Accountants Hold the Key to Unlocking Small Business Cash Flow Mysteries
Economic downturns have a way of uncovering the weaknesses lurking just under the surface in businesses. Business inefficiencies that go unnoticed during boom times can quickly cripple a business during a downturn.
Those weaknesses and inefficiencies often impact profits, but even more critical is the impact they can have on cash flow.
When cash flow suffers, a business gets squeezed for working capital. Making payroll, buying raw materials, and paying operating expenses becomes difficult.
During particularly vicious downturns, vendors and banks are less likely to grant credit and loans, making cash flow even more difficult.
Most business owners are ill-equipped to manage cash flow. They tend to focus more on profits, underestimating the importance of cash flow until trouble develops. Additionally, business owners are often at a loss trying to figure out solutions for their cash flow problems.
Without expert help they cast about for answers and grow frustrated when the answers are not easily found.
The answers to their cash flow questions may be as close as their accountant’s office. Accountants with small business experience can often point out weaknesses and inefficiencies in a business with some quick financial statement analysis.
Accountants who also have business consulting experience can provide valuable insights into the problems in the business that are causing cash flow problems.
A recent study conducted by FSB and Zogby International found that 70% of the small business owners surveyed either don’t have an accountant or get little help from their accountant in identifying strategies for improving cash flow or profits. Why the disconnect?
What keeps small business owners from consulting a valuable resource that can help solve business problems?
Small business owners have shared some of the following reasons:
- Lack of understanding of the importance of having an accountant-in the minds of many business owners accountants exist for the sole purpose of preparing their taxes.
- Fear of looking “dumb” by asking questions.
- Fear of not understanding the answers to questions, again feeling “dumb.”
- Don’t want to “disturb” the accountant with questions.
- Fear that the meter starts running as soon as the accountant picks up the phone.
Perhaps the most troubling disconnect is that often accountants don’t understand how to improve cash flow in their clients’ businesses. Small business consulting and accounting are two very different specialties.
Some areas of overlap exist between the two, namely the financial pieces, but often cash flow problems are caused by a lack of a good marketing plan, under pricing, or a multitude of other management issues that have little to do with accounting.
Accountants can help business owners by defining exactly how the accountant can help, providing educational resources, and stressing the importance of managing cash flow.
It isn’t necessary for an accountant to be a master of all the skills needed to create a successful business.
For example, an accountant who lacks marketing expertise can offer referrals to experts or recommend marketing books. Serving as a resource for small business owners rather than being someone who “just does taxes” opens the door to both a stronger relationship with clients who build stronger businesses and the opportunity for additional revenue streams for the accountant over the life time of that relationship.
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Called one of the foremost experts on small business cash flow and finances, Caroline Jordan works with business owners to solve cash flow problems and build stronger, more profitable businesses. She is the owner of The Jordan Result, a small business consulting firm, and the author of Stop the Cash Flow Roller Coaster, I Want to Get Off! and Strength in Numbers. For more information visit http://www.CashFlowRollerCoaster.com or contact Caroline@TheJordanResult.com. Article Source: http://EzineArticles.com/?expert=Caroline_Jordan |
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