Accounting Outsourcing | Expense Cutting Is Not The Answer
The number one business failure in Canada is the inability to attract enough customers says accounting outsourcing. 50% of all businesses will fail within the first five years of operating, and 42% of all failed businesses will say that was the reason they had to close the doors to their business, making this the most common reason for business failure in Canada. Business owners who are financially struggling often become fixated with minimizing expenses as a way to affect their bottom line, even though minimizing expenses will not allow them to succeed. The reason is, that business owners can save as much money as they want, but without increasing their revenue, there still only working with a limited amount of money.
Entrepreneurs who open their business should get out of the employee mindset quickly says accounting outsourcing. This is the mindset that most employees have and that they cannot significantly alter their income. If an employee wants to increase their wealth, the tousled expenses, get a part-time job, but itís they have a limited amount of money in which to work with, so cutting expenses is the only option they have. A business owner should shift this mindset when they start a business, to avoid the pitfall of thinking that by saving money they can increase their wealth. A business owner actually has unlimited potential to infinitely increase revenue thereby increasing their wealth. Budgeting this mindset, business owners can start to spend the bulk of their time on activities that can help them truly increase their wealth.
Often business owners who are struggling tend to think about saving money on the least important activities, the ones that have the least impact on their bottom line. Such as office supplies, bank charges and utility bills. These are often easy for a business owner to think about, and therefore the first things a business owner does, but even if they were able to save all their money on these things, you still only working with a finite source of money. Businesses often fail even when these types of expenses are minimized because just minimizing costs are not going to save a failing business says accounting outsourcing.
Business owners should spend the time they have in the business on things that are going to give them a good rate of return. By organizing their income statement in numerically descending order, business owners can easily see the things they spend the most money on, and the things that which will be on the top half of the income statement. The bottom half of the income statement will be the activities that will affect their bottom line the least. By spending their time minimizing costs on the top of this list, as will give business owners a good rate of return on the time spent. Things like optimizing their gross margin, and optimizing administrative labour, business owners can have the greatest effect of their bottom line in the least amount of time.
Entrepreneurs who are struggling financially often become fixated with minimizing expenses as a way to increase the money they have in their business, even though minimizing expenses will not allow them to succeed says accounting outsourcing. The reason for this, is that no matter how much money a business owner can save their business, the only way a business owner can succeed in business is to generate more revenue.
Industry Canada says 50% of all businesses will fail in the first five years, and 42% of those businesses will say that the inability to attract enough customers as a reason for their failure. Since this is the number one reason why businesses fail, business owners should spend the most time in their business attracting customers, generating revenue and increase productivity.
Often business owners who are failing often become fixated with minimizing expenses because this is an easy way for them to affect their bottom line quickly, and often become fixated on the things that donít have this great impact on their bottom line because of their simplicity. They look to save money on bank charges, on utility bills, or other supplies. However, it will businesses to eliminate those costs altogether, they still will have financial problems, because a business needs to generate revenue, not reduce expenses says accounting sourcing.
Thatís not to say that business owners should never spend money minimizing expenses, but business owners need to know what activities will give them the best rate of return. By organizing their income statements in numerically descending order, businesses can easily see what things are taking up the top of that list and have the greatest impact on their bottom line. As well, says accounting outsourcing they can also see what is taking up the least important thing on their bottom line.
One of the most significant costs of business will have second only to rent this is accounting sourcing, is there administrative labour. By optimizing there administrative labour, business owners can greatly impact their bottom line. Whether they reduce hours, or by re-tasking admin staff to billable tasks such as Accounts Receivable, business owners can have an extremely great effect on their bottom line to these activities.
Another great activity it will have a good rate of return is optimizing their gross margin. By saving money on direct cost of labour, supplies and materials, accounting outsourcing says that this can help a business be more profitable, have a greater effect on their bottom line.
Once business owners have effectively shifted their mindset from a limited wealth mindset where they feel they have to cut their costs in order to increase wealth, to a entrepreneur mindset where they know they have unlimited potential to unlock unlimited income, then they can truly start to make changes in their business. Changes that can help them make more money so I can avoid the number one reason why businesses fail in Canada today.