From the Xero blog
Small business owners who enlist the help of an advisory bookkeeper and a CPA are far more likely to succeed, new research from Xero shows.
Surveying more than 2,000 small business owners, our research suggests that forming strong relationships with a professional accounting team is beneficial to the longevity of the business. For those owners who collaborate with an advisory bookkeeper and a CPA, 42% of successful businesses describe these relationships as “excellent,” compared to 27% of those whose company failed.
Speaking at Xerocon in London, software entrepreneur and angel investor Dale Murray explained how good, clear accounting advice can propel small business growth.
“I absolutely believe that bookkeeping, accounting, finance and understanding the numbers is a discipline every business owner needs to get their heads around if they want to do something special,” Murray said.
An advisory bookkeeper’s job is to provide clarity around what can seem like a deeply complicated world of business data and numbers.
Not all dollars are equal
Advisory bookkeepers play a key role in helping small business owners understand that not all dollars are equal – some are already underweight.
If business owners are going to increase their expenses, advisory bookkeepers can help them understand that: “a dollar earned in revenue is quite different to a dollar spent,” Murray said.
“Inherently, every dollar earned has a cost associated with it,” she said, adding “You’ve got to take off the cost before you start to spend the money.”
Advisory bookkeepers can also really help small business owners understand that not all customers are equal – some deliver lower revenue than others – and sometimes small businesses chase less profitable businesses.
Cash is everything
While business owners look for the opportunity, advisors need to see if there’s cash at the end of the day.
Advisory bookkeepers can help small businesses understand if they’re in negative or positive cash cycle. Negative cash cycle businesses are more fragile, however, an advisor can help shift the operation from one model to the other, Murray said.
Helping manage cash flow is one of the most important tasks an advisory bookkeeper performs for a small business, Dale explains, adding that unexpected cash crunches or events can throw even the most stable business.
Budgeting and forecasting can really help a small business understand what they need to do to get ahead. “We need to help our business owners plan, not just for the reasonable outcomes but some of the unreasonable ones too,” Murray says.
From the Xero blog