EOS Data can be a tool that unlocks profitability in your business, and aligns your entire team around a shared vision.
Data is the foundation from which all business planning, growth and decision-making is built upon. Without a good foundation, a business will lack accountability, striving for answers in a sea of unknowns.
Check out this recent video from our founder Jeff Allain, and discover how EOS data can transform your business.
In a world where entrepreneurs and business leaders constantly strive for efficiency and growth, EOS data is where continuity is found.
If you’re not familiar with EOS, here is a quick background.
EOS is the Entrepreneurs’ Operating System, designed to provide an encompassing framework to align an entire business. It consists of the following components:
Vision
People
Data
Issues
Process
Traction
Today, we’re focusing on data, because it’s the mechanism used for accountability and making adjustments when something is off track. Without data, there is no way to examine whether the organization is following its vision or goals.
Understanding EOS and Its Importance
EOS is all about moving goals from just an idea into something practical and tangible in the real world.
This pragmatism fosters a culture of accountability and transparency, which is essential for any organization aiming to scale.
The EOS framework encourages businesses to establish a scorecard that tracks key performance indicators (KPIs).
This scorecard serves as a vital tool for measuring progress and identifying areas for improvement.
By having a clear visual representation of their metrics, companies can make informed decisions rather than relying on gut feelings or anecdotal evidence.
The Role of Data in Business Decision-Making
Data is the lifeblood of any successful business. This means access to accurate and timely financial statements, which provide insights into a company’s performance.
These statements should not only reflect past performance but also serve as a predictive tool for future growth. Without this data, entrepreneurs may find themselves making decisions based on incomplete or outdated information, leading to potential pitfalls.
A critical tool to ensure success is cash flow forecasting, particularly the 13-week rolling forecast.
This tool allows businesses to anticipate cash flow needs and make proactive adjustments to their financial strategies.
By forecasting cash flow, companies can avoid unexpected shortfalls and ensure they have the necessary resources to seize growth opportunities.
The integration of these data components into the EOS framework will bring the entrepreneurs’ vision to life.
Implementing the EOS Data
Many companies struggle with the financial side of their operations, often lacking the necessary tools and processes to manage their data effectively. Every business has goals of some kind, even if they’re not explicitly stated.
What’s lacking is a framework for systematically achieving those goals.
In order to do that, the goal must be tied to a number.
Then, you track progress toward that number (in a scorecard) and stay vigilant about tracking progress. If things are off track, you’ll see it, and be able to adjust.
This is the power of data.
You are now able to build a data-driven vision, then work backward from that goal and take consistent action toward your vision.
Your financial models serve as a roadmap, allowing them to set realistic goals and measure progress towards achieving them.
Additionally, having a dedicated implementer who understands the nuances of EOS can significantly enhance a company’s ability to leverage data for strategic decision-making.
The Impact of Data-Driven Decision-Making on Growth
Do you want your business to grow? Do you have a plan for this growth? Unfortunately, growth doesn’t happen by accident. With data-driven decision-making and planning, you can start to take control of your growth.
This proactive approach not only enhances operational efficiency but also fosters a culture of innovation and continuous improvement.
What would that do for your business?
For many, the impact of setting clear goals, then building a data-driven roadmap for achieving them can truly be life-changing.
If you want that roadmap, it starts here. And it starts with data.
EOS provides a structured framework for businesses to align their goals and operations.
Accurate financial data, including scorecards and forecasts, is crucial for informed decision-making.
New Economy CPA specializes in sitting in the Finance Seat to help run the data component of EOS.
The integration of data management can lead to greater control and growth for entrepreneurs.
Let’s Grow Together
The journey to becoming a data-savvy organization may seem daunting, but with the right guidance and tools, entrepreneurs can unlock new levels of success.
That’s what New Economy CPA is here to do – equip entrepreneurs with the tools and guidance they need to walk this journey. We’re walking it ourselves, and are here to help others do the same!
https://neweconomycpa.com/wp-content/uploads/2024/10/New-Economy-2.png6301200Mallory Raberhttps://neweconomycpa.com/wp-content/uploads/2021/01/new-economy-logo_withpadding.pngMallory Raber2024-10-10 15:22:052024-10-10 15:22:05Unlock the Secrets of Effective Leadership with EOS Data
If you didn’t have the pleasure of attending business or accounting school, it’s understandable that some of the accounting jargon can leave you feeling confused.
But accrual accounting isn’t a small definition at the back of an accounting textbook. Choosing accrual accounting can be the foundation for how you set up your entire bookkeeping and accounting systems, positioning you for success.
Shall we get into it?
So, What the Heck is Accrual Accounting?
In plain English, accrual accounting is all about timing.
It’s a method where you record income and expenses when they’re earned or incurred, not necessarily when the cash changes hands.
Income is recorded when you earn it, like when you send out an invoice, even if your customer hasn’t paid yet.
Expenses are recorded when you owe them, such as when you receive a bill, not just when you actually pay it.
Accrual accounting gives you credit for being productive, not just for having money in the bank. It’s like recognizing that you’ve run a marathon, even if you haven’t collected all your medals yet!
Who the Heck Cares About Accrual Accounting?
Glad you asked!
Accrual accounting gives you a more accurate and realistic picture of your business’s financial health.
Big Picture View: It shows you the true financial performance of your business over a period of time. You’re matching revenues to the expenses incurred to generate them, which makes your financial statements more meaningful.
Plan Ahead: By recognizing income and expenses when they happen, you can better predict future cash flows, helping you plan for upcoming expenses or investments.
Trustworthy Reports: Lenders, investors, and stakeholders prefer accrual accounting because it provides a clearer picture of your company’s financial position.
If you’re working on a big project that spans several months, accrual accounting helps you recognize portions of the revenue and expenses as you progress, giving you a real-time view of how profitable the project is at any given moment.
When The Heck Should a Business Use Accrual Accounting?
If you’re a small business just starting out, cash accounting might seem easier. In these cases, you simply record transactions whenever cash changes hands.
But as your business grows, accrual accounting becomes more beneficial—and sometimes necessary.
Consider using accrual accounting if:
You Deal with Large Projects or Contracts: If you provide services or products over time, accrual accounting helps you match income and expenses accurately.
You Offer Credit to Customers: Recording sales when you invoice (not just when you get paid) gives you a better handle on revenues and outstanding receivables.
You’re Seeking Funding or Investors: Accrual-based financial statements are generally required by banks and investors because they reflect your business’s true financial performance.
You Have Plans for Revenue Growth: If large income growth is on the horizon, accrual accounting is generally recommended.
The IRS Requires It: C corporations and those partnering with a C corporation partner are generally required to use accrual accounting. Also, most entities engaging in “the production, purchase, or sale of merchandise as an income-producing factor” should use accrual accounting for inventory transactions at least.
But Wait, What’s the Catch?
Like anything worthwhile, accrual accounting isn’t without its challenges.
Complexity: It’s more complicated than cash accounting. You’ll need to track receivables and payables diligently.
Cash Flow Confusion: You might show a profit on your income statement while your bank account is running on fumes. That’s because accrual accounting recognizes revenue you’ve earned but not yet received.
More Effort: It requires more accurate record-keeping and a solid accounting system to manage it effectively.
But don’t let that scare you off! The benefits often outweigh the extra effort, especially when you have the right support.
3 Key Takeaways
Accrual accounting is the recommended way to go for most up-and-coming businesses. Despite a bit of extra work, at New Economy we encourage our clients to use accrual accounting for their businesses to ensure they’re ready to crush their goals.
Remember:
Accrual = Accuracy: It provides a clearer, more accurate view of your business’s finances by matching income and expenses when they occur.
Growth-Ready: If your business is scaling, accrual accounting helps you track financial performance more effectively, making it easier to plan and secure funding.
https://neweconomycpa.com/wp-content/uploads/2024/09/New-Economy-1.png6301200Jeff Allainhttps://neweconomycpa.com/wp-content/uploads/2021/01/new-economy-logo_withpadding.pngJeff Allain2024-09-23 12:19:412024-09-23 16:29:30What the Heck is Accrual Accounting and Why Does it Matter?
Making sure you have the right person for each job increases your efficiency and potential to knock your growth goals out of the ballpark.
But you may not need multiple full-time hires. Outsourced and fractional roles exist to assist growing organizations.
Before we get into that, let’s make sure we’re on the same page with every role and its functions.
What Does Everyone Do?
