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

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Outsourced CFO | Growing A Business Requires Prompt Bill Payments

Out of all of the habits that successful business owners have, one of them is paying bills on time says outsourced CFO. And while many people may not realize that this is actually going to help them succeed, business owners should understand that by paying their bills on time, is one thing that is going to help them learn what they need to do to be profitable in their business. Therefore, business owners should ensure that they are always able to pay their bills on time every month.

One of the first things that business owners should realize, is that when they pay their bills on time every month, they will end up ensuring that they know how profitable their business is. It will help them learn what their margin is, and help them calculate for each job but percentage is cost, and what percentage is gross profit. Outsourced CFO says that a business owner should be able to know when a customer walks through the door, how much profit on average they will make. If a business owner ends up not paying their bills on time every month, they will not understand if they are profitable every month either, and will end up putting their business in jeopardy.

One problem that business owners have, is they think that it is going to be hard for them to pay their bills every month while they are small, but that problem will be fixed when they scale their business up. Outsourced CFO says that business owners often believe that all they need are more jobs and more customers, and their business will suddenly be more profitable. However, they need to realize that if they are not profitable small, they are not going to be profitable large. Whatever the business looks like, when it is scaled up that is what it is going to continue to look like. Therefore, business owners need to realize that they have to become profitable first, and then they can focus on growing larger.

It is also very important for entrepreneurs to know that if they are behind on bills, they may not realize that they have unsustainable overhead. Therefore, business owners should learn to pay their bills on time every month, and then they will be able to see very easily if there are any bills that are more difficult to pay. And rather than realizing that they have to increase their margins, or go out and get more revenue, a business owner may simply have to cut one of the unsustainable overheads that they have. However many business owners are reluctant to do this, because they are aware that it is usually rent or Edmonton staff. And while rent is difficult to affect changes to, because most entrepreneurs are locked into a lease, business owners are reluctant to lay a staff member off. However, business owners need to realize that if by laying one staff member off, they can ensure jobs for the rest of their team, that is a difficult, but important decision they need to make in their business.

Outsourced CFO | Growing A Business Requires Prompt Bill Payments

It is very important that entrepreneurs learn how to pay their bills on time every month says outsourced CFO. In fact, 50% of all Canadian businesses fail within the first five years. 29% of those businesses who failed said that running out of money was the primary reason that their business failed. It is in fact, the most common reason why any business in Canada fails. Therefore, when business owners learn that they need to pay their bills on time, they can learn when their business is profitable and when it is not. And if it is not, they can strategize on ways to ensure that they can become profitable, either by increasing the cost per job, generating more revenue, or cutting expenses.

When danger that business owners run into, when they do not pay their bills on time, is that they are going to compound that problem every single month. If a business owner is not able to pay their bills every month, the next month they are going to be further behind in the next month even further behind. This is going to be a chain reaction until a business owner owes so much money, that it may be difficult for them to take themselves out of says outsourced CFO. Therefore, when business owners get into the habit of ensuring all of their bills are paid every month, they can ensure that they are not letting debts pileup, that will eventually lead to that running out of money in their business.

Something else for business owners to understand, is that if they start letting their debts pileup, it is only a matter of time for them to stop paying taxes on time as well says outsourced CFO. And this is a huge problem, partly because Canada revenue agency is very ruthless when it comes to collecting on tax money that is owed. Not only will they demand the money, and hit businesses with very steep penalties that can be difficult, if not impossible to pay. But also, Canada revenue agency has the ability to literally go into businesses bank accounts, and take money, or even freeze their bank account. This puts a business at even more jeopardy of not being able to function.

Business owners also need to understand that by not paying their bills on time, keeps them from running an ethical business. Not only will their team see this, and follow the behaviour, thinking that if the business owner does not meet their obligations neither will they. But also business owners relationship with their suppliers will suffer, and they will develop a reputation that will eventually affect the amount of customers there able to get. Therefore, business owners need to ensure that they are paying their bills on time, and running a profitable business.