Accounting Outsourcing | Why The Answer Is Not Minimizing Costs
Often struggling business owners become fixated with minimizing their businesses expenses, even though minimizing expenses will not allow them to succeed says accounting outsourcing. The reason why minimizing expenses will not allow a business to succeed, is because the problem in businesses is not that they have too many expenses, it is because businesses fail to attract enough customers to grow their business. Proof of this is the industry Canada statistic that says 50% of all entrepreneurs to open a business will fail within the first five years, and that 42% of those failed businesses will say that the reason why they failed was they were not able to attract enough customers. This makes the inability to attract enough customers the most common reason for business failure in Canada today.
So why is it that business owners often believe that cutting expenses help them succeed asks accounting outsourcing. The reason is because most entrepreneurs used to be employees, they are stuck in the employee mindset, which is employees are not able to increase their salary, so in order to increase their wealth they must cut their expenses. The reason why this doesnít work in business, is because business owners needs to understand that they have an limited potential for increasing the revenue. Can increase their revenue infinitely, therefore they need to spend most of their time and energy on activities that will increase their revenue.
Those activities that will increase the business revenue our advertising and marketing. By working on their marketing strategies, business owners can be assured that they are working on the activities that will help their business grow. Accounting out sourcing says the only marketing efforts that donít work are the ones that are either not done, or not done regularly. Not only do business owners need to work on their marketing strategies, they need to do so on a regular basis. Evaluating marketing strategies to evaluate if they are working so they can either continue those efforts, or change them if necessary. This is the number one thing that business owner should be doing in their business.
Business owners can spend time and effort minimizing cost, as long as theyíre doing it in an efficient and effective way says accounting out sourcing. By organizing their income statements in numerically descending order, business owners owners will be able to easily see what has the biggest impact on their bottom line. But looking at the top half of the list, it will be able to see which items they should spend their time on optimizing. Almost at the very top of the list will be administrative hours says accounting outsourcing. By optimizing their admin staff, business owners can greatly reduce affect to their expenses. Either by reducing admin hours, or moving admin staff to billable tasks such as accounts receivable as well as advertising and marketing. Next on the list will be the business ownerís gross margin. By optimizing the direct cost of labour including subcontractors, supplies and material business owners will be able to quickly affect their bottom line. Anything on the bottom of that list donít need to be looked at as they wonít significantly affect the businesses income.
Industry Canada says that 50% of all businesses will fail within the first five years of opening their business, and that 42% of those failed businesses say that the inability to attract customers is the reason their business failed says accounting outsourcing. Making the inability to attract enough customers most common reason for business. Unfortunately business owners who are financially certain often become fixated with minimizing their expenses even though minimizing expenses will not help them succeed, they need to increase the revenue.
Since failing to attract enough customers is number one reason businesses in Canada fail, business owners need to understand that spending their time addressing that problem is very important. Business owners need to spend most of their time on revenue increasing and generating activities. What can that business owner do to get more business is a question they should ask themselves says accounting out sourcing. Quite often the answer to that question is on marketing and advertising. Marketing on a consistent basis is very important for a number of reasons, the first one being marketing strategies that are not done consistently are not effective. Business owners needs to continue to market their business on a regular basis in order to make those efforts worthwhile. Also without working on their marketing strategies and a regular basis, business owners risk stalling out their business and in often times. Even when theyíre busy, business owners need to make marketing their priority
The number one resource a business owner has their disposal is time, and as a valuable resource it is also limited says accounting outsourcing. Therefore business owner needs to learn how to make efficient use of their time in order to do everything that is most important in their business. Important for business owners to realize that they donít have time to do everything, so they must know what is the most important thing to be working on.
Though minimizing expenses will not help a business succeed, it is something that business owners can work on as long as they know the most efficient and effective ways to do that. Accounting outsourcing recommends that business owners organize their income statements in numerically descending order so that the top of the income statement has the items that have the greatest effect on the businessís bottom line. By spending their time optimizing those items, business owners can spend the least amount of time making the biggest impact on their business.
If at all possible, if a business owner has additional money in order to buy more time, that will be an efficient use of money as long as the business owner is treating money for time at lower rates than the business owner could produce it at.