Does My Business Need a Bookkeeper, Accountant, Controller, or CFO?

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There’s a lot riding on your financial team, but how do you know if you have the right roles in place to maximize your success? 

Are you asking your bookkeeper to drive your financial strategy?

Is your CFO wasting time on data entry? 

Can’t I just hire an accountant and be done with it? 

And what the heck is a controller? 

Depending on the size and stage of your business, you may need some or all of these roles. 

CFO

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:

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:

  1. Right Expertise, Right Time: Ensure you have the appropriate financial expertise at each stage of your business growth.
  2. Stay Proactive: Don’t wait for financial challenges to find you; have the right team in place and be ready for the future. 
  3. 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 🙂

CFO

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. 

Schedule a time to meet with our Founder, Jeff, and discuss how our team can help your team thrive! 

Top Ways Your Accounting Team Can Reduce Your Pain

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You love your business. 

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. 

accounting team

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. 

Embracing efficiency can help keep your business going strong. 

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! 

  1. 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.
  2. 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.
  3. 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 🙂

accounting team

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.

Schedule a time to meet with our Founder, Jeff, and discuss how we can help your business survive and thrive each year!

Businesses Fail

Top Reasons Why Most Businesses Fail After 10 Years and How to Avoid It

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Built a business you’re proud of?  Now the real challenge begins.

It’s no secret that businesses fail.

In fact, the majority fail within the first 10 years. 

A thrilling entrepreneurial dream can turn into a nightmare if not managed well.

But it’s not inevitable. 

Let’s equip ourselves with insights to prevent this from becoming your reality. 

Businesses Fail

So, what are the chances a business will fail?

According to the Bureau of Labor Statistics: 

  • 20% of businesses fail within the first year
  • 45% within five years
  • 65% within the first 10 years

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:

  • Lack of supportive company culture
  • Founder or employee burnout 
  • Not finding and keeping the right team
  • Competitors  
  • Poor customer service

It doesn’t mean you have to be scared. 

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:

  1. 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.
  2. 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.
  3. 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 🙂

Businesses Fail

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.

Schedule a time to meet with our Founder, Jeff, and discuss how we can help your business survive and thrive each year!

culture

Tips to Building a Healthy Culture That Can Grow Your Business

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We are focused on building a long-term business. 

Heck, we are at the 11-year mark so we are learning and applying what we learn.

Without a doubt, at the foundation of that is people.

And the people need vision, clarity, values, and a mission to get behind. 

Prompts to get everyone aligned and moving in the same direction.

People also need to be supported, heard, cared for, and loved. 

Yup, you heard that right, loved.

culture

If you are building a business or organization, culture should be a top priority. You should be constantly thinking about how to shape, cultivate, and prune the culture.

Before we jump in, here are a few reflection questions for you:

  • How would you rate the culture in your organization on a scale of 1-10?
  • How do you define culture? And what does a healthy culture look like?
  • What investments are you making to nurture the culture that you are looking to build?

As for us, we let our customers rate us. We believe that the awesome service we strive to deliver is a reflection of the culture we have created. So we ask our customer.

Check out what clients are saying here.

We believe that culture can be defined as a set of attitudes, behaviors, and practices shared within an organization which gives it a distinctive identity.

And as for investments, we make lots. 

We have developed a care team, called Wrap Around, to care for our employees. We constantly clarify our mission, vision, and values and share ways the employees can participate in building culture. And we set aside time each month to just have fun together. But more on that later.

We believe that one of the single most important investments you can make in your business is in creating a healthy culture. And this is critical in supporting the growth of the business.

In this article, you will learn about: 

  1. Why culture matters
  2. Who’s responsible for creating and building a culture
  3. Key investments to make in culture
  4. Top 3 Takeaways

Let’s dive in.

Why Culture Matters

Legendary management expert Peter Drucker said that “Culture eats strategy for breakfast”.

Ain’t that the truth?

We believe that culture sets the foundation. 

It sets the tone for how your people operate, communicate, treat each other, make decisions, and treat your customers.

Want more?

It also sets the tone for how you hire, how you fire, and how you promote. It helps you identify customers, vendors, and partners that will align well with your organization.

In Built to Last, Jim Collins discovered that enduring companies have a culture that defines who they are and what they value to attract like-minded individuals to them. 

People who fit the culture know what to do because they can feel why it is important. Conversely, those that don’t fit the culture feel out of place.

Culture matters because it scales. 

It permeates every aspect of the business.

We are living proof of this.

Here are some outcomes of a healthy culture that we have experienced:

  • Lower employee turnover and higher engagement
  • Increased profitability
  • Increased job satisfaction
  • Stronger relationships built on trust
  • Less time wasted on non-sense such as gossip, here say and drama
  • Higher probability of achieving Company and Individual goals
  • Alignment and focus on the greater good

Here are some outcomes of an unhealthy culture that we have witnessed:

  • Higher employee turnover and lower engagement
  • Decreased profitability
  • Decreased job satisfaction
  • Weaker relationships 
  • More time is wasted on non-sense such as gossip, here say, and drama
  • Lower probability of achieving Company and Individual goals
  • Lack of alignment and focus on the great good. 

As you can see there are healthy outcomes related to a healthy culture.

And there are unhealthy outcomes relating to an unhealthy culture.

In our experience, this is a very important part of any organization. 

We believe that there is no silver bullet and it takes time to create, shape, and build a culture that will last.

Who is Responsible for Creating and Building Culture?

We believe that everyone has a role in creating and building culture.

From the newest team member to the most experienced team member folks will be either adding to or taking away from culture.

But the buck stops with the CEO or Visionary. 

The CEO needs to take ownership of the culture.

Sure we want to get the leadership team involved. This will help to multiply the efforts and bring the culture alive in the organization. 

A key point is that if the CEO does not create, and then support, the building of the culture someone else will.

Do you want your unhappy employee, who is not a right fit for your company, to go around and create the atmosphere in the company?

Probably not.

So the leadership team needs to do some groundwork in the following areas to set the baseline:

  • Define the mission
  • Define the vision
  • Define the core values

Then the leadership needs to take the following steps to build the culture:

  • Remove employees or customers that are not a core value fit
  • Provide positive feedback to employees living in the culture
  • Provide constructive feedback to employees not living in the culture
  • Bang the drum and constantly get the Mission, Vision, and core values in front of the team

At New Economy, we have a quarterly company rollout. During that meeting, we review and bang the drum on the Mission, Vision, and Core Values.

