Accounting Outsourcing | The Answer Is Not Decreasing Expenses
Business owners who are struggling financially often become fixated with minimizing their expenses as accounting outsourcing, even though minimizing expenses will not allow them to succeed. The reason it will not help them succeed is because the problem is not high expenses in a business, it is not enough sales. Industry Canada says that 50% of all businesses will fail within the first five years of opening and that 42% of those entrepreneurs will cite the inability to attract enough customers as a reason for their failure, making this the most common reason for business failure in Canada. Businesses who are struggling needs to understand that the best way they can impact their business is by increasing revenue, not minimizing expenses.
The reason why someone business make this mistake says accounting outsourcing is because they have an employee mindset. That mindset is that employees cannot increase their salary, they may be able to work more hours, work overtime or get a second job, for the most part their income is fixed. Therefore if they are looking to increase their wealth, they must cut your expenses. When employees become business owners they need to shift that mindset from limited income to creating revenue. Once a business owner realizes that they have unlimited opportunity to increase their wealth and they can start to work on the activities that can help them increase their business exponentially.
The number one activity that business owners can work on in their business is in advertising and marketing KPIs. This is extremely important because business owners need to constantly work on increasing the revenue in order to continue to grow their business. The only an effective marketing strategies are the ones that are not done on a regular basis as accounting outsourcing. So not only is it very important that businesses set aside time to work on advertising and marketing, they need to set aside time on a regular basis to work on those things. By working on increasing the revenue as well as increasing the productivity in their business, businesses can be assured that those the activities that can help them beat the odds in business and succeed.
That isnít to say that business owners should spend any time in minimizing expenses says accounting out sourcing. Business owners just need to know what expenses of the greatest effect on their bottom line to minimize. By organizing their income statements in numerically descending order with iced expense items at the top and the lowest expense items at the bottom, business owners can for efficient use of their time doing that by looking at the top half of the list and spending time minimizing those expenses will be the most efficient use of their time.
Business owners will see that top the list will be administration labour, so that business owners who spent time ensuring that there admin labour is kept low, either through reducing hours whenever necessary, or having those staff members work in billable tasks such as Accounts Receivable or advertising and marketing, they can help offset their pages.
Financially struggling business owners often become fixated with minimizing expenses in their business says accounting out sourcing. Even though minimizing expenses will not allow them to succeed. The reason for this is because struggling businesses are usually not struggling because they have out-of-control expenses, it is because they havenít been able to generate more revenue in their business. Industry Canada says that 50% of all businesses fail within the first five years, and that 42% of those filled entrepreneurs will cite the inability to attract enough customers as a reason for their failure. This proves that businesses need to work on attracting customers and increasing the revenue in their business.
Once business owners understand that the problem in their business is not going to be solved by cutting costs, that will only be solved by increasing the revenue, they can spend most of their time in the activities that will help them achieve those goals. Working on advertising and marketing KPIís will be the number one most important activity in their business says accounting outsourcing. By increasing the revenue and increasing productivity in their business, business owners can grow their business first, and then we about expenses second.
Business owners can work in the expenses of their business as long as they know which ones will have the greatest effect on their bottom line is accounting outsourcing. In order to know which expenses are the ones that will have a great effect on the bottom line they should organize their income statement in numerically descending order suggests accounting out sourcing. That way all of the highest cost items will be at the top of the list. business owners can spend most of their time optimizing those costs as a way of having the greatest impact on their bottom line in the shortest amount of time.
Once business owner organizes their income statement that way they will see that other than rent, one of the most significant costs to the business is the administration labour. If they are able to reduce the cost, they will be able to greatly impact their business. Whether itís producing admin staff hours, eliminating positions, or even just tasking admin staff to work on billable tasks such as Accounts Receivable or advertising and marketing, those admin staff can offset their wages.
The second most impactful item on the list will be the business ownerís gross margin. If they can optimize those items, they will get a good return on the time spent. Minimizing the direct cost of labour and subcontractors, supplies as well as materials, business owners can not only decrease costs in their business but help their products and services be more profitable says accounting outsourcing.
By spending their limited time in the most important things says accounting out sourcing, business owners will be able to work on increasing their revenue, but also minimize expenses in the most efficient way in order to help their business succeed.