The sad fact is that over 50% of small businesses fail. You want to avoid becoming part of that statistic.
In addition to hiring a reputable bookkeeper/accountant, here are 5 things to look for in order to help you do just that:
1. Ineffective accounting. Poor money management is one of the key reasons small businesses fail. This can manifest itself in a variety of ways. For example, a business can falter when the owner insists on doing the accounting him/herself when that is not his/her specialty. These business owners need to realize that they should focus on what they do best: supplying the product and/or service. Outsourcing the accounting and/or bookkeeping to someone who could become the business’s profit center expert is your best bet.
2. Insufficient sales. This is a serious problem that a good accountant or bookkeeper would recognize when managing a business’s finances. When business owners also recognize this problem they can take action to resolve it. Is there really a need for this product and/or service? Are they charging too much for their products and/or services? Are their marketing efforts lacking or misguided?
3. Unpaid creditors. Another red flag that a business is failing are unpaid creditors. And that problem escalates when one of the creditors becomes the IRS. Owing the government money in addition to key creditors can make business owners feel like they’re being chased by a semi; it’s difficult to get ahead when you’re weighted down by debt.
4. Nonpaying clients. Worse yet is when you’re doing a lot of work for clients who are not doing a lot of paying. And this coupled with unpaid creditors makes it nearly impossible to become a profitable business. In order to cut back on the number of nonpaying clients, run credit checks on potential clients before you admit them to your roster. You can also take steps to collect payment by offering a pay online feature for ACH and credit cards.
5. Poor marketing. This is a weakness that plagues many small businesses. Unless the small business is marketing firm, chances are the owner does not feel he/she knows enough about marketing to put forth a solid and effective marketing plan. And while good products and/or services sell themselves in theory, the reality is that costumers can’t purchase something unless they know it exists and who is selling it.