Bookkeeper
Bookkeepers handle the daily ins and outs of your money matters, which require a keen eye for detail. The time and energy to manage this work may weigh heavily on employees who don’t specialize in this, so a bookkeeper is often your first financial hire.
Key bookkeeper functions:
Daily upkeep: Manages payroll, pays bills, and keeps your books in order.
Keeps your financial house clean: Ensures all transactions are accurately recorded.
First line of defense: Catches small issues before they become big problems.
Unlike accountants, who have the rigorous CPA designation to prove their expertise, bookkeepers do not have a standard designation. There are many bookkeeping certifications out there, and the quality varies, so it’s important to find someone trustworthy who has the correct training to do a good job for your business.
Accountant
An accountant is a bridge between managing your day-to-day finances and providing strategic insights. They particularly shine when it comes to helping you understand your financial statements and what they are telling you about the business. This is an essential part of any business, and a headache if you don’t have the right team supporting you.
Key accountant functions:
Beyond bookkeeping: Prepares financial statements and ensures tax compliance.
Insight provider: Delivers more in-depth reports and financial analysis.
Tax pro: Helps you navigate the complex world of taxes, ensuring you pay what you owe and that you take advantage of the tax write-offs available.
Make sure you find an accountant with a current CPA designation if you’re going to be leaning on them in your business.
Controller
Controllers oversee your accounting operations, ensuring everything runs smoothly and accurately. They are pros at letting you know what has happened in the business based on the historical financial statements.
Key controller functions:
Financial fidelity: Manages policies and internal controls to safeguard your assets.
Team leader: Directs the accounting staff and integrates processes.
Audit liaison: Prepares your business for external audits, ensuring compliance.
Business Tools: Provide and support financial tools to run the business (i.e cash flow forecasting, budgeting).
While accountants and bookkeepers can also prepare for audits, controllers in particular excel in this area. They can help prevent audits by building strong controls, but when they are required, can ensure the process goes smoothly.
Chief Financial Officer (CFO)
Finally, we arrive at the CFO. Your strategic financial partner who aligns financial management with business objectives, especially during periods of rapid growth. They are the right hand to the CEO providing forward looking insights.
Key CFO functions:
Visionary: Manages big-picture financial strategy, from capital raising to budget management.
Growth navigator: Helps secure funding and manages investor relations.
Strategic leader: Ensures the financial team supports broader business goals, maintaining budget discipline and strategic alignment.
How They Work Together
With so many moving parts, it may be hard to visualize how these roles work together in an accounting department. Let’s provide an example that is relevant for many medium-sized growing businesses.
The bookkeeper records daily transactions, ensuring that all financial data is up-to-date and accurately entered. This foundational work is crucial for accountants, who rely on these records to prepare detailed financial statements and conduct thorough tax planning. Some organizations may have several bookkeepers and accountants.
At the next level, the controller uses the reports prepared by the accountant to enforce and refine accounting policies and internal controls, ensuring that the financial operations run smoothly and comply with legal standards. This oversight helps to safeguard the company’s assets and improves overall efficiency, which is critical for the strategic work of the CFO.
With a well-managed financial framework in place, the CFO can focus on higher-level strategic planning and capital management. They can leverage the accurate and timely information provided by the controller to make informed decisions about investments, funding, and growth opportunities.
This strategic guidance, in turn, feeds back into the operational level, where improved processes and financial strategies help streamline everyday accounting tasks, creating a cohesive, supportive financial environment.
What Your Business Needs
While there’s never a one-size-fits-all solution, here are some general guidelines for when different roles make sense in an organization.
Small, Relatively Stable Businesses
If your business isn’t too big, and you’re not planning any major growth or changes, you’re probably fine with a bookkeeper and/or accountant. They’ll make sure your books are in order and compliant, and help prepare you for tax time. They can prepare financial reports to give you a sense of your business.
While your business may be small, it could make financial sense to have a bookkeeper and an accountant, even if they are part-time. Bookkeepers typically charge less, and you don’t need someone with a CPA doing extensive data entry. However, this approach only makes sense if there is good communication between all parties to avoid headaches.
Medium Businesses
If your business is medium-sized, a bit more complex but relatively stable, and you have many employees and streams of income… you might be at the stage where accountants aren’t quite enough.
In this case, you’ll want to consider adding a controller (even if only part-time) to your team. You wouldn’t want to risk the headaches and potential legal pitfalls of not having someone keeping a very close eye on everything going on in your business.
Startups, Rapidly Growing Businesses, and Large Enterprises
You may be ready for a CFO if your business is:
Rapidly growing, regardless of size
A startup that is looking to bring in more funding
Managing finances with an eye for strategy needs sophisticated financial oversight. A CFO becomes essential to navigate capital increases, detailed budgeting, and complex financial forecasting when funding sources and growth are rapidly changing.
Fractional Roles
For many businesses, some or all of these roles can be part-time or fractional hires. This can allow a business to reap the benefits of the expertise of financial professionals, without the longer-term commitment and full-time paychecks.
For example, a full-time CFO can cost anywhere from $100-400K per year at an SME, if you’re including salary and benefits. However, an outsourced CFO could cost only $6-12K per month, depending on the services provided.
3 Key Takeaways
If you’re not sure how to build out your financial team based on your business size and stage, talk to our team at New Economy. We’re always happy to help!
Remember:
Right Expertise, Right Time: Ensure you have the appropriate financial expertise at each stage of your business growth.
Stay Proactive: Don’t wait for financial challenges to find you; have the right team in place and be ready for the future.
Strategic Growth: Leverage the expertise of part-time and fractional financial team members who help rather than hinder your business success.
There you have it 🙂
New Economy Helps You Put Together Your Team
At New Economy, we understand that one size does not fit all when it comes to your financial needs. We’re able to help find part-time and fractional virtual support.
Whether you need a bookkeeper, accountant, controller, or CFO…we have the people who can help your finances thrive. We can save you time by ensuring you have vetted, professional finance experts to help with your business.
https://neweconomycpa.com/wp-content/uploads/2024/09/New-Economy.png6301200Jeff Allainhttps://neweconomycpa.com/wp-content/uploads/2021/01/new-economy-logo_withpadding.pngJeff Allain2024-09-10 10:34:202024-09-10 10:34:58Does My Business Need a Bookkeeper, Accountant, Controller, or CFO?
Do you ever dread talking with your accounting team?
Do you finish conversations with your accountant feeling more confused than confident?
Do your finances feel more like a mystery than a roadmap?
I hate to break it to you…but your accounting team might suck.
We get it—“sucks” might sound harsh.
We’re accountants too, and we’ve met some amazing accountants along the way (many who we hired for our team!)
But too often we’ve found many CPAs who are doing a massive disservice to businesses, and it doesn’t have to be that way.
Sometimes it’s a lack of training, communication skills, or resources. But whatever the reason for this predicament, it’s better to figure it out sooner rather than later.
If your accounting team is still relying on endless spreadsheets, manual entries, and outdated software, you’re dealing with a serious case of inefficiency.
Spreadsheets have their place, but they’re not meant to be the backbone of your financial operations. Outdated tools mean higher chances of errors, slower processes, and more time spent on tasks that could be automated.
The Math on Why it Sucks:
Manual data entry = more errors
Outdated software = missed opportunities for efficiency
Time wasted on repetitive tasks = less time for strategy
What You Deserve: A modern accounting team should be using up-to-date software and automation tools to streamline processes, reduce errors, and save time.
2. Communication is Like Pulling Teeth
Does Your Team Only Speak Numbers?
Financial reports filled with jargon, explanations that leave you more confused, and updates that are as clear as mud—these are all signs of poor communication.
If you can’t understand what your numbers are telling you, how are you supposed to make informed decisions?
Lack of clarity = lack of confidence in your financials
What You Deserve: Your accounting team should be able to break down complex financial concepts into simple understandable language. You shouldn’t need a degree in finance to know where your money is going. Clear, jargon-free communication helps you stay informed and confident in your decisions.
3. They’re Reactive, Not Proactive
Always Playing Catch-Up?
Is your accounting team constantly putting out fires instead of preventing them? A reactive approach means they’re only dealing with problems as they arise—missing out on opportunities to optimize and plan for the future.
It’s like driving while only looking in the rearview mirror. Sure, you’ll see what’s behind you, but you’re likely to miss what’s up ahead.
The Math on Why it Sucks:
Constantly scrambling to fix issues = Missed opportunities for growth + savings
What You Deserve: A proactive accounting team doesn’t wait for problems to arise—they anticipate them and take action to prevent them. Regular financial reviews, strategic planning, and forward-thinking advice keep your business ahead of the curve. Your team will ideally always be one step ahead, so you can focus on running and growing your business.
