There are times when owners of small
businesses (up to $10 million in annual sales or 50 employees) become overextended and lose the ability to closely monitor their companies’ finances.
Often, the culprit is simply a lack of time to
manage financial data. When this happens,
the results can be potentially devastating,
especially if they do not act quickly to regain control of their finances. Fortunately,
they don’t have to do the job by themselves.
Smart Business spoke with Deborah
Herr, of Skoda, Minotti & Co. Small
Business Services LLC, about some of the
solutions available to help small business
owners control their financial issues.
What common financial issues do small
business owners face?
Many financial problems result from the
growing demands on the time that owners
have to commit to their businesses.
Additionally, owners may be unable to read
balance sheets, understand cash flow management, meet tax deadlines or recognize
when they are receiving delinquent payments from customers — or not getting
any payments at all.
Tracking finances simply overwhelms
business owners at times, especially those
who are just starting companies or whose
entrepreneurial skills lie elsewhere. When
they get too busy, they may lose track of
their backlogs, which can have a significant adverse effect on their finances.
Other concerns may include owners who
do not track invoices or know which customers are tax-exempt. Or they may
employ Excel or similar spreadsheets to
keep financial records instead of utilizing
more advanced financial software.
Some business owners get so busy they
may reconcile their checkbooks only once
a year. That really does not tell them anything about their companies’ financial picture and delays the discovery of problems
that might have started earlier and continue to worsen.
What signs can indicate an owners’ loss of
control over finances?
They include tax notices, high bank fees,
increased personal workloads, and exorbitant fees and penalties paid to service
providers and suppliers. These fees and
penalties might include mounting finance
charges for late payments to suppliers or
banks, or escalating fees paid to tax preparers for increased levels of services mandated by additional oversight of companies’ financial records.
When small business owners notice these
signs, it is time to consider adding staff to
help track finances or working with a financial consulting firm for advice and help.
How can financial consulting firms help?
There are several ways, depending on the
firm’s level of services. Some financial consultants might only offer data entry. Others
might be one-stop firms that provide a
wide range of services and personnel, ranging from CPAs to experts in bookkeeping,
tax reporting, and accounting software
support and training.
For example, the consulting firm’s financial training specialists might be able to
provide business owners with assistance in
identifying shortcuts to regaining financial
control or suggest ways the companies can
stop ‘expensing’ everything it purchases.
What criteria define a good financial consulting firm?
One significant criterion is whether the
firm specializes in small business services.
Financial advice that might resolve
Fortune 500 companies’ issues might not
work for small businesses — and vice
versa.
So small business owners should be looking for consulting firms whose staff members are well trained in managing financial
data and the use of software applications
appropriate to their company size, or
which can provide temporary staff members who can perform the functions
required to upgrade cash flow reporting
and accounting systems. As an alternative,
business owners might look for consultants who can identify people on their own
staff with the skill levels to help, and who
can provide whatever training that other
staff members require.
Another consideration is the level of
information technology the consulting firm
provides. Some firms can provide remote
online data processing services to the point
where they can remotely take control of
your computer to handle the entry of data.
How do small business owners benefit from
partnering with financial consultants?
The short answer is that the consultants
save the owners money and time. They
help solve cash flow issues, restore
accounting/financial books in an orderly
fashion, reduce fees and penalties, and
even assist to resolve tax authorities’
notices.
More importantly, they can help you get
back to applying your entrepreneurial
skills to growing your company, which is
what you probably intended to do when
you started your business.
DEBORAH HERR leads Skoda, Minotti & Co. Small Business
Services LLC, based in Mayfield Village. Reach her at (440) 449-6800 or [email protected].
