason why their business is failing is not because theyíre spending money on for stationary or on accounting fees or their phone bills. In order to run a successful business, they need to make that business successful. Saving expenses will not save a feeling business, but it can make a successful business more successful says accounting outsourcing. Therefore, business owner needs to know that the most important thing that they can spend their time on is an increasing revenue generating new revenue. Focusing on their advertising and marketing strategies will enable a business owner to be able to increase their business.
Many business owners in business they believe that by minimizing their expenses, they will able to be successful says accounting outsourcing. However industry Canada says that 50% of all businesses will fail within the first five years of business ownership. Out of those businesses, 42% of them will say that the inability to attract new customers was the reason they failed. With some rather sobering statistic that proves that the biggest problem in business is generating revenue, not being unable to cut expenses.
Business owners need to spend the bulk of their time on revenue increasing and generating activities as a way of their business become successful. The only marketing strategies that are ineffective are the ones that are not done on a regular basis. Business owners to set aside time in the day to ensure that they are not only advertising and marketing their business, but that they are reviewing and evaluating those advertising and marketing activities in order to know what is working, and therefore should continue doing. What is not working so they can either change or eliminate those strategies says and accounting out sourcing.
Accounting outsourcing also says that even though minimizing expenses wonít save a failing business, it can be important for businesses to do, but they must be able to know what they should spend their time on in order to affect their bottom line, the greatest amount by the least amount of work. The way that they can do that is to organize their income statements in numerically descending order, which will naturally ensure all of the most impactful expenses are at the top of the list. Business owners can spend time minimizing these expenses, because they will be the most likely to effect their bottom line the most.
Whatís most likely to be on the top of this list in addition to rent which is difficult to change, is ministration labour and gross margin. Businesses can spend their time on minimizing those expenses and know that the time they spend on those things will greatly impact their bottom line. Since they will be able to greatly affect their bottom line in a short period of time, that will free up business owners to spend the rest of their time on revenue increasing and revenue generating activities as well as activities that will help them increase productivity for their product will have a better margin. Accounting outsourcing says the only ineffective advertising and marketing strategies are the ones that are not done on a regular basis. Therefore business owner needs to do advertising and marketing on a regular basis, as well as evaluating those strategies in order to continue doing whatís working, and avoiding or changing the activities that are not effective. This way business owners can avoid the problem that plagues most business owners in business today, and that is not being able to find the right customers.