So much research has been done on the survival rate of new businesses. You will hear everything from 33% to 86% of new businesses fail between year 1 and year 5. I can’t find a definitive percentage, but it is common knowledge that a large percentage of them fail. There is also research done that says businesses with a trusted advisor in the form of a strong CPA/Accounting firm reverse that failure rate, meaning 85% of businesses who partner with an accounting firm succeed. This makes sense, right? It takes a certain skill set to start a business: Fearlessness, a creative idea, vision, persistence, motivation, the ability to multi-task, all kinds of skills. BUT not all business owners have the financial, accounting tax experience, education or expertise to act as their own Chief Financial Officer. The skill set to start and run a business does not necessarily include strong financial knowledge. In fact, a lot of the time they are mutually exclusive skills. Creative people are not always savvy with accounting and finance, reading financial statements, knowing the tax implications of their decisions, the importance of cash flow and financial projections. The whole Right Brain/Left Brain conundrum. There is not much that any of us can do really well or can master without the aptitude, education, knowledge and years of hands on experience, whether it is playing an instrument, playing a sport or……running a business AND being your own financial advisor.
With a lot of small business owners, it is definitely a case of you do not know what you do not know. It just makes sense to partner with a trusted financial/accounting advisor to help you get started with the right decisions, strong business planning to know what it will take financially to succeed. CPAs that have been working with and consulting for businesses for decades know some things. It goes well beyond basic debits and credits or being able to prepare an income tax return. You should leverage that knowledge all through your adventure of owning your own business.
CPAs with strong business consultation skills can do so much for you it’s hard for me to imagine trying to start or run a business without one.
- Helping you project and forecast revenue and cash flow so you know in advance when cash is and is not available for your needs. Awesome business ideas often fail only because they run out of operating capital before they can really take off.
- Helping you choose the correct entity for your business and circumstance. If all business entities were identical for their operating and tax implications, then why are there so many entity types to choose from? There is a reason why there are choices: one entity works for this situation and another works for a different situation. You need someone who understands the pros and cons of each to help you choose and implement.
- Helping you get started with an accounting process and an accounting software so you can measure your financial situation: Are sales what they need to be. Are expenses in line with what you thought they would be, what they need to be to generate enough profit. How can anyone run a business without knowing what their financial situation is?
- Helping you standardize your processes, automate your system so that certain tasks happen consistently the same using technology to free your time, your employees time so you can concentrate on the operation of the business, not the recording of receipts, the writing of checks, getting bookkeeping done. The right CPA is not just an accounting specialist, they are a business specialist with a strong accounting/tax background.
- Providing strong, creative business consultation and coaching on all aspects of running a business. Starting and running a business is hard. You are wearing a ton of hats and juggling so many To-Dos that it is easy to lose sight of critical tasks, projects, strategic mindsets that, if utilized, would propel you forward, would accelerate your growth, would fuel the engine of your business idea. A CPA that has worked with businesses and is a strong consultant can keep you on track, can help you design that track and can help you stay accountable for the process, strategies and action items that will keep you focused, attached to the vision of the awesome business you decided to have the courage to start. Think of all the types of coaches there are and why that position exists……because they are critical to success for people that have certain talents, but still need someone who trains, motivates, builds teams, designs the play book, etc. Everyone needs a coach whether you are a professional athlete or a graphic artist with massive creative skills, a store owner who can sell sand to an ocean, an attorney who is a guru of law.
I could go on and on, but this post is getting too long. I am passionate about how partnering with a CPA who does more than just tax returns can alter the trajectory of your business in the most positive way. You need one that has chosen to specialize in working with businesses. You want a CPA that offers all services to businesses. A CPA that only prepares tax returns and a bookkeeper who only provides bookkeeping can work together, but one person who can provide the entire accounting, financial and tax needs of your business will be able to have the most impact because they are up close and personal to the entire picture of you and your business. Nothing gets lost in translation, nothing finds the black hole because the bookkeeper thought the accountant was doing it and the accounting assumed the bookkeeper was doing it. Neither took ownership because they were only responsible for one aspect of the process. One firm partnered with you, taking ownership of everything having to do with your success can make a real difference.
Consider hiring a CPA that can take your business to the next level. Do your research and find someone you can book a consultation with. Invest in 1 hour of their time to see what they have to offer. In my case, people who meet with me leave re-energized about what their business is capable of if we partner together to be intentional about the path, strategies, action items designed with your success in mind. It will feel like a you found a treasure map AND have an increased chance of success, simply because you have the map!!
