SBA STATISTICS


Based on the latest statistics from the Small Business Administration (SBA), 10 Percent of All new businesses close each year and a bit more than 70 percent of ALL new businesses will close their doors within five years. That is a long time to struggle for the brass ring and still end up failing to say nothing about the massive investment made financially.

A wise business owner will not risk financial failure by ignoring other's mistakes. Here are the top five reasons why businesses fail:

  • Starting a business for the wrong reason
  • Poor Management (financial system non-existent, misunderstood financial data. And/or lack of Production / Marketing / Accounting areas contributing equally toward profits)
  • Insufficient Capital
  • Location, Location, Location
  • Poor Planning (non-existent, incomplete or not using an updated business plan, unwise credit policies, not factoring in competition, not following a sound marketing plan, inadequate sales management, dishonesty, over-optimism, not watching cash flow, lack of planning and budgeting, etc)

A small business, like a large one, requires focus on three Sectors of any business: Production, Marketing and Accounting.  Each Sector cannot work alone or independtly of the other for the Business to succeed.  With that said, your business needs an Accountant that will keep an eye on the bottom line and provide analysis of the financial data so you can:

  • Make sound financial decisions using accurate Financial Data,
  • Know whether policies and procedures support increasing profits,
  • Identify which of your products or services are priced right to cover all expenses to ensure profitability, and
  • Ensure all reduction to taxes and expenses and increase in Income has been taken advantage of so your business profits.



QUALITY FINANCIAL INFORMATION

As a business owner, here are some examples of things you should know about your business on a daily, weekly, monthly or annual basis:

  • which type of service or product you provide is generating the greatest revenues
  • which type of service or product you provide generates little income
  • do you know if you have missed out on discounts given by your vendors
  • which advertising / marketing plan brought in the expected revenues
  • do you pay late fees
  • which customers owe you, how much, and how long have they owed you
  • which customers are your biggest buyers and work toward increasing their business
  • would you like to know for sure each service or product is priced right to bring you a profit
  • how much do you owe and when is it payable
  • do you have a cash flow forecast for the next 7 days, month, 12 months
  • which vendors offer you the best payment deals
  • do you understand the financial metrics which keep your business strong, competitive and growing
  • are you being alerted to important requirements, like when to purchase a particular inventory item
  • are you alerted when to pay certain vendors
  • do you have too much cash not working for you
  • do you have financial information at your fingertips
  • do you have the ability to easily plan and budget for growth and improvements
  • do you have a variance report comparing budget to actual so you can see what exceeded or failed to meet expectations
  • do you know the cause for any differences between budget and actual so you can take action
  • do you have policies and procedures in place to safeguard property and assets
  • do you take an inventory count on a set schedule

If your CPA, Accountant or Financial System does not provide this information easily, talk to us – Accounting 4 Small Businesses can help.