Accounting Outsourcing | Decreasing Expenses Is Not The Answer
Industry Canada says 50% of all businesses will fail within the first five years of their business opening, and 42% of those entrepreneurs will say that the inability to attract new customers was the reason for their failure, says accounting outsourcing. This makes the inability to attract enough customers the most common reason for business failure in Canada. Most business owners often fall into the trap of believing that they have a expense problem, actually have a revenue problem. They tend to get fixated with minimizing their expenses, even though minimizing expenses will not allow them to succeed because they need to increase revenue not cut costs.
When the most important things that entrepreneurs can do when they open their own business is to get out of the employee mindset, says accounting outsourcing. The employee mindset is quite simply employees are able to change their salary, so in order to increase their wealth they met cut costs. This is mindset that most employees are in, because that is the way they live their life, knowing that they do not have the ability to increase their revenue. So when employees become entrepreneurs, they donít shift that mindset. Itís very important that entrepreneurs shift that mindset as quickly as possible from limited income to creating revenue increasing wealth. In fact entrepreneurs need to understand that they have an infinite ability to increase their income infinitely.
Once the business owner understands that they can increase their income infinitely, but they need to do is learn what expenses they need to cuts to their business in an efficient manner. In a way to do this, business owners can organize their income statements in numerically descending order, so that the largest expenses. The top the list, and the smallest expenses and the ones that are least likely to affect online are at the bottom. By paying attention to the excesses of the top of the sheet, business owners can ensure that they are spending their time on the items that will have the greatest impact to their bottom line in the shortest amount of time. The items that will appear at the top of this list are administrative labour and gross margin. They can quickly and easily spend time on these two types of expenses. This way they can affect their bottom line quickly, and spend the rest of the time that they have on revenue increasing and revenue generating activities as well as increasing the productivity in their business. By spending the time that they have on increasing their business, business owners can address the number one problem businesses face in Canada today and that is the inability to attract new customers Says accounting out sourcing.
The only ineffective advertising and marketing practices are the ones that are not done in a regular basis, therefore business owners need to undertake their advertising and marketing activities regularly in order for them to be effective. Spending most of the time they have on their business in this area will allow businesses to increase their revenue. Accounting outsourcing also says that increasing productivity is very important for business in order to help the business become more profitable on the business they already have.
Business owners who are struggling in their business, often start focusing on advising their expenses, even though minimizing their expenses will not allow them to succeed says accounting outsourcing. The reason that minimizing expenses will not help them succeed is because businesses tend to have a problem generating revenue rather than a problem spending money. Since industry Canada says that 50% of all businesses will fail in their first five years, and 42% of those entrepreneurs say that being unable to attract new customers was the reason why their business failed, it stands to reason that business owners should spend most of their time working on increasing the revenue and productivity rather than minimizing expenses as a way to succeed in business
The biggest reason why business owners tend to fixate on minimizing expenses as a way to be successful in business, is that they have always grown up with the mindset that they are unable to change their salary, so in order to increase their wealth, they must cut their costs. However accounting outsourcing says if business owners can shift that mindset to the fact that as a business owner they will have an unlimited opportunity to increase their income, they will be able to see revenue-generating activities as the way to success instead of expense minimization.
Accounting out sourcing says that although minimizing expenses is not the way to success, it can be an effective strategy to helping the business succeed, as long as itís done in the right way. They recommend organizing your income statements in numerically descending order, as a way to be able to easily see what is affecting a businesses bottom-line the most. By paying attention to the top half of the list, business owners can easily see what they can spend their time on to affect their bottom line the most. Since business owners have very little time in their business, effecting the maximum amount of change in a minimum amount of time is important. An entrepreneur will see the top of the list has administration hours as well as gross margin expenses being the most significant expenses aside from rent their business will have. If a business owner can minimize their administration labour on a regular basis, that can affect the largest change to their bottom line. Accounting outsourcing recommends reducing Edmonton hours whenever possible, eliminating positions, or redirecting admin staff to billable tasks in order to minimize the effect of that salary on their bottom line. The other thing that affects the bottom line the most to business owner are the direct cost of labour, supplies and materials. The business owner can help eliminate or reduce the cost of those things, they can drastically affect their bottom line.
Once a business owner has figured out which expenses they can minimize with the least amount of effort, annexing that they need to work on is increasing their revenue through revenue generating activities and by increasing their productivity in order to get a better margin. Business owner needs to ask themselves what can they do to get more business? Often the answer to that question is on advertising and marketing KPIs.