Also, we use Slack as an internal communication platform. We have a channel called core value callouts. We encourage employees to “call out” an employee and give recognition when a core value is being lived out. This helps with positive reinforcement.

There are so many different directions you can take this in.

The Company needs a Core Value Champion which is typically the CEO.

Key Investments to Make in Culture

A healthy culture takes investments.

It takes investment in time, talent, and treasures.

The more you invest, the bigger your return.

Are you willing to make investments in your organization’s culture? 

Investments in Time

We believe that building a healthy culture happens over a period of time, and it is a lifelong pursuit.

Here are some of the examples of investments that we making in time at New Economy:

  • Monthly Culture Zoom – All employees participate. This is a fun event where we create time and space to get to know each other and have fun. It is not work-related.
  • Quarterly Wrap-Around Zoom – All employees participate. We have a care team called Wrap Around. Each quarter they host an event to “wrap their arms” around the team. Our last topic of discussion is generosity in the workplace. 
  • Monthly One-On-One Zoom – All employees participate. Our first question on these is “How are you doing and how can we help?” We make these about the employees and try to remove obstacles that are preventing them from being successful.

Investments in Talent

We believe that Companies rise and fall based on leadership. As we noted above, the Leadership team has a responsibility to create a culture.

Here are some of the examples of investments that we making in talent at New Economy:

  • We have training budgets for all team members of about $1,000 per year.
  • We invite all team members to attend the Global Leadership Summit.
  • We have created a Leadership Team Oath that leaders put into
  • We have our leaders participate in coaching programs like C12, Key Players, and How to Be a Good Boss

Investments in Treasure

All we are referring to with treasure is money. Beyond developing talent and creating time for developing culture it takes monetary investments.

We have mentioned a few above in the form of the value of time through meetings and training.

Here are a few more.

  • Above we mentioned our Wrap Around team. They invest $50 per month to partner with each employee in investing in a charitable organization picked by the employee. This is $600 per year of cash donated to good causes.
  • Above we mentioned our Wrap Around team. They invest $50 per month to partner with each employee in investing in their emotional, spiritual, and physical well-being. Think gym memberships, meditation apps, and meal delivery services. This is $600 per year of cash donated to good causes.

Building a healthy culture that will last takes time.

Also, it takes investments in the form of money, talent, and more time.

But it is so worth it.

Imagine working at the place you always dreamed of working.

You can make that happen by investing in building and growing your organization’s culture.

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.

  1. The CEO needs to take ownership of being the Chief Culture Officer. And he has to encourage and hold the Leadership team accountable for building and nurturing the desired culture.
  2. There are no shortcuts. Building a culture takes time and lots of work. Do the work and you will reap the rewards.
  3. Make sure you are making investments in culture. Invest in people. Invest the time in the right meetings. Invest money in the right support to help people succeed. People who buy into your culture will champion it for you.

There you have it 🙂

culture

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.

Schedule a time to meet with our Founder, Jeff, and discuss how we can add value to your situation.

3 Keys to Turn Your Financial Budget into a Financial Forecast

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We are coming to the end of the quarter.

So how did your Company do?

At New Economy, we hit our measurables of revenue of $614K, gross profit of 50%, and net profit of 12%. 

Also, we hit 80% of our rocks. These are the top priorities for us in the quarter.

What did you learn?

At New Economy, we learned a lot. 

financial forecast

We learned that we need to keep making financial investments in our team members through training and growth opportunities. 

We also learned we need to increase our financial investments in marketing to help let entrepreneurs know we are here to help them gain control of their finances to make smart decisions.

But what do we do with these learnings from a financial perspective?

At New Economy, we believe you can use this information to forecast for the next quarter.

For a bit of background on creating a budget, check out our blog posting Here.

Your financial budget is set for the and will not change. 

However, your financial forecast can change based on what you have learned.

In this article, you will learn about: 

  1. The difference between a financial budget and a financial forecast
  2. When and why to update your financial forecast 
  3. Top 3 Takeaways

Let’s dive in.

The Difference Between a Financial Budget and a Financial Forecast

Most Companies, including New Economy, perform their financial budgeting towards the end of the year. 

Being a December year-end, we typically begin the process in November and wrap up in the first week of January.

The financial budget is the goalpost – think football and field goalposts. You are aiming to kick the ball through the goalposts to score. Or from a financial point of view, achieve the budget which keeps you on the path to achieving your overall goals.

You are estimating things like the investments you need to make into the business that will get allocated to hiring, marketing, and operating expenses. 

Further, you are determining your revenue goals and the direct costs to support that revenue.

It is your best guess.

You are painting the financial road map month to month to help you achieve your annual financial goals.

It’s important to note that your budget should not change.

You don’t want to move the goalposts.

We call that cheating 🙂

However, there is another very helpful tool.

It is your financial forecast. 

Your financial forecast is identical to your budget. It is set up the same way, looks the same and even works the same.

The biggest difference is you can change your financial forecast. 

In fact, at New Economy, we are constantly changing our forecast. 

But we are also continuously lining up the financial forecast against the financial budget. 

The idea is the financial forecast is updated for what is happening in the business, and in our experience that is lots of change.

At the end of the day, we hold ourselves accountable to the financial budget that was set and use the financial forecast as the real-time road map to get to the intended destination.

It’s kind of like the direction app, Waze.

You enter your destination and ways will give you the directions to get to your destination. This is like your financial budget.

However, then an accident happens. 

Waze then recalibrates and provides an alternate route. There are changes but it will still get you to the original destination. This is like your financial projection.

So, we suggest you make sure you have a financial budget.

Then modify that budget by bringing it alive based on changes or real-time information and call that your financial forecast.

In the next section, we will talk about when and why to update your financial forecast.

When and Why to Update Your Financial Forecast

When to change your forecast 

By now you should know the difference between a financial budget and a forecast.

The next question is when do we update the financial forecast?

There is a wide range of answers to this question depending on:

  • The business
  • The visibility required
  • The investment of time that’s willing to be made 

We have some customers that re-forecast weekly. 

They have built a weekly process around this and have determined that weekly forecasting gives them real-time insights that they need to manage the business.

We have some customers that re-forecast monthly or even quarterly. 

They will access real-time changes but more so look at monthly budget versus actual information. When items are on and off track, they will trigger changes to the model.

At New Economy, we re-forecast weekly. 

We have created a simple process where all the department leaders provide any material changes. It takes us about 15 minutes per week to do this and we will discuss why we do it this way in a bit.

In any case, updating on a weekly, monthly, or quarterly basis you are on the right track. 

You need to turn your budget into a forecast applying what you have learned.