4. They Make You Second-Guess Everything
Confidence in the Red?
If your accounting team isn’t providing you with clear, accurate information, it’s easy to start second-guessing every decision you make. Maybe you’re not sure if your financials are accurate, or you’re uncertain about the reports you’re getting.
When you don’t trust the numbers, it’s hard to move forward with confidence.
The Math on Why it Sucks:
Doubt in your financials = indecision
Second-guessing your strategy = missed opportunities
Constant worry about mistakes = more stress
What You Deserve: A solid accounting team provides you with clarity and assurance, turning uncertainty into confidence. With accurate reports and expert advice, you can make informed decisions without the constant fear of making a mistake. It’s about transforming your financials from a source of stress into a powerful tool for growth.
5. They’re Costing You Money
Financial Errors and Missed Opportunities
Errors in accounting aren’t just annoying—they can be downright expensive. Whether it’s overpaying on taxes, missing out on deductions, or dealing with mistakes that lead to penalties, a subpar accounting team can take a serious toll on your bottom line.
The Math on Why it Sucks:
Overpaid taxes = money out the window
Missed deductions and credits = lost opportunities
Penalties and fees due to errors = unnecessary costs
What You Deserve: An accounting team that’s meticulous and knowledgeable, ensuring that your finances are optimized. They should be spotting every deduction, maximizing your tax benefits, and catching errors before they become costly problems.
You Deserve an Accounting and Finance Team that Rocks
The right accounting team doesn’t just help you avoid pain, they create a solid foundation for growth. They can turn your financial operations into a source of strength, not stress.
If your current team is stuck in the past, poor at communication, reactive instead of proactive, making you second-guess everything, and costing you money, it’s time to reconsider your options.
So, take a step back, evaluate your current team, and don’t be afraid to make a change if it’s needed. Your business—and your peace of mind—are worth it.
3 Key Takeaways:
At New Economy, we take pride in helping our clients find accounting solutions that don’t suck. In fact, we might even find solutions that are downright awesome!
Here are 3 key takeaways:
Upgrade Your Tools: If your accounting team is still relying on outdated methods and tools, it’s time to move on. A modern approach minimizes errors, saves time, and enhances efficiency.
Demand Clarity: You deserve clear, jargon-free communication from your accounting team. Understanding your financials is key to making informed decisions with confidence.
Be Proactive: A great accounting team should anticipate challenges and opportunities, not just react to them. Proactive planning and strategic advice will keep your business ahead of the curve.
New Economy Team Members are Experts in Accounting for Entrepreneurs
https://neweconomycpa.com/wp-content/uploads/2024/08/340.png6301200Jeff Allainhttps://neweconomycpa.com/wp-content/uploads/2021/01/new-economy-logo_withpadding.pngJeff Allain2024-08-23 17:44:552024-08-23 17:46:18Reasons Your Current Accounting Team Sucks
But sometimes the accounting side of things can feel like a never-ending game of Whac-A-Mole.
And some days, you’re not the one doing the whacking, you’re the mole getting hit over the head.
Ouch.
We feel your pain.
Or, we used to.
And that’s why we love our work here at New Economy.
We love helping our clients reduce their financial pains so they can focus on greener pastures, hopefully not nearly as mole-infested.
Your accounting team has a tough job, but the end goal is to reduce your pain, not make more of it. So, let’s share some ways your accounting team is (hopefully) working to make your life better right now.
1. The Pain of Inefficiency and Wasted Time
There’s a reason for computers and AI, and it’s not to steal our jobs.
It’s to take on the work that would be otherwise boring, repetitive, or inefficient for a human to spend their brain power and time focusing on.
The software exists for most of these tasks, from bank reconciliations to expense tracking. It just needs to be well-implemented.
Your accounting team can help you out with the following:
Automate Repetitive Tasks: From invoicing to expense tracking, automation tools can handle the mundane so your team can focus on more exciting stuff. Less grunt work, more strategic thinking!
Optimize Workflows: Implementing streamlined processes reduces the time spent on repetitive tasks, freeing up resources for more important activities.
Improved Morale: Have you ever worked at an inefficient place that was constantly putting out fires? Compare it to somewhere that knew what was going on, had processes in place, and treated you like the intelligent person you are. Letting your employees plug into the processes, and then freeing up their minds to find innovative solutions is a great way your accounting team can help.
2. The Pain of Accounting Errors
We all make mistakes, it’s part of being human.
But how many times have your finances been thrown off by a tiny bookkeeping or accounting error?
Whether it was you or someone on the accounting team, someone spent hours, maybe even days, combing through the transactions and calculations to figure out what went wrong.
It’s a much better learning process to make interesting mistakes – like rethinking your marketing or investment strategies – compared to dealing with manual data entry errors.
And unfortunately, financial errors are more than just a headache—they can be expensive.
Here’s how your accounting team can help you avoid these pitfalls:
Implement Checks and Balances: Regular reviews and reconciliations catch errors before they become expensive problems.
Use Error-Prevention Tools: Some accounting software can identify potential errors before they impact your bottom line, or eliminate them by the automation we spoke about earlier.
Invest in Training: Ensure your team is well-trained to handle – and prevent – financial task errors.
3. The Pain of Taxes
We love the benefits taxes bring to our society, but we don’t love overpaying more than our fair share.
By optimizing your tax strategy, accountants help ensure you’re paying what you owe—nothing more, nothing less.
Strategic Tax Planning: Planning your tax strategy throughout the year avoids last-minute scramble and headaches. We know they’re coming – there’s no need to add extra stress just because it’s tax time!
Stay Compliant: Avoid penalties by ensuring you meet all your tax obligations correctly and on time.
Leverage Deductions and Credits: Your accountant can spot deductions and credits you might miss, ensuring you get the maximum benefit.
4. The Pain of Audits
Whether it’s an internal audit to ensure everything is in good shape or a visit from the IRS, audits strike fear into the hearts of business people around the world.
But they don’t have to be nightmares.
Your accounting team can simplify the process to make audits smoother and less stressful, with steps such as these:
Organize Documentation: Keeping your records neat and accessible to make the audit process a breeze.
Prepare in Advance: Regularly reviewing and preparing your documents so you’re not caught off guard during an audit.
Working Collaboratively: While your accounting team can handle the heavy lifting of audits, the sooner you can get info to them, the easier the jobs will be for everyone. While you don’t need to be an accountant, feel free to ask questions and learn the basics, because at the end of the day, you need to understand what’s going on financially in your business.
5. The Pain of Overwhelm and Second Guessing Your Strategy
It’s easy to be overwhelmed with the decisions you make for your business. Adding a bunch of numbers and financial reports on top of that may make things even worse if you’re not someone who feels comfortable with the financial side of running a business.
No one makes perfect decisions, but if you’re confident your numbers are accurate, and you have the correct reports, you can ask the right questions and make solid decisions.
A skilled finance and accounting team can offer expert advice and enhance financial reporting to ensure you’re not flying solo.
With their support, you’ll make informed decisions and feel more confident in your financial strategy.
They can help you by:
Clarifying Financial Reports: Make sense of your financial statements with expert advice that turns complex data into understandable insights.
Providing Strategic Insights: Receive guidance on making strategic decisions that align with your business goals, including tools such as business scorecards.
Putting Together a Scorecard: Your business scorecard can be an invaluable tool.
Supporting Big Decisions: Whether it’s expansion or cost-cutting, your accountant can provide insights and expert perspectives on the financial side to ease the process.
Preparing for Funding Opportunities: Whether it’s investments or bank loans.
3 Key Takeaways
At New Economy, we help you use financials to make more money and better business decisions so you’ll feel less pain when running your business. Those poor moles need a break as much as you do!
Streamline Your Processes (and Minimize Errors). Get rid of those repetitive tasks and reduce financial slip-ups by automating processes and leveraging efficient tools. A well-oiled accounting machine means fewer mistakes and more time to focus on what truly matters.
Simplify Audits and Tax Strategies. By keeping your records organized and planning your taxes smartly, you’ll make these daunting tasks much more manageable. Let your accounting team take the stress out of compliance and optimization.
Feel More Confident in Your Decisions. With clear financial reports and expert advice, you’ll be equipped to make informed decisions without second-guessing. Confidence in your financial strategy means less stress and more focus on growing your business.
