While being an entrepreneur allows you to forge your own path, it is often fraught with challenges you don’t see coming. If you aren’t prepared to overcome challenges, it can lead to your downfall. But maybe even more risky for the entrepreneur is settling on surviving, instead of trying to thrive.
Survival means you break even and can keep your head above water. But when even the slightest change occurs, such as the loss of a major customer, your risk for drowning is much higher. That’s why it’s important to know the difference between surviving and thriving in your business. And the key to knowing that is all in the numbers. Here’s how your accounting can help keep things clear.
Being proactive is the first difference between surviving and thriving. To thrive you need to reexamine spending across different categories to find ways to become more profitable including:
- The world has changed in the time of COVID-19. It has opened doors to a remote workforce that is –- highly affordable for business owners. Looking at your workspace is a significant opportunity to restructure costs. If your lease term is almost complete, consider the possibility of remote work opportunities. When more people work from home, you need a smaller space, or maybe no space at all.
- Look for benefits that allow you to define how much you contribute in relation to your employees benefits. This helps personalize benefits to attract top talent while controlling your required contribution. You can also adopt a performance-based plan for your 401k benefit contributions.
- Use Technology:
- Where can you introduce more technology to improve efficiencies? Is it cheaper to outsource your IT team? What repetitive work could be automated and streamlined? Explore Zapier solutions to tie together software to better integrate your operations.
- Talent management:
- Your people are your most important asset. Hiring appropriately, training adequately, and managing effectively to keep them provide the best investments your business can make.
- Travel and entertainment:
- With entertainment no longer deductible for federal tax purposes, more personal relationships remain crucial. Phone calls, Zoom and properly planned in person meetings keep the client relationship on course.
- Sales budgets:
- Revisit your sales measurements and compensation and adjust the performance rewards to properly motivate all of the productive team to their best, while quantifying the non-performers and dealing with those issues.
A small business accounting coach can help you leverage these cost restructuring methods.
Remaining critical of your processes works to improve efficiency. Your goal should be to constantly reassess your processes across all departments and methods to improve performance and decrease costs. Accounting hints at inefficiency are often spotted in wasteful spending such as materials, labor hours or the costs of renting space.
Your culture should reflect your values and beliefs, which should also resonate with not only your internal team members, but your ideal customer as well. Once you have that culture in place, it’s important to market it to your ideal client so they know they aren’t just buying from you based on price.
If your budget shows you haven’t invested in marketing effectively, Business Coaches for Entrepreneurs can help set up a marketing budget to help develop a positive culture. Many times internal initiatives such as asking for referrals and recording testimonials can be low cost, direct result method to upgrade the marketing approach.
Innovation is at the heart of every small business, yet it often falls by the wayside once the business is up and running. Remaining on the leading edge of your industry and investing in technology that helps improve your processes is the best way to encourage growth.
When you can use automation to improve productivity, and increase margins, you might even find you can downsize your team to save on labor costs or increase profitability using the same strong team. A small business CPA or accounting coach can help you find the money to invest in innovation and automation.
As your business grows so too should your negotiating powers. This puts you in a position to stop settling with what is offered and fighting for your own terms. From banks to landlords and vendor costs to supplier fees, your accountants can show you the best opportunities to negotiate for better prices and terms that help you thrive. They can compare outgoing costs associated with contracts and spot areas for improvement.
As you can see, the difference between thriving and surviving is thrivers tend to take a more proactive approach. With our Business Compass Program we show you have to use your real-time accounting to make financial decisions that cause your company to thrive. Don’t hesitate, schedule a Free 30-minute Introductory Call to find out how the Business Compass Program can help your business thrive.
Visit our Entrepreneur’s Guide to Accounting for more valuable articles like this one to help you build the right foundation for your business financials.