Why change your forecast 

One of our taglines is we help entrepreneurs gain control of their finances to make smart decisions to build and grow their businesses.

To make smart decisions you need timely and accurate financial information like a financial forecast.

The forecast gives you the most accurate picture of how your business is performing from a financial perspective at any point in time.

Having that timely and accurate financial information allows you to do the following:

  • Determine if you are on or off track to your budget
  • Identify areas of opportunity or improvement
  • Run decision-making scenarios that show the financial impact

The reason New Economy updates the forecast weekly is to have good data for our weekly Leadership Team meeting called our Level 10 meeting. 

As part of that weekly Level 10 Meeting, we review a weekly, monthly, and quarterly scorecard which has the financial data we’re measuring. 

And you guessed it, one of the sources of that data is our financial forecast.

One last thing to note on the financial forecast.

Once a month has closed, we drop the actuals into the forecast. Refer to more information on the financial close here.

For example, if we are through Q-1, the months of January, February, and March would have actual results in the financial forecast. The remaining nine months would be the projected results.  

And we continuously analyze the financial forecast against the original budget.

A financial budget and financial forecast are very powerful business tools. So don’t sleep on the importance of implementing them into your business.

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.

  1. Make sure you have a budget in place. Don’t change the budget once you set it. And build the budget showing details such as monthly and by-line items.
  2. Make sure you transition your budget into a forecast. Your forecast can be updated weekly, monthly, or quarterly. It can be changed and should be compared back to the budget.
  3. Leverage these tools in your business. They are powerful tools to help you achieve your business goals.

There you have it 🙂

financial forecast

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.

Schedule a time to meet with our Founder, Jeff, and discuss how we can add value to your situation.

5 Ways to Know You Need a New Accountant

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Having the right accounting and finance team is important. 

Really important.

Why?

Contrary to popular belief, your accounting team is not just overhead.

You need timely and accurate financial information to make smart decisions to build and grow your business.

Accountant

At New Economy, we think about the right seats needed to support the accounting department for any business. Then we think about getting the right people in those seats.

Most small businesses need some form of an Accountant, Controller, or CFO. 

It really depends on the type of business, the stage the business is in, and the growth plans the business has for the future.

And each of these seats has a different skill set and value they bring. It goes from tactical to strategic in nature.

For more information on the differences between each seat check out our post on Do you know the difference between an Accountant, Controller and CFO.

But what are the signs that your accounting team is not working?

In this article, you will learn about: 

  1. The top reasons your accounting set up is no longer working
  2. 5 ways to tell it’s time to change accountants
  3. Top 3 Takeaways

Let’s dive in.

The Top Reasons Your Accounting is No Longer Working

There are several reasons why this can be the case but here are a few.

Reason #1 – Sorry, You really don’t have an accountant.

Very early on in the life of your business, you might have had Tony’s aunt doing the accounting. 

There is nothing wrong with Tony’s aunt. However, she is self-taught and doesn’t fully understand what she is doing. Sure, she can pay bills and is wicked cheap, but she’s just a family friend, not an accountant.

This is common and ok, but this will hold you back if you don’t make a move.

Reason #2 – The business outgrew your current accountant.

You have a vision of where you want to be. You are chasing down that vision and raising capital, hiring people, building processes, and executing your plan.

Your business is growing and evolving, and when that happens things can get complicated in the various departments, such as your accounting department.

But your current accountant is stuck in the old way of doing things. They don’t have a grown mindset and they are not open to technology and new ways of doing things. 

This results in delays and inefficiencies because the business is growing but your accountant is not growing with it.

This too will hold you back. 

Perhaps you have a good tactical person but need to layer on a more experienced person who focuses on strategy from an internal perspective.

Reason #3 – Your accountant is overhead and is doing too many administrative tasks.

Many internally placed accountants get very comfortable and are overpaid. 

Yup, I said it.

They have a high-level technical skill set and are compensated for it. 

But they are given tasks that don’t relate to this skill set. They start doing administrative work, they get pulled into a bit of human resources or even managing technology.

They get pulled in too many directions, are overpaid, and are no longer adding value. 

They become overhead as opposed to an investment that is helping you get closer to achieving your goals.

Reason #4 – You don’t need a full-time accountant.

Once you really dive into point #3, you may realize that you don’t need a full-time accountant. 

How can this be?

You have them focus on the functions that require their specialized skill set. Nothing more, nothing less.

For more information on this check out our blog post on hiring a part-time remote accountant.

Also, as part of not needing a full-time accountant, you can save money. You are not covering insurance, benefits, training, or even internal time to manage this person. We believe the cost of a part-time remote accountant can be a big savings with a better return on your investment.

For more information on this check out our blog post. “What will it cost to outsource my accounting?”

Ok, so now you have some reasons as to why our accounting might not be working.

And it’s ok. 

You are not alone. Part of your job is to ensure the right people are in the right seats to help you achieve your plan.

In the next section, we will discuss some of the indicators that it’s time to start thinking about some changes on your accounting team.

 

5 Ways to Tell It’s Time to Think About a Change in Accountants

So we know why you might be having issues.

But how exactly do those issues manifest?

After years of experience, we have identified 5 key ways to tell it’s time to make a change.

Here they are in no particular order:

Reason #1 – You are not getting timely financial information.

If you are not getting the following reports within the following timeline a red flag should go up:

  • Cash Flow reporting – Weekly
  • KPI / Scorecard reporting – Weekly, Monthly, Annually
  • Financial statements – Within 20 days of month end
  • Budget vs Actual reporting – Within 20 days of month end
  • Forecasting – Updates within 20 days of month end

Having timely information is important. You want to make real-time decisions based on data that is current.

Reason #2 – You are not getting accurate financial information.

If you are not getting accurate financial information a red flag should go up. The information is the same as that listed above. 

But how do you know it’s accurate considering you’re not an accountant and an entrepreneur?

Here are some thoughts:

  • Use your gut, it got you this far
  • Share the information with a peer group and compare information
  • Ask a trusted advisor or mentor with a financial background to have a look

Timely and accurate information are the keys to making smart business decisions.

Reason #3 – You keep getting surprised and are not learning from the past.

No one likes surprises. 

So if you’re looking at your budget versus actual reporting and are surprised when something is off track, a red flag should go up. 

Or if you get to year-end and your monthly financials that have been reported on change, a red flag should go up.

Or if you are caught off guard by an unexpected tax bill, a red flag should go up.

Things change fast in business, but learning and applying is key. 

Remember the old saying “Fool me once shame on you but fool me twice shame on me”?