There you have it 🙂
New Economy Team Members are Experts in Accounting for Entrepreneurs
If identifying ways to decrease your taxes is not in your skill set or you want to gain control of your finances to make smart decisions to build and grow your business, New Economy is an excellent partner.
We’ll help you get your accounting and taxes done, and done right.
https://neweconomycpa.com/wp-content/uploads/2024/08/New-Economy.png6301200Jeff Allainhttps://neweconomycpa.com/wp-content/uploads/2021/01/new-economy-logo_withpadding.pngJeff Allain2024-08-15 12:35:212024-08-15 12:36:14Top Ways Your Accounting Team Can Reduce Your Pain
It’s always good to approach your business with curiosity.
What’s driving you?
How’s your team doing?
What could be going better?
But sometimes we don’t ask the right questions about our finances, because it can feel a bit intimidating. Who knows what we’ll uncover?
There’s no need to be worried. Knowledge is power, and we’re here to make you more powerful than ever before.
We’ve put together five key questions that will help keep your business on track and grow to new heights.
Leading with Curiosity
There’s a reason the wisdom of Socrates carries on today. He’s famous for asking questions. It’s a method that can help you reach useful insights.
A toga is not required, but certainly, a fun addition if you want to really get into it! 😉
Anyways.
Consider employing the “5 Whys” Method, which is popular among lean startups.
Whenever you think you have an answer to the below questions, try asking “Why?” again and again. You may discover some interesting root causes, causality, and insights.
Always pursue this approach without judgment. Even if it’s tempting to do so, the goal is insights and not blame.
5 Whys Example
The “why” to many of these could have many answers taking you in different directions to explore, but here’s a simple example with one answer and follow-up question for each.
Why aren’t we profitable yet?
Our revenues aren’t exceeding our expenses.
Why aren’t our revenues exceeding our expenses?
Our expenses are reasonable, so it must be that we need to work on our revenue model.
Why isn’t our revenue model working?
We’re not sure, perhaps there’s some more research that needs to be done here. However, it’s based on assumptions from two years ago when we started, and we’ve learned a lot since then which could be updated.
Why haven’t we updated our revenue model?
We get caught up in the hustle and bustle of daily business.
Why are we too caught up in the hustle and bustle of daily business?
We haven’t created a process that includes scheduled time and accountability for strategic thinking and updates.
Okay, here are some good questions to get the curiosity going!
Question 1: How’s My Cash Flow?
Cash flow is the lifeblood that keeps everything running smoothly.
Unlike profit, which is a measure of your earnings over time, cash flow is the actual money flowing in and out of your business right now. If you’re not paying close attention to your cash flow, you could be headed for trouble, even if your business is profitable on paper.
Signs that your cash flow might be struggling include:
Late payments from customers
Overstocked inventory
Unexpected expenses
To keep your cash flow healthy, make sure you’re invoicing promptly, negotiating favorable payment terms with suppliers, and keeping a close eye on your expenses.
Question 2: Am I Profitable? (And If Not, Why?)
This seems like common sense, but it’s key.
While cash flow is essential for short-term survival, profitability is the key to long-term sustainability. It’s the difference between making money and just breaking even.
To figure out if you’re profitable, take a close look at your revenue and your expenses.
Are you pricing your products or services correctly?
Are your costs under control?
Is your sales volume high enough?
Answering these questions and keeping an eye on your budget can help you pinpoint areas where you can improve your profitability.
Question 3: How’s My Debt Situation?
Not all debt is created equal. Some debt, like a loan used to purchase equipment or expand your business, can be a good thing. In fact, we recently wrote an article which will help you get a bank loan for your business.
However, too much debt can weigh your business down with interest payments and limit your cash flow.
If you’re carrying a lot of debt, consider strategies like consolidation or refinancing to reduce your interest rates and monthly payments.
Question 4: Am I Saving Enough?
Even if your business is doing well right now, it’s important to prepare for the unexpected. A rainy day fund can help you weather tough times, like a sudden economic downturn or an unexpected expense.
It can also give you the flexibility to take advantage of new opportunities, like expanding your business or investing in new technology.
Make sure you’re setting aside a portion of your profits each month to build up your savings.
Question 5: What Does My Future Look Like?
Having a clear vision for your business’s future is essential for making smart decisions today. Financial forecasting can help you anticipate potential challenges and opportunities down the road.
By using tools like financial modeling software or seeking the help of a professional advisor, you can develop a roadmap for your business’s financial future.
This can help you make informed decisions about everything from hiring new employees to expanding into new markets.
3 Key Takeaways:
At New Economy, we’re always asking questions and coming up with helpful solutions. We want to help you flourish by taking control of your finances. Here are 3 key takeaways:
Stay Curious: Instead of making assumptions and judgements, keep an open mind and question the world around you.
Keep Asking Why: Go deeper and deeper to see if you can find and solve root causes.
Plan Ahead: Use questions and forecasting to make informed decisions about your business’s future.
Remember, asking the right questions is the first step to taking control of your business’s financial health.
Don’t be afraid to seek help from a financial professional if you need it. By staying informed and proactive, you can set your business up for long-term success.
New Economy Team Members are Experts in Accounting for Entrepreneurs
If you need help asking the right questions, getting your finances organized, and decreasing your taxes, New Economy is an excellent partner.
We’ll help you get your accounting and taxes done, and done right.
https://neweconomycpa.com/wp-content/uploads/2024/07/New-Economy-1.png6301200Jeff Allainhttps://neweconomycpa.com/wp-content/uploads/2021/01/new-economy-logo_withpadding.pngJeff Allain2024-07-30 14:45:302024-07-29 14:52:15Top 5 Questions to Ask Relating to Your Business’s Financial Health
Ever feel like you’re running your business on crossed fingers and gut instinct alone?
Do you feel like you’re flying blind?
Wish you had a clearer picture of where you’re headed?
We get you.
That’s where many of our clients are when they first approach us.
Don’t worry. Get ready to ditch the guesswork and embrace a powerful tool that we’ve seen transform business: the scorecard.
But this isn’t 8th grade…why do grown adults, savvy entrepreneurs like us need scorecards?
Everyone needs numbers to ground them and set goals in an organization. Scorecards give clear and concise direction to all team members.
Scorecards let us focus on future indicators instead of lagging ones that are barely relevant.
Speaking of the future, scorecards help us see helpful patterns and trends.
Scorecards can be concise and visual, which helps us process complex concepts quickly and more easily.
And lastly…we need to stop managing businesses on assumptions. Letting our emotions lead the way instead of checking what the numbers are telling us typically isn’t the best solution.
We saw this ourselves at New Economy. We experienced incredible growth, including our top line increasing by 40% once we began implementing a scorecard across our business.
But we’d never leave you hanging.
Let’s explore how you can create and use a scorecard to skyrocket your business success.
Meet with Leadership: Gather your leadership team and brainstorm 10-15 key performance indicators (KPIs) that will help you manage the business effectively. These numbers should be relevant to your specific goals and industry.
DON’T fall into the trap of too many KPIs on your scorecard, it will only lead to overwhelm.
Assign Accountability: Make someone responsible for driving each KPI. This prevents anything important from falling to the wayside.
If a number is off track, that person owns it and is responsible for taking corrective action.
Set Goals: Establish clear, measurable goals for each KPI. This provides a benchmark for success and helps you track progress.
Remember the classic SMART goals formula – specific, measurable, achievable, realistic, and timely.
Measure Regularly: Track your KPIs on a weekly, monthly, quarterly, and annual basis. This allows you to identify trends and address issues promptly.
DON’T wait until the end of the year to measure and try to fix issues.
Root Cause Analysis: If a KPI is off track, dig deep to understand the root cause of the problem. This will enable you to develop effective solutions and prevent similar issues in the future, keeping your business in the green.
Make sure that it isn’t a witch hunt or blame game situation. While everyone is responsible for their number on the scorecard, it’s about finding the root cause and solutions together, with a curious and compassionate problem-solving approach.
Everyone in the Business Needs a Number
You get a number. And you get a number. And YOU get a number!
It’s not just Oprah who can hand out the good stuff.
Providing everyone with a clear number, which is their responsibility, can inspire confidence, motivation, and encourage everyone to work together collaboratively.
You may be reluctant, thinking not everyone on the team needs one. But here’s why we encourage this approach:
Clarity: Numbers cut through murkiness and provide a clear picture of performance. They eliminate ambiguity and ensure everyone is on the same page.
Accountability: Assigning numbers creates accountability. Each person knows what they are responsible for and is motivated to achieve their targets.
