Tag: small business owner

Posted on

Business Owners to Accountants – Tell Me in Real Time

Business Owners to Accountants – Tell Me in Real Time

Business accounting is defined as the system of recording and summarizing business and financial transactions and analyzing, verifying, and reporting the results.  It sounds pretty dull, and to most small business owners it is the last thing they want to think about.  “Accounting” is what happens at the end of the month, quarter or year – or when any type of taxes are due.  What matters to the small business owner is their cash flow and cash availability to meet immediate operational demands, and how they will get past today’s problems to reach their future goal of comfortable retirement, leaving a legacy for the kids, or selling the business at a high value.  It may even be that, during periodic visits to deliver the monthly paperwork to the accountant, business owners express interest in discussing their ability to meet future business goals, yet these conversations often take a back-burner to simply getting the work processed and reports and returns completed.

Accounting has traditionally been approached as an after-the-fact activity, recording transactions for things that were already done in the business.  While this may be a handy approach to getting an annual tax return completed, it really does nothing for the small business owner in terms of providing them with information to run the business. Further, it does nothing toward helping the business owner get to where they want to go with the business, reaching whatever goals they had in mind when they first got started.

Cloud solutions and Internet-based applications have emerged which provide a high level of capability and information to small business owners, much like the E*Trade tools which enabled any user to “take control of their financial futures by providing the products, tools and services they need to meet their near- and long-term investing goals”.  Where E*Trade delivered simplicity, insight, and guidance for investors in real-time, so do many of the new business analysis and financial dashboard solutions, but in a business financial context.

Individuals who are focused on meeting their financial or investment goals are very interested in monitoring their progress toward reaching those goals, and guidance often suggests that making adjustments in strategy or approach at certain points along the way may be required.  Similarly, business owners have a great interest in monitoring the progress and status of their businesses, and many are taking steps to gain that insight and obtain guidance through the use of online banking solutions and other real-time reporting tools.

By simply connecting financial systems to some of these online reporting tools, business owners are able to gain a significant level of insight into their business operations, including bank balances, cash coming in and going out, and other information which supports making daily business decisions.  Unlike a static financial statement or annual report, these dynamic tools can provide business owners with real-time information about their businesses, which is what the business owner is looking for.  But guess what?  It’s not happening like it ought to.

Business owners are becoming increasingly impatient with their accounting professionals, and are demanding higher levels of service at more competitive rates than ever.  Further, many business clients of accounting professionals are gaining a belief that the value their accountant delivers is diminishing as do-it-yourself tools are gaining in popularity due to ease of use and well-stated value propositions.  If accounting professionals would only take a proactive, rather than a reactive, approach to working with their clients, this question of value would be much less of a question.

The biggest problem facing these accounting professionals is that they rely upon the client to deliver the work.  Waiting around for clients to bring in information for processing, or traveling around to client offices to pick up materials when they say it’s ready, is creating a divide between the client and the accountant which is difficult to overcome.  This divide – the lag in time between when business things happen and when they are accounted for – eliminates any possibility for the business owner to operate with all the information they need.

Accounting professionals must become proactive in their relationships with business clients, establishing the initial groundwork for how each will perform in order to achieve the desired result – real-time information for real time decision support.  The accountant has a responsibility to not only ensure that the information is processed appropriately and accurately, but also to ensure that it is obtained and processed in a regular, timely manner.  Increasing the frequency of capturing and processing data is necessary in order to provide information when it is most useful.  This means that accountants must not only organize their workflows to adjust to the new frequency and timeframe for processing, but that they must also be far more proactive in obtaining the source information from clients on a regular and recurring basis.

It has always been a problem to get information from client businesses so that it can be processed and reported on.  Now, with the demand for more timely data and “instant insight”, business owners are expecting faster returns on the processing of accounting information even as they continue to be the bottleneck in providing the source data.  Accounting professionals and the tools they use will have to adjust to this reality, creating a stronger focus on the organization of work and turning notification and exception handling processes around so that they drive the workflow rather than simply result from it.

Make Sense?

J

Posted on

Surprise! Consumer apps get IT approval in small businesses: GIGAOM.com

Surprise! Consumer apps get IT approval in small businesses: GIGAOM.com

In a recent article on GigaOm, author Barb Darrow discusses the findings of a survey of small businesses in the US, UK, Canada, Australia and New Zealand, where it was found that the use of “consumer” information technology is being more widely accepted for use in small businesses, and that many of these selections are happening without the knowledge or participation of the IT department.

“Employees are driving business apps selection in many small and medium businesses, according to new research. A good percentage of productivity, social and collaborative apps now sanctioned by IT in SMBs were brought in by workers without IT knowledge.“

Reporting that small businesses are adopting “consumer” IT, and that it is OK with IT departments, isn’t a surprising finding.  Small businesses have begun leveraging mobility and cloud solutions to their benefit, being able to take advantage of powerful technologies that previously only enterprise IT departments could enjoy.

 “.. the line between personal and workplace technologies has become all but invisible. That poses real challenges to IT departments that have to deal with all sorts of technology coming in over the transom. But it also opens up opportunities for vendors that design easy-to-use consumer apps to enter the business realm as well.”

