How do small businesses achieve high profitability?
When small business owners who had achieved substantial success in growing their business either through acquisition, inheritance or as a start-up were asked about the key resource that led to their achievements, mostly pointed out the selection of a good accountant and more specifically accountants with the below-mentioned qualities:
- An advisor and a business partner
Their accountant partnered with them in driving the strategy and plan of the business through well-constructed business plans and monthly face to face sessions supported by valuable data analysis rather than simply recording the transaction and filing taxes once a year.
- Monthly Financial Statements.
Their accountants worked with Accounting systems like QuickBooks Online and processes that enabled them to generate monthly Profit & Loss, Balance Sheet, Cash Flow and Bank Reconciliation statements, and recently providing data in real-time through systems based on cloud computing and assisted by artificial intelligence. Monthly Financial Statements also help a small business to plan proactively towards their profit goals and tax strategy.
- Expert planner and strategic mindset
The accountant had adequate experience and professional background to think strategically and provide long term business plans, structures on pricing, volume analysis, sales channels selection, fixed and variables cost analysis and precise calculation of taxes.
- Advance Tax Planning
A valuable by-product of monthly financial statements and meetings and a strategic mind set enable the business owners to discuss and execute tax strategies fairly in advance and enable substantial savings.
- Cash flow focused
Monitoring and projecting advanced cash flow is like monitoring the lifeblood of the business, profits do not necessarily translate into much-needed cash. Close monitoring of Bank reconciliations monthly if not daily is another key process good accountants and businesses follow.
A most appreciated trait of an accountant leading to good advice and follow up was an analytical mind, trained to generate and interpret pertinent information, backed by timely advise and ability to spot any telling signs of trends that would otherwise escape the layman.
- Professionally qualified & knowledgeable
A professionally qualified and trained accountant such as a Chartered Professional Accountant (CPA) has valuable traits that allow them to maintain high professional standards and ethics, in addition to a deeper understanding of numbers, rules, regulations and laws.
- Works with the latest technologies
Technology is developing at an astonishing rate, with cloud computing, artificial intelligence and blockchain technologies forming a substantial part of the accounting ecosystem, your accountant must be comfortable working with these technologies to help you grow your revenues faster, track costs better, help choose the right inventory systems etc.
- Access to other small business service providers
Small business owners need access to the same professionals that their larger counterparts use to run their business i.e. bankers, foreign exchange traders, lawyers, wealth managers to name a few. Great accountants usually partner with these professionals, especially those catering to small businesses and should be able to refer them to their clients when needed.
- Cost management and Investment monitoring
A good accountant knows the delicate balance that the small business owner must maintain between cutting wastages and investing to boost future revenues when needed. Helping the small business owner to measure the cost of those additional investments or impact of reducing costs.
- Succession Planning
Small business owners at a certain stage of the business life cycle face the decision to go public, name heirs to the business or sell it. A professional accountant helps with the selection of professional valuation firms, the IPO process, or simply transit the business legally and financially to the heirs.
- Corporate Structuring
As a business partner who has access to the market and the inner workings of other successful businesses, the accountant is usually in a position to recommend changes to the business that would further boost the growth of stem any leakages of revenue.
- Debt Planning
At a certain stage of growth, all businesses especially start-up require access to banking channels, debt markets, and other lenders to either enhance capital or borrow short and long terms. A great accountant has connections in the market place to recommend and access these funds.
- Acquisition as a growth strategy
In some instances, the small business hit a plateau in terms of growth where the organic business growth strategy simply is not an option. An accountant has usually during their career worked on acquisition in terms of due diligence, purchase, bedding the acquisition or handled the complete cycle and is therefore in a good position to work with a team of professionals to identify the right fit for their client.
- An advisor and a business partner
Clearwater Professional Corporation based out of Oakville, Ontario is one such firm that has focused completely to help small businesses generate positive cash flows and achieve above-average profit levels.