Appreciation: Accountable people appreciate numbers. They provide a sense of ownership and a way to measure their contribution to the company’s success.
Commitment: Numbers create clarity and commitment. When everyone knows what is expected of them, they are more likely to commit to achieving those goals.
Competition: Numbers foster healthy competition. Employees are motivated to outperform their peers and strive for excellence.
Results: Numbers produce results. By focusing on measurable goals, employees are more likely to achieve tangible outcomes.
Teamwork: Numbers promote teamwork. When everyone is working towards a common goal, they are more likely to collaborate and support each other.
Problem-Solving: Numbers help you solve problems faster. By identifying issues early on, you can take action before they become major obstacles.
However, it’s important to ensure you’ve built a strong company culture. You don’t want employees to prioritize numbers over the overall best interests of the organization, people, and society in general. A strong company culture, with values-based leadership, will help ensure that the assignment of a number will not get in the way of common sense and collaboration.
3 Rules of Thumb for the Scorecard
Here are some more things we’ve learned in successfully implementing scorecards at New Economy and with our clients.
Leading Indicators: Use activity-based numbers that are leading indicators. For example, track leads generated instead of revenue, as leads are a predictor of future revenue.
Proactive Tool: Use the scorecard as a proactive tool to make changes in your business. Don’t wait for problems to arise; use the data to identify potential issues and take action before they escalate.
Prioritize Red Flags: Flag off-track items as red and give them the attention they need. Addressing problems promptly can prevent them from becoming major setbacks. Literally using the color red can visually signal a sense of importance and urgency when looking at a scorecard.
3 Key Takeaways
At New Economy, we help companies harness their data to do a world of good for their business. I hope you’re starting to see why the clarity of a scorecard can be so helpful.
Scorecards can help you soar, instead of wildly flapping around and hoping something works.
Here are my 3 key takeaways.
Embrace the power of data: A scorecard is your compass, guiding you towards informed decisions and sustainable growth.
Empower your team with numbers: Give everyone a metric to own and watch their engagement and performance take off.
Make your scorecard a habit: Regularly review and refine your metrics to ensure they’re aligned with your evolving goals and challenges.
There you have it 🙂
New Economy Team Members are Experts in Accounting for Entrepreneurs
If identifying the best KPIs for a scorecard is not in your skill set, or you want to gain control of your finances to make smart decisions to build and grow your business, New Economy is an excellent partner.
We’ll help you get your accounting and taxes done, and done right.
https://neweconomycpa.com/wp-content/uploads/2024/07/New-Economy.png6301200Jeff Allainhttps://neweconomycpa.com/wp-content/uploads/2021/01/new-economy-logo_withpadding.pngJeff Allain2024-07-29 14:40:452024-07-30 11:18:14How to Create and Use a Business Scorecard
Got a vision for business growth that’s bigger than your wallet?
It might be time to make friends with the bank.
Or, at least, become much better acquainted!
Today, we’re breaking down key tips for getting your business funded with a bank loan.
Put on your dress shirt, shine your shoes, and let’s build a funding relationship with your bank.
At New Economy, we’ve helped our clients raise over $75 million in capital.
For many of our clients, raising capital wasn’t about pitching to fancy VCs (venture capitalists).
It was landing a tried-and-true, humble bank loan.
We’ve found these three keys to securing a loan to grow your business:
Organized, Persuasive Financials
A Strategic Business Plan
Knowledge of Your Credit History
Let’s turn those dreams into dollars!
Key 1: Money Talks, But Financials Shout
Don’t let the word “financials” scare you.
It’s your business’s story, but with numbers instead of words.
Here’s what lenders are really looking for:
Healthy Business, Not Lottery Ticket: Show them you’re not a one-hit-wonder, but a sustainable, profitable venture who is prepared for the long haul.
Financials Are Your Resume: Your Profit & Loss statement, Budget, and Balance Sheet are your business’s resume. Make sure they are clean and up-to-date.
Pro Tip: Organize your records like your business depends on it. Because in many cases, it does!
Key 2: The Business Plan: Your Dating Profile!
Think of your business plan as a first date with the bank.
You need to woo them with your vision, strategy, relationship experience, confidence, and potential.
Your Love Letter: Tell them what your business is all about, why you’re so passionate about it, where it’s headed, and why they should invest in your love story.
Show Off Your Smarts: Market analysis, competitor research – prove you’ve done your homework and know your stuff.
Financial Projections: Show them the money – the money you’re going to make them with your brilliant business.
Pro Tip: Be ambitious, but realistic. Lenders love a visionary who’s also got their feet on the ground.
Key 3: Credit History: The Ghosts of Your Financial Past
Your credit history shows highlights (and lowlights) of your past money adventures.
A history of bad credit doesn’t necessarily exclude you from a loan, but you need to demonstrate you’ve since taken responsible action to set things right.
Work towards paying off any debts and building back up your credit score, otherwise, they’ll come back to haunt you.
Some banks will have strict criteria for what they’ll allow historically for someone to be eligible for a loan, but others are flexible, especially if you’re able to win them over with your current financials and business plan.
Remember that both your personal and business credit histories will be considered when applying for most bank loans.
Pro Tip: Check your credit report before you apply for a loan. It’s better to face any financial ghosts now than have them surprise you later.
Reminder: Shopping Around is Okay!
You don’t need to limit yourself to your current bank. It can take a bit more effort to find a new place for a loan, but each has its advantages.
Pros of Getting Loans from Your Current Financial Institution
If you already have a good working relationship, it may be easier for you to manage communication channels, and know what to expect.
Your “home” bank may have discounts for long-standing clients.
It can be a real sanity saver to have all your finances in the same place.
Pros of Shopping Around
You might find some favorable rates and terms for new banks looking to woo you.
Some banks will be more flexible in terms of offering loans if your credit isn’t stellar.
You may find a new bank with incredible customer service, and decide to switch all your banking over at some point (that may be part of their “evil” plan, after all!).
Some online lenders are extremely convenient and price-effective (but do your homework to ensure you’re not being scammed).
3 Key Takeaways
At New Economy, we want to help you flourish by taking control of your finances and getting the financing you need. Here are 3 key takeaways:
Make sure your financials and business plan are organized and showing your growth and potential.
Become familiar with your credit history so you don’t scare your lenders.
Shop around and don’t forget about credit unions! You may find some more favorable rates and terms.
There you have it 🙂
New Economy Team Members are Experts in Accounting for Entrepreneurs
https://neweconomycpa.com/wp-content/uploads/2024/07/308.png6301200Jeff Allainhttps://neweconomycpa.com/wp-content/uploads/2021/01/new-economy-logo_withpadding.pngJeff Allain2024-07-02 11:00:342024-07-02 11:02:493 Keys to Getting a Bank Loan for Your Business to Keep Growing
One of the interesting things is that these statistics remained fairly consistent for the past few decades. That means there’s a lot we can learn from the past years.
Here are the top reasons why businesses fail:
Finances – Especially Cash Flow
Financing Challenges
Minimal Operational Efficiency
Not Focusing on The Customer and Evolving Marketing Trends
Lack of Effective Business Vision, Strategy and Execution
Finances – Especially Cash Flow
According to SCORE, a whopping 82% of small business failures can be traced back to cash flow issues.
That doesn’t mean the business isn’t profitable. But without the cash to pay employees and vendors, the business isn’t going to last long.
While profits are important, they can be a lagging indicator. Cash flow, on the other hand, is a real-time reflection of your financial health.
Don’t get caught up in the illusion of profitability on paper – focus on managing your cash flow effectively.
There are many reasons for cash flow problems
Poor budgeting and forecasting
Slow collections from clients
Unexpected expenses and emergencies
Inventory mismanagement
Expanding quickly without a cash flow management plan
While we can’t solve every cash flow problem in one day, we do have a ton of articles about cash flow because it is such an important topic, including:
Here are some key strategies to keep your cash flow healthy:
Embrace the “lean and mean” startup mentality: Especially in the early years, avoid major expenses and prioritize a conservative approach. This doesn’t mean stifling growth; it means being strategic with your resources.
Develop a budget and stick to it: A well-crafted budget is your roadmap to financial health. Track your income and expenses meticulously, and identify areas where you can optimize spending.
Inventory management is crucial: Implement a system to track inventory levels, forecast demand, and avoid overstocking. This prevents unnecessary costs and ensures you have the right products available to meet customer needs.
Consider partnering with an accounting service: A qualified accounting service that fits your vibe can be a valuable asset, especially in the initial years. They can help you set up strong accounting practices, optimize your accounts receivable/payable systems, and ensure you’re on top of your tax obligations.
