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E-Myth – “Why most small businesses don’t work & what to do about it”

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Accounting Outsourcing | The Answer Is Not Cutting Costs

The answer is not cutting costs for businesses who are struggling financially says accounting outsourcing. Often business owners who are having trouble in their business often become fixated with minimizing their expenses, even though that will not allow them to succeed. The reason for that is because the number one problem business owners face is the inability to attract customers. Industry Canada says that 50% of all businesses will fail within the first five years of opening their business, and that 42% those failed businesses say that the inability to attract enough customers was the reason for their business failure. This shows us that the most common reason for business failure is not increasing revenue.

The greatest resource of the business owner has is time, second that is money. Therefore business owner needs to be very careful what they spend their time on, and you donít have time to do everything, or to do it perfectly says accounting out sourcing. Therefore being very mindful of what they spend their time on is very important. Some of the most important things that business owners can work on are the activities that will help them increase their business. working on their advertising and marketing KPIs are some of the most activities that a business owner can do for their business. The only ineffective strategies are the ones that are not consistent says accounting outsourcing. Therefore business owners need to not only set aside time to work on their marketing, but they needs to set aside that time on a regular basis. By spending most of their time on the activities that will help them increase their business, business owners can directly minimize the reason why most businesses fail in Canada today.

Minimizing expenses in a business can be an important activity says accounting outsourcing, the business owner needs to know how to do that efficiently and effectively. Many business owners often spend time with minimizing expenses such as office supplies, interest charges, phone bills and utilities because they are easy concepts to grasp, and also easy to make few positive changes to easily. However, business owner needs to know that those things wonít greatly affect their bottom line. In order to determine what expenses do have the greatest impact on their bottom line, outsourcing recommends that business owners organize their income statements in numerically descending order so that the most expensive items are on the top half of the list. By spending the time they have on those items, businesses can make a great impact their bottom line in the shortest amount of time.

The items that business owners will see at the top of those list include administrative labour and gross margin. Administrative labour is one of the largest overhead besides rent that affects businesses bottom line. By reducing administrative hours whenever they can, or by re tasking those staff members to billable tasks, business owners can offset the effect of those wages to the bottom line.

Industry Canada says that 50% of businesses will fail within the first five years of opening, and that 42% of those businesses say that the inability to attract new customers was the reason that their business failed says accounting outsourcing. Making the inability to attract enough customers the most common reason for business failure. A great quote by Peter Drucker, who is that author of 39 business books says nothing happens until someone sells something. Increasing sales is the activity that business owners need to work on in order to the greatest effect on growing their business. Business owners often think that by minimizing expenses allow them to succeed, but that is the employee mindset which is employees canít change their salary, so in order to increase wealth they must cut costs. By shifting to an entrepreneurial mindset, business owners can move from having to cut costs in order to increase wealth to increasing sales in order to increase wealth.

Since a business owners most precious resource is their time, they need to know not only what areas the should spend the most time on to grow their business, but how much time spend on those as well. The number one way they should spend their time is in revenue increasing in generating activities as well as increasing the productivity in their business. By working towards attracting customers and increasing revenue in their business, business owners can directly affect her income in their wealth. Accounting out sourcing says that advertising and marketing KPIs should be the number one way business owner spends their time.

Since business owner does have such limited time on their hands, if they do spend their time on minimizing expenses, need to know how to do so in an efficient manner is accounting out sourcing. By organizing their income statements and in numerically descending orders that are just expenses are at the top and the smallest expenses are at the bottom, is owners can know that by its spending more time on the top of the list give them the greatest return on their efforts. At the top of the list says accounting outsourcing will be there administrative labour. By being efficient with their admin labour, business owners can either reduce their hours, eliminated position, or have admin staff work on billable tasks such as accounts receivable in order to offset their effect on the businesses revenue. The next largest expense underneath administrative labour is gross margins. Business owners can spend time working on optimizing the cost of labour, supplies and materials can only positively affect cash flow in the business, but also help a business be more profitable.

Whenever possible says accounting outsourcing because of business owners time is the most valuable resource if they have additional money in order to buy more time, a business owner should always do that as long as they can buy it at a lower rate. Any time they can spend money creating time, can help a business owner free up their time to spend on activities that will increase their business.