More and more entrepreneurs are taking the leap into business ownership, but with no previous accounting knowledge. This can lead to many challenges and roadblocks in the future, as well as a lack of financial leadership. It’s essential to start your business the right way and ensure you’re making the right decisions to grow your business instead of running into financial problems.
The best solution is to hire a CFO for your small business or start-up company; this will ensure that you stay financially stable and grow as needed! Read on to find out what makes accounting such an important consideration when starting a new business.
What Are the Challenges that Small Businesses Regularly Face?
It’s not easy running your own business. You end up wearing a ton of different hats, learning everything from sales, supply chain, and customer service to digital marketing. However, one area that is essential to have an expert on board is your accounting procedures. CFOs can help you face many of the issues small businesses commonly run into with proven solutions while ensuring your business remains financially stable. Here are a few of the common problems new business owners run into.
- No Foundation Knowledge: Small businesses rarely have an accounting professional on staff, but they also don’t have the knowledge or history in accounting practices to maintain these processes efficiently.
- Start-up Funding Concerns/Funding Obstacles: Without proper funding (i.e., loans), entrepreneurs may find themselves with limited resources, which could lead to bankruptcy if they do not succeed quickly enough; this will result in loss of jobs as well as asset liquidation from creditors. Lack of knowledge about funding sources will lead to missed opportunities and a lot of wasted time.
- Managing Payroll: This is one of the most essential aspects of accounting because it keeps a record of timesheets, hours worked, and payroll deductions for taxes. However, it is often mismanaged due to other priorities taking precedence.
- Keeping Track of Money: Money keeps your business running. However, most entrepreneurs don’t have an easy way to track profits, losses, or cash flow which can impact their overall success.
Using Accounting as a Business Tool for Success
A strong accounting system is a business tool that can help you succeed in any aspect of your company. You will need to rely on the data collected by your CFOs, as well as make decisions based on what they report back to you about how much money your company has made or lost over time. The following are some areas where good accounting practices have been proven successful:
- Business Planning/Finance
With an understanding of budgets and forecasting, entrepreneurs and small businesses can be more confident in their spending choices for new products or marketing campaigns; this reduces the risk commonly associated with starting a new business.
- Cash Flow Management
Having accurate financial records allows managers to see when cash is coming into the company (think sales revenue) and when it’s going out. Understanding revenues, profits, and losses can help you make the right decisions to keep your business in business.
- Tax Planning
The IRS offers incentives for small businesses to file their taxes using accounting software. With the help of a CFO, you can take advantage of every credit and deduction available to your company, making sure that you’re saving as much money as possible.
Do I Really Need a CFO for My Start-Up to Succeed?
Yes! Hiring a CFO for your start-up is the only way you’ll know for sure that your business will remain financially stable and not be taking risks with decisions based on faulty numbers or inaccurate data. With competent knowledge of accounting practices, small businesses can avoid certain pitfalls while ensuring their needs are met through practical solutions. If anything changes regarding your finances, your strategies will need adjustments, so it’s imperative to have a person in charge with an understanding of how accounting works for small businesses.
How Do I Find a CFO That Meet Our Business Needs?
It’s essential to find a CFO that meets your expectations and needs. A good idea is finding someone with past business experience, that has an accounting degree or certificate in the field and can do any work needed on the side, such as bookkeeping. Other attributes you should look for in a CFO should include:
- Good Communication Skills: Are they able to communicate easily? They are keeping tabs on one of the most important parts of your business. If they’re unable to communicate effectively, it could negatively impact your business’s bottom line.
- Background Experience: How long have they worked in the industry? Are they qualified to take care of a business in your sector? Make sure they have the necessary experience to make your business a success.
- Attention to Detail: You need an accountant that is organized and pays attention to the small details. Not only do accountants help with managing your daily financial reports and strategy, but they also make sure you comply with local, state, and federal laws.
My Start-Up Can’t Hire a Full-Time CFO, Now What?
If you’re an entrepreneur looking to grow your company and start the right way, then you need to hire a CFO. However, not every company has the ability to hire a full-time employee right away due to budget concerns or may only need minimal accounting work done. Thankfully, at ioogo, we’re able to provide an alternative solution: virtual CFO services. A virtual CFO can provide the accounting services that every business needs without having to hire a full-time employee.
What are some benefits of hiring a virtual CFO? With our team onboard, you won’t have to worry about needing space in your office or hiring employees with specific expertise like bookkeeping and payroll management. We’ll take care of everything, so all you need to do is focus on running your business! Interested? Visit ioogo today and learn more about how we can help you achieve success as an entrepreneur by managing finances at any stage in growth!