Other financial threats
Now that cash flow is covered, here is a bit more you’ll want to keep an eye out for in your finances:
Inconsistent Budgeting and Record-Keeping: Without a solid budget and meticulous tracking of income and expenses, it’s difficult to identify areas for improvement or predict potential cash flow challenges.
Tax Neglect:Taxes are a fact of life. Neglecting your tax obligations can lead to hefty penalties and interest charges.
Limited Financial Network: Not building strong relationships with lenders and financial advisors can leave you with limited options when challenges arise. These professionals can provide valuable guidance, access to financing, and help you navigate complex financial situations. Take the time to foster these relationships as soon as possible – you’ll be better equipped to weather financial storms and seize growth opportunities.
Financing Challenges
While cash flow management is crucial, it all starts with having enough financial resources in the first place.
“Of course!” you say.
Doesn’t everybody wish they had a blank check from a wealthy, ethical, no-strings-attached funder?
Well sure, and we’d be happy if you’d give them our number!
But the reality is, many businesses with millions in funding still don’t succeed. A blank check isn’t the answer to everything.
Unrealistic Funding Expectations
Launching a business requires investment.
Whether it’s personal savings, loans, or venture capital, not having enough capital to cover initial expenses and operational costs can hinder your ability to gain traction and establish a strong foundation. Entrepreneurs are often brimming with optimism, but it’s important to have realistic expectations about how much funding you’ll need to get your business off the ground. Underestimating your financial requirements can lead to a funding gap that limits your progress.
For example, if you’re thinking of launching a business that will require significant marketing efforts to succeed, it may be better to wait until you’ve secured enough funding for marketing before taking the leap.
The “lean” method can only take you so far, and it varies wildly based on industry and situation.
Poor Financial Planning
Beyond simply securing funding, a well-defined financial plan is essential. This plan should outline your funding needs, potential revenue streams, and strategies for managing your cash flow.
By carefully considering your funding needs, developing a sound financial plan, and securing adequate resources, you can set your business up for long-term success…with or without that magical blank check!
Operational Efficiency: Streamlining Your Path to Success
Operational efficiency is all about optimizing your processes to achieve maximum results with minimal wasted resources. Here’s how inefficient operations can impact your business:
Wasted Time and Resources: Inefficient processes can lead to wasted time spent on repetitive tasks, unnecessary rework, and underutilized resources. This not only frustrates employees but also translates to lost productivity and higher costs.
Inconsistent Quality: Inefficiencies can lead to inconsistencies in product quality or service delivery. This can damage your reputation and customer satisfaction.
Hindered Growth: As your business grows, inefficient processes become bottlenecks, hindering your ability to scale effectively. Streamlining your operations allows you to handle increased demand and grab those growth opportunities.
Here are some ways to improve your operational efficiency:
Embrace Technology: Automation and digital tools can free up your team’s time for more strategic tasks. Invest in software solutions that automate repetitive tasks, streamline workflows, and improve data analysis.
Standardize Processes: Develop clear and consistent procedures for various tasks within your business. This ensures everyone is on the same page, reduces errors, and improves overall efficiency.
Regularly Analyze and Improve: Don’t settle for the status quo. Regularly evaluate your processes, identify areas for improvement, and implement changes to optimize your operations.
Foster a Culture of Efficiency: Encourage your team to identify inefficiencies and suggest improvements. By empowering your employees and fostering a culture of continuous improvement, you can create a more efficient and adaptable business.
By prioritizing operational efficiency, you can free up valuable resources, improve your bottom line, and position your business for sustainable growth.
Remember, efficiency doesn’t mean cutting corners; it’s about working smarter, not harder.
Focusing on The Customer and Evolving Marketing Trends
“Over 40% of small businesses fail because there’s an insufficient need for their product or service.” – US Chamber of Commerce
The business landscape is dynamic, constantly evolving with new technologies, consumer preferences, and economic shifts.
Business owners need to stay on top of this – just think of how much happened in our world in the last 10 years!
Many businesses lose touch with their audience, assuming their needs are the same as when they first started out.
Others fail to keep their fingers on the pulse of evolving markets, missing out on perfect pivot opportunities and untapped market segments.
Don’t let this be your story!
How to stay relevant and thrive in an evolving marketplace
Embrace Customer Centricity: Put your customers at the heart of everything you do. Gather customer feedback, analyze buying patterns, and adapt your offerings accordingly.
Foster a Culture of Innovation: Encourage a culture of creativity and experimentation within your organization. Invest in research and development, explore new technologies, and actively seek ways to improve your products and services to better meet your customers’ needs.
Stay Agile and Adaptable: Be prepared to change your strategies and business model as necessary.
Business Vision, Strategy, and Execution
A business without a clear vision and well-defined plan can flounder. And even with that, the Founder of EOS Gino Wickman states “Vision without execution is just a hallucination”.
Without a clear strategy, it’s hard to create and measure goals.
Employees might be unsure of their goals and priorities beyond the day-to-day tasks, resulting in frustration, stress, and wasted effort.
And of course, businesses get stuck in reactive decision-making, instead of being able to anticipate what’s needed for their success.
How to Build a Roadmap for Success
Develop a Clear Vision: Clearly articulate your company’s long-term goals and aspirations. What impact do you want to make? What problem are you solving or what need are you fulfilling? A clear vision inspires your team, attracts talent, and guides your strategic direction.
Don’t Throw Out the Business Plan: Business plans aren’t just for the first days of business and getting funding – revisit your plan and adjust it based on what you’re learning.
Embrace Forecasting: Don’t just use your budget as a guide, transform it into a forecast. Some of our customers re-forecast weekly! It’s simply part of their regular weekly process. At New Economy, we do the same.
Systemize Strategic Planning: Make sure you have it in your calendar and are regularly taking the time to update your strategy as needed.
Focus and measure execution: Measure your progress. Hold the team accountable for completing the top priorities in the Strategic Plan.
Other factors
This list isn’t exhaustive. There are countless reasons why a business could fail:
It just means you need to take some deep breaths and put business planning into your calendar as a recurring appointment.
3 Key Takeaways
At New Economy, we help you use financials to make more money and better business decisions so you’ll be in business as long as you want.
Here are 3 key takeaways:
Master Your Cash Flow: Don’t be fooled by profitability on paper. Focus on strategies like budgeting, inventory management, and building strong relationships with lenders and financial advisors to maintain a healthy cash flow.
Embrace Change and Agility: The business landscape is constantly evolving. Stay on top of customer trends, adapt your marketing strategies, and be prepared to pivot your business model as needed. A culture of innovation and customer-centricity is key to staying relevant.
Plan for Success: Develop a clear vision, create a comprehensive business plan, and revisit and revise your strategy regularly. This roadmap will keep your team aligned, focused, and prepared for future challenges.
There you have it 🙂
New Economy Team Members are Experts in Accounting for Entrepreneurs
If identifying ways to decrease your taxes is not in your skill set or you want to gain control of your finances to make smart decisions to build and grow your business, New Economy is an excellent partner.
We’ll help you get your accounting and taxes done, and done right.
https://neweconomycpa.com/wp-content/uploads/2024/06/304.png6301200Jeff Allainhttps://neweconomycpa.com/wp-content/uploads/2021/01/new-economy-logo_withpadding.pngJeff Allain2024-06-12 15:10:332024-07-02 11:02:42Top Reasons Why Most Businesses Fail After 10 Years and How to Avoid It
Are you leaving money on the table by undervaluing your products?
Or are you potentially driving your target customers away with higher prices?
Your financial data can help reveal the sweet spot – the price point that maximizes both sales volume and profit margins.
Negotiate like a pro
Financial data empowers you to become a stronger negotiator with vendors and suppliers.
By understanding your cost structure and past purchase history, you can confidently negotiate better deals, squeezing unnecessary expenses and boosting your bottom line.
Strategy 2: Turn Forecasts Into Cash Flow
Using your financials to create forecasts helps you prepare for stormy seas.
But forecasting is only half the battle. You must then adjust your sails accordingly, or the effort will be wasted.
Here are some examples:
Your forecast predicts a surge in sales during the holiday season.
Instead of investing in a new marketing campaign right now, focus on optimizing your inventory management and staffing levels.
This will ensure you have enough supplies and crew on board to handle the influx of customers and avoid stockouts, which can leave money on the table.
Your forecast predicts a surge in demand for a specific product line.
Reallocate resources from underperforming areas to invest in marketing and production.