Reason #4 – You can’t see into the financial future.

Your historical statements are very important. 

As we stated, they need to be accurate and delivered on time.

But we also need windows out into the future from a financial perspective. So if you can’t see out into the future whether it be 13 weeks of cash flow into the future or 24 months of your profit and loss out into the future, a red flag should go up.

Reason #5 – You are frustrated and feel pain and confusion on the financial side of your business.

We have said it before, trust your gut. You have great intuition.

So if even hearing the word financials causes you to feel pain or frustration, a red flag should go up.

Or if your accountant is confused and can’t seem to give you straight answers, a red flag should go up.

So there you have it; 5 examples that can give you an indication it’s time to think about changing your accounting team.

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.

  1. Make sure you have the right people in the right seats on your accounting team. Early on Tony’s aunt might have been a great fit. But since you have raised some capital, have 10+ employees, and are on your way to profitability it’s time to increase the firepower of your accounting team.
  2. Make sure you are not flying blind. You should have timely, accurate historical financial statements and visibility into the future financial condition of the business based on your forward-looking projections.
  3. Trust your gut and invest in your accounting and financial team. They are an investment that should help you to get closer to your goals by providing you with invaluable insight to make great business decisions.

There you have it 🙂

Accountant

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.

Schedule a time to meet with our Founder, Jeff, and discuss how we can add value to your situation.

Creating a Compelling Company Vision Using EOS – Part 2

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Creating a compelling vision for your Company is extremely important – and it does not have to be complicated or overwhelming.

At New Economy, we have leveraged 8 questions to help us wrap our arms around our overall vision and strategy.

In our first post, (see link here) we covered the first 4 questions:

  1. What are your core values?
  2. What is your core focus?
  3. What is your 10-year target?
  4. What is your marketing strategy?

We highly recommend reading the first post before continuing on. In that post, we share the answers that we came up with at New Economy to help you get started.

We believe in creating a clear vision and communicating it to everyone.

EOS Business

Full disclosure, we are a Company that runs on EOS, and we happen to be data experts. 

The system has helped us to grow the Company 3x since graduating from implementation. Even if you don’t run on EOS, this post will surely help you out. 

We know firsthand as some of the thoughts and frameworks have helped us get better.

In this article, you will learn about: 

  1. 4 remaining key questions to help you create a compelling vision
  2. 3 key takeaways

Let’s dive in.

Refresher: 8 Key Questions to Help You Clarify Your Vision

As a refresher, below are the 8 key questions to help you clarify your vision. New Economy, we have taken the time to answer these 8 questions. 

If you need some background on what exactly vision is, check out Jim Collins’s article published in the Harvard Business Review entitled Building your Company’s Vision. You can find it here. 

Much of this is inside work that no one can do for you. The questions we will present will help you along the way.

Here they are:

  1. What are your core values?
  2. What is your core focus?
  3. What is your 10-year target?
  4. What is your marketing strategy-?
  5. What is your 3-year picture?
  6. What is your 1-year plan?
  7. What are your top priorities over the next 90 days?
  8. What are your issues?

In this post, we will run through questions 5 – 8.

We will provide a bit of background and provide the answer we came up with at New Economy.

Question #5 – What is your 3 year picture?

Having answered the previous questions, you know who you are, what you are, where you are going, and what marketing strategy you will use to get there. Now it’s time to consider what the business will look like in 3 short years from now.

At New Economy, we love the 3-year picture. It allows us to get up to 30,000 feet and dream while at the same time bringing us back down to the ground floor and having detailed budgets for the next 3 years to support that vision.

Also, the decisions that you are making today should align with the direction you are illustrated in your 3-year picture. So the decisions are powerful and must be aligned with getting you to where you want to be.

Our 3-year picture at New Economy is illustrated as follows as of December 31, 2026:

EOS Business

Beyond our financial measurables, we believe that it looks like the following:

  • Culture of high satisfaction days
  • Culture of pay for performance  
  • Key partner to companies running on EOS
  • Best practices and processes to support SAAS, construction, service & e-commerce companies
  • Using speaking, writing, podcasts & video to advance the mission of New Economy
  • Marketing generating leads 
  • Wrap Around team caring for and loving our people
  • Career success plans for all team members
  • Customer success plan for all clients
  • All core processes are operationalized through Financial Cents
  • Increased efficiency through technology
  • Someone else running the LT team besides Jeff

As you can see, we have created an image of what New Economy will look like in three years. 

It is important to have this documented so that you can move into the 1-year plan and start making moves to get yourself closer to your 3-year plan.

Here are some tips for coming up with your 3-year plan:

  1. Schedule time with your leadership team to specifically discuss what it looks like
  2. Make sure everyone believes in the plan and wants it
  3. Encourage feedback and folks to speak up with concerns
  4. Memorialize the plan so you can measure your progress on an ongoing basis

Question #6 – What is your 1-year plan?

Giddy up.

We are now bringing the longer-range vision to the ground level and making it real. This plan is for those who love to get stuff done.

Here we must decide what has to get done this year. 

We believe less is more and have found that we overestimate what we can do in one year and underestimate what we can do in three years.

Our 1-year picture at New Economy is illustrated as follows as of December 31, 2024:

EOS Business

Beyond our financial measurables, we have created Company goals for the year:

  • All core processes run on Financial Cents
  • Customer success plans for 10 clients
  • Career success plans for all core team members
  • 3 experienced new hires

Now you have 1-year goals and a budget in place to support your 1-year plan. At New Economy, we take it a step further and break it down into the next quarter we are facing.

This brings us to our next question.

Question #7 – What are your top priorities over the next 90 days?

We refer to our top quarterly priorities as rocks. These are the most important things that must be accomplished over the next 90 days. 

It’s possible that these rocks connect into an annual goal, and by investing time in the quarter, you are moving closer to the annual goals.

We have created the following measurables for Q-1 of 2024:

  • Revenue is $531,000
  • Gross profit is 49% or $260,000
  • Net profit is 17% or $90,000

We have created our top priorities for Q-1 of 2024:

  • All Team Services running on Financial Cents
  • Make an offer to an experienced hire interested in supporting EOS companies 
  • Set up Time Tracking & Capacity Management in Financial Cents
  • All Operations & Customer Success processes running in Financial Cents
  • Schedule 9 zooms with EOS implementers or integrators
  • Sell $18K or MRR or $39K of total new revenue

We leverage the system of making our goals and rocks SMART. 

Meaning we want them to be:

  • Specific
  • Measurable
  • Attainable
  • Realistic 
  • Time Bound

For more information on SMART goals refer to this Harvard Business Review Article to get you started.

