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

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Outsourced CFO | Delaying Bill Payments Puts Entrepreneurs At Risk

Many business owners may not realize that if they are not paying their bills regularly and on time every month, they are actually putting their business at risk says outsourced CFO. In fact, many business owners believe that this is not only a normal part of owning a business, that is actually how they are going to be able to build and grow their business. Unfortunately, this is not true, and rather than growing a business by unethical means. Business owners need to learn why paying their bills on time is important, and how doing that can actually help them grow their business.

One of the first things that business owners should understand, is that when they pay all of their monthly bills on time, every month they will be able to see if their business is generating enough revenue to be able to meet that financial obligation says outsourced CFO. If they are not able to pay all of their bills, that means they need to increase their revenue, increase their profit margin, or cut expenses. the sooner a business owner can see that they are not paying all of their bills, the sooner they can make the changes necessary in their business to become profitable.

When business owners fail to pay all of their bills in a timely manner, or pay them in full month, what happens says outsourced CFO, is that they are not being able to see if they are making enough money in their business. And if they are not, then those debts are piling up. Only a few months of having bills accrue, will make it very difficult, or almost impossible for a business owner to dig themselves out of. Therefore, entrepreneurs need to ensure that there keeping a close eye on their bills, and ensure that they can meet all of their financial obligations.

When myth that some entrepreneurs believe is outsourced CFO, is that if their business is not financially viable on a small scale, that all they have to do is scale their business up. They think by having a larger business, more jobs and more customers, they are going to be able to have an easier time paying their bills. However, this is not true. Whatever the business is doing on a small scale, it will do on a large scale. Therefore, by scaling up business that is not financially viable, they are growing a larger problem for them that will be even more difficult to fix.

Business owners can ensure that they are acting as quickly as they can to make their business profitable, if they are paying attention to all of their bills every month. By learning how to act quickly, and in what area of their business they need to make changes to, and entrepreneur can create a plan that can help them be reactive in their business, to ensure that it is always profitable. By doing this, business owners will be able to ensure that they are increasing their chances of success.

Outsourced CFO | Delaying Bill Payments Puts Entrepreneurs At Risk

Running out of money is one of the most common reasons that businesses fail says outsourced CFO. In fact, according to stats Canada, 50% of all Canadian businesses are going to fail within five years, and the second most common reason why is running out of money. Therefore, business owners need to ensure that their business plan addresses what they can do to avoid this problem in their business.

One thing that business owners can put into action early on in their business, is ensure that they are paying all of their bills on time every month. While this seems overly simplistic, outsourced CFO says that it is very crucial, in helping entrepreneurs understand if they have enough money in their business to meet their financial obligations, and if not, having a plan in place that can help them act quick enough to fix that.

When business owners are not able to see that they are not making money in their business, that will negatively impact their business. Because they will end up accruing debts, making it more and more difficult for them to recover from. In fact, one thing that outsourced CFO has seen other business owners do, is start finding different payments to avoid, so that they can hopefully pay the accumulating pile of debts.

If business owners do this by believing that they can avoid paying taxes, to buy enough time to pay other bills. They may find their business negatively impacted in extreme ways. Outsourced CFO says that Canada revenue agency is quite aggressive in collecting on taxes that are due. And they have quite a lot of power that they can use at their disposal to get that money back. After sending demand letters, Canada revenue agency will literally be able to either go into an entrepreneurs bank account and take the money that they are owed. Or, freeze entrepreneurs bank account which will make it difficult if not impossible to continue writing their business.

It is also very important for entrepreneurs to know that not only will Canada revenue agency demand their money back. But they will also hit entrepreneurs with penalties. These penalties have varying degrees of severity, however the greatest penalty that business owners can expect to face from Canada revenue agency is for improperly paid source deductions. This is a 20% interest penalty for the entire amount that they owe. And while that sounds high enough, business owners need to take into consideration that that interest is accrued per day. Literally turning hundreds of dollars and thousands overnight.

Therefore, business owners can positively impact their business simply by learning how to pay their bills on time every month. By seeing if they are meeting all of their financial obligations or not, can help an entrepreneur act fast enough, so that they can take actions to ensure that they are staying as financially viable as possible.