This hidden gem may soon become your most profitable product line.
Your forecast predicts an economic downturn in the coming months.
Instead of launching a new product line that requires a significant upfront investment, you can focus on tightening your budget.
Renegotiate contracts with suppliers, or offer discounts to boost sales and maintain cash flow during the rough weather.
At New Economy, we re-forecast our financials weekly! It’s a simple process that takes about 15 minutes, where all department leaders discuss and revise based on any material changes we’ve noticed.
Strategy 3: Reduce Waste and Streamline Operations – Plugging the Leaks in Your Ship
Any captain worth their salt knows even the sturdiest ship can sink from a tiny leak.
Inefficiencies and waste within your business can be pesky leaks, slowly draining your profits.
But fear not, matey!
Financials help you identify and patch those leaks before they become a major catastrophe.
Every penny saved is a penny earned, and financial data empowers you to become a swashbuckling cost-cutter.
By analyzing your financial statements, you can pinpoint areas where expenses can be minimized or eliminated, ensuring your treasure chest remains overflowing.
Chart a course for lean operations: Financial data can reveal areas of unnecessary overhead costs. By analyzing expenses, you can identify potential areas for streamlining operations, such as eliminating redundant subscriptions or renegotiating service contracts.
Mind yer inventory! Inefficient inventory management can lead to overstocking, which ties up your valuable resources. Financials can help optimize your inventory levels, ensuring you have enough supplies on board to meet customer demand without unnecessary stockpiling.
Embrace the power of automation: Financial data can highlight repetitive tasks that are ripe for automation, causing a drain on your team’s time and energy. Freeing up your crew allows them to focus on higher-value activities.
3 Key Takeaways
At New Economy, we help you use financials to make more money and better business decisions.
Here are 3 key takeaways.
Unearth Hidden Profits: Financial data is your treasure map, guiding you towards hidden opportunities within your business. By analyzing key metrics like sales data, cost structures, and customer behavior, you can identify areas for increased profitability.
Chart Course with Forecasts: Financial data empowers you to create forecasts, acting as your compass in uncharted waters. These forecasts help you regularly adjust your sails for stormy seas or fairer weather.
Plug the Leaks: Analyze financial statements to pinpoint areas of inefficiency and waste, like unnecessary overhead costs or bloated inventory levels. Every penny saved is a penny earned!
There you have it 🙂
New Economy Team Members are Experts in Accounting for Entrepreneurs
If identifying ways to decrease your taxes is not in your skill set or you want to gain control of your finances to make smart decisions to build and grow your business, New Economy is an excellent partner.
We’ll help you get your accounting and taxes done, and done right.
https://neweconomycpa.com/wp-content/uploads/2024/05/298.png6301200Jeff Allainhttps://neweconomycpa.com/wp-content/uploads/2021/01/new-economy-logo_withpadding.pngJeff Allain2024-05-28 15:25:272024-05-28 15:26:263 Ways to Use Your Financials to Make More Money
The team thinks you’re just one marketing campaign away from surpassing your goals this year.
But can you do it?
How much can you realistically invest in this campaign without jeopardizing other areas of your business?
At New Economy, we use financial data to make nearly every decision.
It’s guided us to the growth we are seeing today.
So, it’s said with confidence and experience when we say:
Without timely and accurate financial data, you can’t answer your business’s most pressing questions.
Of course, intuition has its place.
But fuel your gut with delicious data to ensure your decisions have a foundation for success.
Timely and accurate financial information is the cornerstone of smart business decisions, big or small.
In this article, we’ll explore the reasons why every business, regardless of size or industry, needs up-to-date and reliable financial data to thrive.
Reason #1: Make informed decisions with confidence.
Reason #2: Navigate challenges and opportunities effectively.
Reason #3: Gain a competitive edge and secure funding.
Before we jump in, ask yourself these reflection questions:
Do you feel confident making strategic decisions based on your current financial information?
Are you prepared to react quickly and effectively if a sudden market shift impacts your business?
Have you ever missed out on a potential business opportunity because you lacked clear financial insights?
If you were to seek funding for your business today, are you confident your financial information accurately reflects its true potential?
Ready?
Reason 1: Make Informed Decisions with Confidence
Do you ever feel like you’re navigating your finances in the dark?
At New Economy, we understand how a lack of direction can keep an entrepreneur up at night.
But think of financial data as a compass – guiding your decisions and keeping you headed toward success.
With timely access to your financial information, you can:
Track progress towards goals by measuring how your current performance compares to your budget and identify areas exceeding or falling short of expectations.
Identify areas for improvement by analyzing trends in sales, expenses, and profitability.
Make data-driven decisions instead of relying on guesswork.
Let’s revisit the marketing campaign from the beginning of this article.
By analyzing past marketing data, you can see which strategies brought the best return on investment (ROI).
This allows you to allocate your budget more effectively for the upcoming campaign, maximizing your chances of success
Reason 2: Navigate Challenges and Opportunities Proactively
We all know to expect the unexpected as entrepreneurs!
Whether it’s a global pandemic, supply chain disruptions, or a strangely eventful pop culture event…
there’s no crystal ball to prepare us for the future.
But, smart businesses can still be reasonably prepared for the future with timely and accurate financial data.
It lets you pivot at a moment’s notice.
You can mitigate potential damage or explore a new opportunity with the click of a button if you’ve got the right data on your dashboard.
Here’s how:
By analyzing trends and historical data, you can identify potential financial risks and develop contingency plans to mitigate their impact.
Having a clear picture of your current financial situation allows you to react quickly to unexpected events and adapt your strategies accordingly.
Timely financial data can reveal new market trends or opportunities you might otherwise miss. This allows you to capitalize on these opportunities and stay ahead of the competition.
Now, back to the marketing campaign.
Your sales data starts showing a decline in a specific product category just before launch.
You realize it’s showing a shift in a market trend.
Thanks to the early warning, you can do some research to identify the causes.
Then you can adjust your campaign messaging or even pivot your marketing strategy to target a different product line that’s experiencing higher demand.
Reason 3: Gain a Competitive Edge and Secure Funding
Financial health is a top priority for investors and creditors.
Regardless of the type of funding you seek, your financial health will be reviewed thoroughly before getting anywhere near the purse strings.
Timely and accurate financial data can be a key indicator of your business’s growth potential and ability to repay loans.
Here’s why:
Up-to-date financial statements give a clear picture of your company’s financial performance, profitability, and debt levels. This builds trust with investors.
Financial data can be used to create forecasts and projections for future growth. This allows you to showcase your company’s potential to generate strong returns for investors.
Your funders love when you can answer questions with accurate financial data that was generated recently, instead of bumbling about how they’ll need to wait a few weeks for you to get the data to answer their questions.
A solid understanding of your financial position empowers you to negotiate more favorable terms with lenders and suppliers.
Beyond attracting funding, reliable financial data also helps you stay competitive:
Set competitive prices while maintaining healthy profit margins by analyzing your cost structure and customer behavior.
Gain a clear financial picture to make informed decisions about resource allocation, investments, business expansion, and more.
Let’s come back to our marketing campaign.
You’ve crunched the numbers and decided you just can’t risk dipping into your business savings to launch a massive marketing campaign.
The team decides taking out a short-term, low-interest loan could maximize your outcomes and minimize your risk.
By demonstrating your financial stability and growth potential with accurate data, you’re in a much stronger position to secure funding for the campaign.
When you share how you made your decision to pivot the focus of your marketing campaign based on the most recent data, your funder feels more confident you’re making decisions based on real-world data.
3 Key Takeaways
At New Economy, we want to help you gain control of your finances to make smart decisions.
Part of that is understanding your finances and how to drive business performance.
Here are 3 key takeaways.
Make informed decisions with confidence. Timely and accurate data means you have a more complete picture of your business.
Be prepared for challenges and opportunities. Being able to see your financial records quickly means you can change direction when the time is right.
Secure funding and gain a competitive edge. Showcase your company’s financial position with ease, preparing you for investment, loans, and the ability to gain a competitive advantage.
There you have it 🙂
New Economy Team Members are Experts in Accounting for Entrepreneurs
If collecting timely and accurate data is not in your skill set or you want to gain control of your finances to make smart decisions to build and grow your business, New Economy is an excellent partner.
We’ll help you get your accounting done, and done right.
https://neweconomycpa.com/wp-content/uploads/2024/05/287.png6301200Jeff Allainhttps://neweconomycpa.com/wp-content/uploads/2021/01/new-economy-logo_withpadding.pngJeff Allain2024-05-15 11:43:152024-05-15 11:45:533 Reasons Every Business Needs Timely and Accurate Financial Data
We recently attended the EOS conference in sunny San Diego.