Ok, we are covering lots of ground. We are almost there, stay with us.

This brings us to our final question.

Question #8 – What are your issues?

This is a tough one at first.

But once you get comfortable with openness, honesty, and transparency you can address pretty much anything.

An issue is an obstacle that could prevent you from reaching your targets. The sooner you accept that you have issues, the better off you will be. You will always have them and your leadership team is responsible for solving them.

Currently, at New Economy, we have 30 issues on our issues list. Our leadership spends 60 minutes per week solving these problems which increases our probability of success.

Here are some tips for coming up with your issues list:

  1. Schedule time with your leadership team to specifically discuss issues
  2. Consider all the obstacles, concerns, and opportunities you face
  3. Take them one at a time. Focus on getting to the root cause of the issue
  4. The goal is to remove the issue by solving the problem. Make sure someone is assigned responsibility for any to-do’s relating to the issue
  5. Review your issues weekly

As mentioned, issues can be tough, but once you get into it, you realize that everyone has them. And the more you work at solving problems the better you become.

 

 

You now have a compelling vision with a 3-year, 1-year strategy supported by a marketing plan, and you are dealing with your issues on a regular basis.

But this is one last key piece.

You need to share this vision with your employees. The only way you can do this is to tell them. You must tell them over and over.  You want everyone’s energy going in the same direction towards the common vision, goals, and rocks you have created. 

When that happens, it will create an exponential force helping you to achieve your vision.

Here are some tips for sharing your vision:

  1. Share it during new employee onboarding
  2. Share it at your annual Company meeting
  3. Share it at your quarterly meetings. 

They say it takes folks 7 times before something sticks. So keep repeating yourself here, it’s worth it.

Summary

We have covered all 8 questions to help you create a compelling vision for your Company. We have found that focusing on these topics has helped us to create a  foundation to grow New Economy. 

And you can too.

3 Key Takeaways

This is some heavy and impactful stuff. It will help you to build a solid foundation to build and grow your business. We are living proof.

Here are 3 key takeaways.

  1. Spend some time on the 3-year plan. This should be fun and practical. It should drive the decisions you are making today and connect back to your longer-term vision. Early on, we lost sight of the 3-year plan which can create a rudderless ship. Now we have the 1-year plan lining up with our 3-year plan which helps us to ensure that we are on track.
  2. Run into your issues not away from them. The more open you are to solving your problems, the faster you will be able to chase down your vision. Be open, honest, and vulnerable. Encourage others to do the same.
  3. Constantly share your vision. You need to find ways to get your vision in front of your employees. They are critical to your success. They need to understand where you are taking them and the role that they will play in the vision. Connect those dots for them and you will have alignment that will move them and your business forward.

There you have it 🙂

We are living proof that this system works.

EOS Business

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.

Schedule a time to meet with our Founder, Jeff, and discuss how we can add value to your situation.

EOS Business

How to Go Deeper with the EOS Data Component of Your Business

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We run on EOS.

It has been game-changing for us. Our vision is clear, our team is aligned with the values and missions, and we are creating a culture that is open to new ideas and discusses challenging issues.

The result is we have been able to 3x the business.

In other words, we are the data component.

And as we all know the tools are simple. It’s going deeper into the tools where the insights and learning are applied.

Our mission is to help unleash the full potential of the growth-minded entrepreneur.

We want to help you gain control of your finances to make smart decisions to build and grow your Company. 

In this article, you will learn about: 

  1. Best practices for the current EOS Data tools
  2. A few additional data tools to support your EOS Company
  3. Ways to go deeper into the EOS data tools 
  4. 3 key takeaways

Let’s dive in.

EOS Business

Best Practices for the Current EOS Data Tools

The EOS data tools are your gauges. If set up and utilized properly, they are going to help you accurately and consistently measure the pulse of your business so you can take effective action when needed. You’ll no longer manage based on gut, emotion, ego, or impulse. 

You will have data. 

Understanding the landscape

Ok, as a quick refresher let’s discuss the EOS data component tools.

  • Scorecard – This is a handful of numbers, between 5-15,  that can tell you at a glance how the business is doing. These are reported weekly, monthly, quarterly, and annually.
  • Measurables – This is a number that is given to a single person to take ownership of.

There you have it. That data component of EOS is pretty simple. We have a few additional tools which we will discuss below.

But don’t be deceived. The power of the tools actually lies in the “working” and “evolution” of the tools themselves. For instance, at New Economy, it took us about a year to land on the right scorecard and we are continuing to evolve it. This provides better data to make decisions and gauge where the business is currently at and trending.

Best Practices

So, over the years we have created some best practices which have helped us to further unlock the 2 main EOS Data Component tools. 

Here they are:

  • Leverage technology. We started way back in the day using a Google sheet as it allowed for sharing and easy updating. We then moved on to leveraging the technology platform Ninety.io. It has been a game-changer.
  • Be persistent and relentless. When we started, the information entered was not correct. In fact, we learned we were measuring the wrong things. But we hung in there and continued to hold the line, it was worth it. So pick a team member, like your Integrator, to be persistent and relentless.
  • Measure “fluffy stuff”. We measure the more traditional stuff like cash in, gross profit, and so forth. But what about keeping a pulse on team members? We measure something called “High Satisfaction” days with our team. We also measure “Core Value Call Outs”. We set goals and intentions to foster and develop the culture we want.
  • Measure leading indicators. Measuring revenue is great but what drives revenue? We measure leads and new prospect zooms which lead to sales. So consider those things that will help you drive towards your desired outcome.
  • Reflect, Discern, and Simplify. The natural tendency is to measure more. We try to step back and really ensure we are measuring only the things that matter. We strive to continue to simplify.
  • Accountability. You need to go there. If something is off track, lean in and give the person taking ownership the opportunity to get to the root cause and fix the problem. This will only happen if leadership is strong and healthy and is willing to go there.

So, keep working on your scorecards and measurables. It should be like fine wine and get better over time.

 

Additional Data Tools

At New Economy, we have leveraged a few additional tools that fit into the data component. We believe these tools help to provide visibility, confidence in decision-making, and overall peace of mind as it relates to uncertainty.

These are tools that are around technology and processes that we leverage to help our clients gain control of their finances to make smart decisions.