The cloud introduces new agility and capability for all businesses, not just small business. For IT departments in larger businesses, this is a big IT management issue. For smaller businesses, the IT manager is often the business owner or an occasionally contracted on-site technician.  When faced with IT needs in the business, many small business owners will at some level rely upon the solutions they also use in their personal lives – in many cases, there simply isn’t a budget for both.  The line between business and personal has always been “blurry” for the small business owner.

Make Sense?

J

Read more: Disruptive Trends = Emerging Opportunity: Adapting to a changing technology and business environment

What will my business be worth, when I need it to be worth a lot?

bodeguy

Business Enlightenment

Get on the path…

  • Read more about how accountants need business intelligence, too
  • Read more about how there’s no fear and loathing in accounting
  • Read more about the pressure on accountants to deliver more value and intelligence to their clients
  • Read more about Data Warriors: accounting in the cloud
Posted on

“Business as Usual” Isn’t Cutting It

“Business as Usual” Isn’t Cutting It

For a lot of businesses today, “business as usual” just isn’t cutting it.  Competition is getting more aggressive, and clients are demanding more while margins are shrinking and the cost of operating the business just seems to go up.  Business owners and their CFOs must recognize that it’s time to change the way they operate.  By leveraging innovative technologies and cloud solutions, it is possible to transform the way critical business decisions are made and to radically improve how the business serves their customers, empowers their sales force, and keeps mobile workers working.

Business intelligence comes from all aspects of the business, not just accounting and finance.  Particularly in volatile economy, where uncertainty weighs heavily on each and every business owner, it is essential that the business make the best possible use of its information assets to eek out every bit of insight it can in order to not simply survive, but to find a way to identify and capture opportunities which will propel the business forward.

Data is just data, but information is power.  It takes skill and experience to turn raw data into instant insight, and this is where accounting and finance professionals should be placing their focus.  With a wise and intelligent approach to “enabling” businesses with tools to help streamline and improve process effectiveness, and structuring systems to capture and integrate data throughout the operation, CFOs and accounting professionals can assist their business clients in turning operational and financial data into actionable information supporting better decision-making.

Make Sense?

J

Read more… What will my business be worth when I need it to be worth a lot?  Your Exit Strategy

Posted on

What will my business be worth when I need it to be worth a lot? Your Exit Strategy

What will my business be worth when I need it to be worth a lot?   Your Exit Strategy

An exit strategy, as defined in Wikipedia, is “a means of leaving one’s current situation, either after a predetermined objective has been achieved or as a strategy to mitigate failure.”  With planning, a solid approach to managing business finances and operations, lots of hard work and a little luck (and more planning), your exit strategy from the business will look more like something from the first category rather than the latter.

It’s important to note that having an exit strategy doesn’t necessarily mean that the sole purpose of the business is to sell out for a bunch of money – not right away, anyway.  For many small business owners and entrepreneurs, the exit strategy is really about where they want their businesses to be in the future, and what they hope to get from it now and later.   For every small business owner, it is a balancing act between meeting today’s needs and reaching tomorrow’s goals.  The “Exit Strategy” is the essential plan for recouping the capital (money, time, effort) that has been invested in a company, whether that “recouping” happens earlier or later.

Not every business owner is in business to become a Fortune 500 company; some small businesses exist largely to support the lifestyle desired by the owner, and to perhaps leave a legacy behind for the heirs.  As with any investment strategy, a well thought out plan must be developed and followed in order for the entrepreneur to have a chance of reaching the desired outcome with the business.  What is really difficult is getting that plan in place, and then monitoring progress and making adjustments over time.   Business valuation – establishing the worth of the business – isn’t done based on data from a single point in time, it must capture historic performance data over several years of operation.  Business value also takes into consideration whether or not there is a profitable future for the business given its current condition, based not just on historic information but on industry outlook as well as economic and competitive landscapes.

Because business value is a dynamic thing, potentially changing with any given activity or event, it is essential that the business owner monitor performance and how it impacts the value “goal”.  Too often is a business owner caught off guard, believing that things were going very well because the cash flow was good, only to find out that they have drawn too much cash out of the business to allow it to grow in a healthy manner.  If the goal of the business is to support the owner lifestyle, perhaps this is not a problem, as additional growth of the business may not be the primary goal established.  The following quote from an article on Entrepreneur.com described this type of business owner pretty well:

“I asked the owner of a small, fabulously profitable manufacturing company why he didn’t grow the business bigger and sell it for a gazillion dollars. His response: “Excuse me? You’ve had way too much schooling. What part of 30-hour work weeks and a $5 million personal income don’t you understand?”

For most small business owners, this is where the struggle becomes visible – understanding that what you do now in the business impacts what you will get from it in the future.  If the business needs the money to grow, then taking too much out will stifle that ability.  If part of the exit strategy is to build value in the business and position it for acquisition, then a growth strategy is likely a requirement.  On the other hand, if you’re getting what you want and need from the business, and growth isn’t your imperative, then it is good to know that, too, and plan accordingly (the cash cow won’t be alive forever without proper care and feeding!).

The key for every business owner is to establish the goal – the result they wish to achieve from having the business – and to then make a plan and follow it as best they can, adjusting to changing conditions and situations, but never letting the path and the goal get out of sight.

Make Sense?

J