The keynote speakers were motivating and inspiring.
The breakout sessions covered practical tips on leveraging the tools.
But the thing that really stuck out to us was the tone of the conference.
Everyone seemed to have a level of vulnerability that was so refreshing.
There were lots of top-notch leaders getting very honest with themselves and the people they were sharing their stories with.
We believe that Companies rise and fall based on leadership and management.
So we wanted to share our top takeaways that you can apply to your business to help it grow.
In this article, you will learn about:
Top insights from the EOS conference
Actionable steps you can take even if you don’t run on EOS
Top 3 takeaways
Let’s dive in.
Top Insights from the EOS Conference
Even if you don’t run on EOS, the tools and insights can help you grow your business.
We are living proof that they work.
Attending the conference was like drinking from a fire hose.
We are going to blast you with a list of our insights from the speakers and then dive a bit deeper into a few that really resonated with us.
Here we go:
Mastery of the right tools and critical skills is important to grow your business. So ask yourself, have I mastered “this tool” and do my results prove I have mastered this?
Our greatest power lies in our ability to be fully present.
Our proven process is critical to getting out of the commodity trap and helps customers and team members know what they will become.
People are the number one thing to help your business grow. So ask yourself, what is the number one move I need to make each quarter?
Success loves discipline.
Discipline and consistency around the process will set you and your business free.
Truth equals freedom. The more true you are with yourself and others, the more freedom you will experience.
The more people that are vulnerable, the greater the chances of a breakthrough to happen.
Constantly leverage the delegate to elevate the tool. This will help you as the CEO or leader to get to the next level.
Identify and have the difficult customer or employee conversation you need to have. Then go have it.
These takeaways were golden nuggets offered up by the keynote speakers.
We are reflecting upon them and finding ways to apply them to our situations. And you can do this too.
As you can see, the tone was that of being open, honest, and having the courage to lean in to do the difficult work.
We are going to dive a little deeper into #1, #4, and #9 and tease out some actionable steps.
Actionable Steps You Can Take
As you can see we have identified 10 insights. Actually, there were more, but we are starting with these.
We believe that these learnings need to be applied in an effort to drive change which will drive success.
So we will break down our reflections on #1, #4, and #9 and provide some actionable “to-do’s” that we can all apply to our businesses.
Reflection #1
Mastery of the right tools and critical skills is important to grow your business. So ask yourself, have I mastered “this tool” and do my results prove I have mastered this?
EOS has many tools.
In fact, they have a toolbox that has about 20 tools that can be applied to help your business grow.
The Accountability Chart (AC) is similar to your Organizational Chart.
The main difference is you are focused on listing the top 3-5 core functions the team member is accountable for in the seat they are sitting in.
Ok, so you get it.
The tool is pretty simple and straightforward.
But here is the question.
Have you mastered this tool and do your results prove that you have mastered it?
We believe a big part of success is driven by identifying the right seats and then getting the right people in those seats.
And businesses are constantly changing and growing.
Is your AC changing and growing every 90 days?
Here are some indicators that you have probably not mastered this tool.
You had no changes in the AC over the past 90 days
You are frustrated with a team member that is not adding value
You are not achieving your annual goals
You are not achieving your financial measurables
Many issues come down to people, it is a fact.
Your AC is a tool that will help you to identify the right seats and then the right people needed in the seats to win.
By win, we simply mean to achieve the things that you are trying to achieve.
At New Economy, we are going through an internal restructuring.
On the one hand, this is difficult. Sometimes it is easier to just keep moving as is.
However, we have realized that what worked for us in the past as it relates to people and the roles they performed to get us from $1M to $1.5M in revenue will not be the same as getting us from $1.5M to $2.5M in revenue.
And that is ok.
So mastery of this tool is an ongoing task.
Consider the following questions that may relate to actionable items for your Company:
Do you have an Accountability Chart or Organizational Chart? If not, your to-do is to create one.
If you do have one, have you updated it for the new quarter? If not, your to do is to update the seats to make sure you have the right structure in place to support your business over the next 12 months.
Do you have people who no longer fit in the seat they are in for whatever reason? If so, your to do is to determine if there is another seat for this team member. And to get the right people in the right seat.
This all sounds simple.
In some ways it is but in other ways, it is not.
The tool requires mastery which entails going deep and doing the work.
This requires focus, intentionality, and often difficult decisions to be made.
And once you do this, you will start to see your business grow and produce the results you are looking to achieve.
Reflection #4
People are the number one thing to help your business grow.
People matter.
We believe every person has unique gifts, and strengths and loves to contribute to the mission, vision, and goals of every organization.
Your job is to find the right people and get them in the right seat.
And this can be hard, especially with a growing business.
This should be an ongoing continuous process.
And let’s face it, with people, you encounter challenges.
Think for a moment.
Are you feeling frustrated about a team member? And to this point, you have spent a lot of time talking about that frustration and have not actually done something about it?
You are not alone. But you owe it to your Company, your customers, and your team to fix the people issue.
Why?
People are the ones that will help you achieve your goals.
Oh, and there is a tool for this, it is called the people analyzer which you can find here.
This tool measures employees against your core values and what you are asking them to do. You are trying to determine if they are receiving a “passing grade”.
If they are not, then you give them 30 days to fix it by placing them on a development plan. And you give them a few chances over a 90 period.
If things don’t change, you counsel them out.
So, mastery of this tool is an ongoing task.
Consider the following questions that may relate to actionable items for your Company:
Do you provide your people with feedback every 90 days? And do you hold them accountable for areas where improvement is needed? If not, your to-do is to start booking meetings and provide real feedback.
Are you making key people moves every quarter? This requires some vision in your staffing plan. If you are not considering key hires to make every 90 days, start building out a future staffing plan based on the AC tool above.
Are you investing in training and development for your team? Especially your leaders and managers? If not, your to-do is to create a training budget and plan to increase your team’s skills which will allow them to contribute more value into your mission and goals.
This is simple stuff, but we often get distracted and don’t focus on things that matter, like people.
Do the work.
Reflection #9
Constantly delegate to elevate
Want to make $250,000 per year?
Then stop doing $25 per hour work.
That should get your attention 🙂
And we actually did a longer post on this topic here.
As we grow and build our companies, AC charts, and people up, we need to let go of things that do not require our unique ability.
We need to constantly be pushing work down.
Every 90 days, we encourage folks to delegate one thing down.
This frees you up to focus on your top priorities that will get you closer to your goals.
Consider the following questions that may relate to actionable items for your Company:
Are you doing work that does not bring you joy or is not in your sweet spot? If so, your to do is to delegate this work to someone else.
Do you understand the things that only you can do based on your gifts? If not, your to-do is to reflect upon that. If so, your to do is to do a self-evaluation to make sure you are spending your time in that area.
These are some powerful insights, they are golden nuggets.
We have found that when we take this knowledge and apply it it becomes wisdom that changes things for the better.
You got this, let’s go!!
3 Key Takeaways
At New Economy, we want to help you gain control of your finances to make smart decisions. Part of that is understanding your finances and how to drive business performance.
Here are 3 key takeaways.
We believe that you need to unplug and connect. We have found it very motivating, inspiring, and great learning opportunities to attend the annual EOS conference. So ask yourself, if you are investing enough yourself to fill yourself up so you can then fill up others.
Master the tools. Maybe you don’t run on EOS but there are common business tools that require mastery. Make sure you have a solid understanding of these tools like the organizational chart, budget, and even scorecard. Master them as they will help you get the results you are looking for.
People matter. You matter. Invest in yourself and the people around you. By leaning into tools and even taking the time to reflect on the insights mentioned above you will increase the probability of achieving your goals and financial measurables.
There you have it 🙂
New Economy Team Members are Experts in Accounting for Entrepreneurs
If identifying ways to decrease your taxes is not in your skill set or you want to gain control of your finances to make smart decisions to build and grow your business, New Economy is an excellent partner.
We’ll help you get your accounting and taxes done, and done right.
https://neweconomycpa.com/wp-content/uploads/2024/05/New-Economy-2.png6301200Jeff Allainhttps://neweconomycpa.com/wp-content/uploads/2021/01/new-economy-logo_withpadding.pngJeff Allain2024-05-01 11:52:272024-05-01 11:54:36Top Takeaways to Grow Your Business from the EOS Conference
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