Here it goes:

  • 13-week rolling cash flow forecast. Have you ever worried about cash? Well, imagine having a tool that is predicting the cash flows of your business to a degree of accuracy over the next 2.5 months. You would have peace of mind knowing where the cash gaps are coming from and can plan in advance on how to fill them.
  • Financial model. You are familiar with this tool. You know it as the 1-year, 3-year, and 10-year plan. We have taken that tool and built it into the monthly financial meeting cadence. Meaning, we review the one-year plan each month and review for budget versus actual. Why? So we can determine what is off track, fix it, and re-forecast for the remainder of the year. Think agile budgeting and forecasting that make your 1, 3, and 10-year plan stay alive and front and center.
  • Month End Close. Yes, this is a tool. Every business needs accurate financial statements to determine the financial performance of the business. The Month-end close is a tool that encompasses all of the reconciliations to ensure the numbers are correct. This is important because you should be making decisions based on true and accurate information.

For more information on these tools refer to our blog post here

At New Economy, we feel grateful to have the unique ability to help in the data component. We could not imagine running a business without having these tools in place. 

And we feel you don’t have to be a bookkeeper, accountant, or CFO to have financial insights. These financial insights will help you:

  • Increase your probability of success and achieving your goals
  • Get the most out of your business 
  • Reduce your stress level and provide peace of mind

You just need to have the right team and system in place to provide timely and accurate financial information to help you grow your business. 

Ways to Go Deeper on the EOS Data Tools

The beauty of the EOS tools is in their simplicity. They take complicated matters and help to provide a framework to make decisions.

But don’t be fooled. These tools have some depth to them and you need to stay close to them to receive the full benefit.

Since we like lists, here is a list of 10 things to consider when going deeper into the EOS Data tools:

  • Make sure you have the right level of experience for the team member running your data tools. If they are too inexperienced, they will not be effective at fully leveraging the tools.
  • Make sure you keep evolving the tools. Meaning, that the tools and their usage should improve over time. Don’t let them get stale or become complacent with them. Review them quarterly.
  • Leverage technology for the tools. You will become more efficient, be able to collaborate with others, and avoid version control issues.
  • Measure fluffy things. We have scorecard items that are so impactful but they are non-financial and culture-related. We measure things like high satisfaction days and core value callouts which help to create and nurture the culture we desire.
  • Don’t settle for less. Every business needs a cash flow projection, a budget, and ongoing projections that are updated monthly. These tools will give you tremendous insight into the business. Make sure you have these tools in place.
  • Get an outside perspective. Talk to other EOS companies. Seek the counsel of accountants and CFOs who are dedicated to adding value to the EOS community. Feel free to email me directly at [email protected].
  • Think vision and leading indicators. Think of where you want to be and consider the things that have to happen to get you there. If you want sales, measure leads, customer calls, and prospecting lunches as they will drive you toward your desired outcome.
  • Hold the line on accountability. Make sure the numbers are accurate and are being delivered timely. The idea is you can use this data to make smart decisions to build your business. And get to the root cause of off-track data issues.
  • Reflect on the data. Meaning are you learning and applying what you are learning to drive change in the business? Reflect, learn, and apply.
  • Everyone, I mean everyone, has a number. Consider each team member and ask yourself, do they have a number? If they don’t, they should. Connect these numbers into the vision which is connected to the financial plan. Many companies overlook this.

Data is your friend. The tools that provide data arm you with information to support your intuition and gut. It is an amazing combination of having great intuition and data to support it when making decisions.

There you have it. We hope this insight allows you to go deeper into the EOS data component to help you achieve your goals.  

Here are three key takeaways:

  1. Get the right person in the right seat. Make sure that you have an experienced EOS accountant on your Accountability chart to help you leverage your data to keep your pulse on the business.
  2. Leverage your data to make smart decisions. If you have questions or decisions to make, use your budget to understand the financial implications of those decisions. You now have tools to help corroborate your “gut” response to decisions.
  3. Leverage additional tools such as a budget, forecast, and cash flow projection. Every week, month, and quarter you will be gaining new insights into your business. You have the opportunity to apply that learning and make changes that will impact the performance of your business.

EOS Business

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.

Schedule a time to meet with our Founder, Jeff, and discuss how we can add value to your situation.

Why Companies Running on EOS Need a Remote Accountant in their Accountability Chart

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New Economy runs on EOS. 

We successfully graduated from a full implementation of EOS with a hired implementer back in 2020. The system has been instrumental in allowing us to build our team, systems and processes, and create company alignment around mission, vision, and values. It’s also helped us support our 3.5x revenue growth since implementation.

So clearly, we see the value in the EOS system. 

Further, we greatly appreciate the EOS community’s shared values which encompass an abundance and growth mindset, doing the right thing, giving before you get, and doing what you say.

We are grateful to be a part of the community and want to help others just as we have been helped.

We have unique abilities in the data component that can be leveraged to help EOS companies achieve their vision and goals.

We want to help you gain control of your finances to make smart decisions to build and grow your company. 

In this article, you will learn about: 

  1. Why to consider hiring a remote accountant and what to look for
  2. The proper seats and core functions to set you up for success
  3. The right tools and meeting rhythms
  4. 3 key takeaways

Let’s dive in.

What to Look for When Hiring a Remote Accountant and Why to Consider it as an Option

What to look for

New Economy is a fully remote Company. We have 15 team members in 15 different states. Further, we have 45 recurring customers that get us into another 5 states, totaling 20 states between employees and customers.

So we know firsthand that remote working works. We have leveraged the EOS tools and meeting rhythms which increase the probability of success. 

We focus on:

  1. Lots and of Leading, Managing, Accountability (LMA)
  2. Focused and consistent Level 10’s, monthly check in’s, 90-day check-ins, Quarterly and annual roll-outs
  3. Focused and consistent weekly, monthly and quarterly scorecards
  4. Documented process
  5. Technology to support the team and customers

Further, we outsource our marketing (awesome plug for Full Stadium 🙂) and legal (awesome plug for Howell Legal 🙂) to remote Companies. So not only are we a remote and outsourced service provider but we successfully leverage the service of others

So here is tip #1 –  Make sure the company has proven experience and examples of success when working in a remote environment. 

Many companies are trying to take advantage of remote working but they have not invested in the technology, process, or systems. They just are not equipped to provide awesome service (core value call out).

Another key component is alignment. Being an EOS company, we have a set of core values:

  • Deliver awesome customer service
  • Embrace learning and growth
  • Be passionate and own it
  • Build open and honest relationships
  • Continuous learning and growth

And we even look at our core values and seek to find alignment with our customers by asking questions during the early stages of the customer journey. Further, by leveraging our core values we have created the characteristics of our ideal customer:

  • Mission-driven, values-based, and growth-minded
  • Revenues and/or investor funding in excess of $2M 
  • 10+ Employees
  • Located anywhere in the US
  • Leverages technology and process
  • Wants an engaged accounting and finance partner to help them use data to grow

 

If this is you, let’s talk.

