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Many business owners may not realize that being profitable goes hand-in-hand with paying their bills on time every month says outsourced CFO. However it is so linked, that business owners were not able to pay their bills on time, or who choose to pay their bills late, or actually putting their business in jeopardy. And industry Canada did a study and found that half of all Canadian entrepreneurs go out of business within the first five years. 29% of those businesses that fail end up running out of money, making it the second most common reason for businesses to fail. Therefore, business owners can avoid this reason for failure, as well as learn how to run a profitable business when they get into the habit of paying all of their bills on time every month.
Ultimately, how this works says outsourced CFO, is that it shows a business owner if they are able to pay their bills on time every month, that they are being profitable. When they do not pay their bills on time every month, they are never sure exactly what is going on with the profit in their business. Therefore, learning how to pay bills on time will ensure that businesses no their margin and their profit. If, a business owner realizes that they are not making enough money to pay their bills consistently every month, then they need to figure out a strategy on how to fix that. Whether this is raising the price, so that they can make more of a margin for each job, perhaps it is simply increasing the sales that they have, and perhaps it is cutting expenses, such as overhead.
Many business owners make the mistake of believing that even though they cannot pay all of their bills while there small, that that problem will be fixed when they grow larger, and have more customers, and more jobs. However, outsourced CFO says that this does not actually work in reality. If business owners are unable to pay their bills while there small, scaling up their business also means scaling up the problems that they had. Therefore, a business owner needs to learn how to be profitable while they are small, so that when they grow their business, they are growing a profitable business.
Ultimately, business owners need to realize that it may be difficult to pay all of their bills on time due to unsustainable overhead. A business owner can only increase the margins, and generate more sales enough. Outsourced CFO says that often unsustainable overhead is to blame. Therefore, learning how to cut overhead costs is very important. However, the two most expensive overhead costs a business owner will have our administrative staff and rent. Affecting rent may be very difficult, because business owners are typically locked into a lease. Making laying off a staff member the only other option. And while this is uncomfortable, because owners do not want to let their staff down. Outsourced CFO says that business owners need to understand that by laying one staff off, they are ensuring jobs for the rest of their team, which is ultimately better goal, no matter how uncomfortable it might be.
Business owners who learn how to pay their bills on time every month develop skills that will serve them well as they grow their business says outsourced CFO. For example, if business owners learn what they have to do to be profitable when they are small, as they grow their business, they will be able to take those same actions into practice, and ensure that their business continues to be profitable. Ultimately, business owners that are not able to do this put their business at risk, and eventually fail in their business because of it.
Business owners need to realize that paying their bills on time will help them avoid unsustainable margins and overhead, because they are forcing themselves to face the reality of whether they can afford their staff or not. While many business owners want to hire staff immediately, so that they can focus on scaling up their business. It is important that business owners also understand if they have enough money to pay those people or not. While it is okay, and even expected for entrepreneurs to put sweat equity into their own business says outsourced CFO. It is absolutely never okay for an entrepreneur to expect that of their staff members. Therefore, a business owner even before they hire staff in their business must understand truly if they can afford to pay them. Get into the habit of paying their staff and suppliers on a regular basis, when business owners can do this, they will be able to make the determination if their business is actually scalable.
One thing that business owners need to realize, is that if they let the bills pile up in their business, it can be almost impossible to come back from that. Every month that they do not meet all of their financial obligations, there making the next month harder to pay the bills as well. Therefore, the more that an entrepreneur is not able to pay their bills every month, their compounding the problem. Ultimately, it will not be long before the bills will be impossible for an entrepreneur to pay off, leaving way to running out of money, which is the second most common reason businesses fail in Canada.
Ultimately, it is very important for business owner to pay their bills on time, not just because it will be easier to grow a successful business, but so that they can set the culture that they want to have in their business. When their team sees that an entrepreneur does not meet their obligations, they start failing on their own obligations as well. This start coming in late, leaving early, missing deadlines and doing poor quality customer service. This is the kind of thing that can literally destroy business. Therefore, business owners can set the right example by ensuring that they are paying all of their bills on time, and ensure that they have the culture that they want to grow a business on.