 

This leads to tip #2 – Make sure there is a degree of alignment around core values, working and communication styles. 

This takes a bit of hard work, but as an EOS company, we know it’s all about getting the right people in the right seats, and the right person just might be someone that is remote.

So now we have a sense of what to look for.

But why should I consider outsourcing to a remote company?

Why to consider outsourcing

Back in June we wrote a detailed blog posting giving 3 key reasons why you should consider outsourcing to a remote accountant. For your reading pleasure, we are including a link here.

But if you like summaries, here are the top 3 reasons why:

  1. You will likely save money as you probably don’t need a full-time hire. You won’t need to worry about space, technology, or benefits. Further, you will not be overpaying a technical person to do admin-type work. We stay in our lane and focus on what we are good at which aligns with the seats and core functions which we will talk about later.
  2. Considering outsourcing will require you to focus and evaluate your accountability chart, your people, your processes, and your technology. And this is a good thing for your business. It will require you to take a hard look at what is working, not working, and why. And one of the things about remote working and leveraging technology and process is effectiveness and efficiency because we have to.
  3. You will have a resident accounting expert on your team who does not need to be trained or managed. They work with different companies so have an inside look into many businesses and acquire best practices. They are focused and specialized in core functions that are specific to their skill set. 

So, by now you should have a sense of what to look for and why to consider outsourcing to a remote accountant.

Keep reading if you want to get a glimpse of seats and core functions in the accountability chart that will help you gain control of your finances to make smart decisions to build and grow your business.

The Proper Seats and Core Functions to Set You Up for Success

ou are probably familiar with the accountability chart if you run on EOS, and if not check out this quick video here. It acts like an organizational chart by really focusing on identifying the core functions of each role.

This is all about getting the right people in the right seats and focusing on accountability for the tasks they are responsible for. 

We figured the best way to explain the ideal chart for a growth-minded organization is to just show it.

We prefer to build this from the bottom up:

First up is your staff accountant. This team member is leveraging processes and technology to perform their core functions. They are the foundation of your accounting team. The old saying is garbage in, garbage out. The tactical inputs of this team member will be at the front end of the strategic outputs you are looking for. 

 

Staff/Senior Accountant

*AR and AP

*Payroll

*Bank & Credit Card recs

*Maintain QB

 

Next up is your Controller. This team member leads and manages the staff or senior accountant. Further, they work with creating processes and policies, and are focused on delivering timely and accurate financial information. 

 

Controller

*Lead, Manage, Accountability

*Month-end close

*Financial process

*Budgeting & cash flow

 

Next up is your CFO. This team member sits on your leadership team. They are focused on being the right hand to the CEO and supporting the overall strategy of the business. 

 

CFO

*Leadership

*Strategy

*Capital raising

*Risk

 

The above 3 seats are key for really every business, but it’s hard for a CFO to be effective if the foundational pieces are not in place. Remember, each role requires unique abilities and skills, so make sure you are setting everyone up for success. 

Here is what a health accountability chart for a growth-minded company should look like:

 

CFO

*Leadership

*Strategy

*Capital raising

*Risk

                    

Controller

*Lead, Manage, Accountability

*Month end close

*Financial process

*Budgeting & cash flow

                   

Staff/Senior Accountant

*AR and AP

*Payroll

*Bank & Credit Card recs

*Maintain QB

 

For more information on the difference between an accountant, controller and CFO, check out this blog posting here.

And here are a few pro tips:

Tip #1 – Start from the ground up. Get the tactical foundational stuff set up before bringing in a controller or CFO.

Tip #2 – Don’t over-hire. Meaning, your CFO or Controller should not be doing admin-type work. Actually, they should not be doing any work outside of the core functions listed above.

Tip #3 – The reality of it is outsourcing can save you money. Focus on the core functions which are based on specialized skills. Use Admin and operations people for all non-accountant and finance core functions.

If you are feeling pain in this area, let’s talk. We have this figured out for you so you can focus on building and growing your Company.

The Right Tools and Meeting Rhythms

Now let’s talk about tools and meeting rhythms.

The Tools

Being a fully remote company, we operate in a paperless environment with all web-based applications. There are hundreds of web-based platforms out there to meet your needs and we don’t have time to go over all of them here, but here are some essentials:

  • Quickbooks Online – Maintains all of your accounting and produces your financial statements
  • Bill.com – Provides bill payment solutions that automate and help with internal controls 
  • Expensify – Provides expense reimbursement solutions that automate and help with internal controls
  • Fathom – Provides month end dashboards and analysis like budget versus actual
  • Jirav – Provides budgeting and forecasting

And the list goes on. The key is to find a tool that is in the cloud and will add value to your life. The goal is to become more efficient as a result of the technology.

The Meeting Rhythms

Being remote, we live and die based on accountability. One of the ways we drive accountability is by having preset meeting rhythms. Much of this depends on the services our customers want but here is a glimpse into the preset rhythms we have in place:

Internal

  1. Weekly Team Level 10’s – Here we all get on the same page for what’s working, not working and solve problems
  2. Monthly Team member one on one – Make sure our team members are set up for success and help them with challenges and issues
  3. Quarterly Check-Ins – These are 90-day check-ins where we provide our team with feedback and actionable insights to help them grow.
  4. Monthly Culture Events – These are geared to help us grow in our relationships with each other. We are looking to build intentional connections and increase trust and credibility.

The above meetings impact our clients even though they are not a part of them. These meetings help to build our team up and provide clarity on timing, expectations, and deliverables. Most importantly they set the tone for our culture which is an internal thing that makes its way into everything we do.

Now onto our client-facing meeting rhythms:

External

  1. Weekly Check-ins – These are to drive alignment and build trust. They are quick meetings to “get on the same page”. Some happen in Slack and others in Zoom.
  2. Weekly Cash Flow – If we are doing bill pay or cash flow forecasting, we have a weekly cash flow meeting. This is to provide insights into cash flow on a rolling 13-week basis. (Read more about creating and following a cash flow model here).
  3. Monthly Finance Zoom – This is a fun meeting and core to our services. Here we present the financials with actionable insights. We are quickly spoon-feeding our customers relevant information from the financials to make smart decisions.
  4. Quarterly Tax Zoom – If we are providing tax consulting services, we connect quarterly to discuss tax opportunities and threats with the idea of providing peace of mind around taxes.
  5. Quarterly Budgeting Zoom – If we are providing budgeting or forecasting services we will meet quarterly to discuss what we have learned about the business and how to apply it moving forward.

Ok, that seems like a lot and there is more. Note, that we love to simplify and can combine and condense where it makes sense.

The key for us is to have preset meetings that drive engagement. This engagement allows us to provide key insights to help our customers grow their businesses. 

Here are three key takeaways:

You made it this far, now for the top 3 takeaways:

  1. Spend time reviewing your business needs as they relate to your accounting department. What’s working or not working? Get this all documented based on the above accountability chart. Once you have established the seats and functions you can then move on to getting the right people involved.
  2. Don’t overpay or underutilize team members. Meaning, your CFO should not be in QuickBooks doing basic accounting work. Further, your accountant should probably not be advising you on strategic business decisions. Build some depth on your team and outsourcing will provide a cost-effective way to make that happen.
  3. Culture. Culture. Culture. We love to focus on alignment. Make sure you take the time to align with a company that seems to have a shared value system. Ask them about their mission, vision, and values and look for areas that resonate with you.  Taking your time to get the right people in place will provide tremendous value in helping you achieve your goals and allow you to focus on what’s most important.

New Economy Team Members are Experts in Accounting for Entrepreneurs

If you run on EOS and building out processes with a focus on accountability is something your business is working towards, New Economy can help. We have the right tools and meeting rhythms to ensure your core functions are being taken care of. 

Again, it’s our goal to help you gain control of your finances to make smart decisions to build and grow your company.

So, Schedule a time to meet with our Founder, Jeff, and discuss how we can add value to your situation.

Creating a Small Business Budget

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A small business budget is like a treasure map. Yup, you heard that correctly. Just think of Jack Sparrow in the Pirates of the Caribbean.

Many entrepreneurs and business owners can communicate where they want to be at some point down the road. For many, that is obtaining the treasure i.e. achieving goals and financial measurables. 

But they struggle with how they are going to get there.

That’s where creating a small business budget comes into play. Think of your small business budget as the map to provide the steps to obtaining your treasure.

At New Economy, we believe in one-year, three-year, and 5-year budgets, and as we are entering into the fall, now is the time to start thinking about your budget again. As much as we love the three-year plan, this article is focused on the one-year plan.

We want to help you gain control of your finances to make smart decisions to build and grow your Company. 

 

Small Business Budget

In this article, you will learn about: 

  1. How to get started on preparing your one-year small business year budget
  2. Best practices in creating your one-year small business budget
  3. Utilizing your one-year small business budget to obtain your treasure
  4. 3 key takeaways

Let’s dive in.

How to Start Preparing Your One-Year Small Business Budget.

You might be surprised, but some of the most important parts of creating a budget have nothing to do with numbers or spreadsheets. The first part of creating a budget requires stepping back and obtaining a deep understanding of the business.

Understanding the Business

At New Economy, before we prepare a one-year budget, we spend time getting to know the business. This requires meeting with key team members like the Visionary/CEO, Integrator/COO, Operations, and Sales team leaders in an effort to gather as much knowledge as possible about the business. 

We do this because we seek to understand. We want to be able to offer up best practices and strategies to help you get closer to achieving your goals. And without historical context, an understanding of the present moment, and the future vision it is difficult to predict.

Here are some of the things we seek to obtain and understand and what you should too if you are preparing your own budget:

  • Review existing business and financial information like historical financial statements, tax returns, and business plans.
  • Review and understand unit economics. For example, the cost of making your product or service.
  • Review pricing strategies.
  • Understand management’s vision, growth, and exit plan for the business.
  • Get a sense of the resources needed to achieve the vision. Think people, equipment, technology, and so forth.
  • Understand the finances and capital in place to support the business.
  • Understand the sales and marketing process and review all collateral.
  • Understand the issues and challenges the business is facing.
  • Get a sense of the overall market conditions and opportunities in the specific industry.
  • Review key documents like customer agreements, employee agreements, and bank documents.

It seems like a lot and it is, but it’s important. We typically have a few sessions to do these knowledge and data transfers.

By reviewing all of this information, we are able to obtain a baseline understanding of the business and the direction that management is looking to go. We use this as the foundation for building a one-year small business budget. So don’t rush through, take your time and seek to understand. Soon, you’ll have what you need to create the map that leads to your treasure.

Best Practices For Creating Your One-Year Small Business Budget

Okay, now we are ready to get started.

Tools and Technology

There are many forecasting tools out there, and we are big fans of leveraging technology. This allows for automation, reduction of errors, and possibly some time savings.

A few forecasting tools to check out are:

  • Jirav
  • Spotlight
  • Fathom

However, at New Economy, we tend to gravitate towards either Excel or Google Sheets. We find they allow us to customize the levers and unit economics and inputs specifically to your business. In other words, we have extreme flexibility when building out the budget.

There is no wrong answer here, but staying consistent with a single tool is the best route.

General Framework

At New Economy, we build our budgets much like your historical financial statements. So our budgets encompass three financial statements:

  • The Balance sheet
  • Profit and loss statement
  • Statement of cash flows

You’ll need this to produce budget versus actual information but more on that later.

When building out financial statements, we take a detailed approach and use the chart of accounts in your financial statements to build the budget. Yup, we do it line item by line item based on each account so we create variance reporting at month end.

Further, we build out the financial statements by month. So each financial statement will have monthly balances. The end product is a Balance Sheet, Profit and Loss statement, and statement of cash flows that mirrors your financial statement accounts and is produced by month.

Input Sheets

Next, we move into the input sheets. These sheets are the drivers, the levers that feed into the financial statements mentioned above. By setting up input sheets, you are able to run “what if” scenarios and change your assumptions which will ripple throughout your financial statements.

Here are some key examples of input sheets:

  • Staffing Sheet – This sheet represents the team you have and the new hires you will make. You can add new hires, increase compensation, add benefits, and even remove staff. The idea is to show what your team is going to look like over the next 12 months and how much it is going to cost the business. Again, this is done monthly and at a detailed level. 
  • Operating expense Sheet – This sheet represents the general expenses and overhead needed to support your business over the next twelve months. Think about expenses like rent, insurance, software costs, and marketing expenses. These are your fixed costs and the idea is to show how much it is going to cost the business. Again, this is done monthly at a detailed level.
  • Revenue and Cogs Sheet – This sheet represents your revenue and the direct costs to produce that revenue. We like to get very detailed on the revenue side. For instance, as you build this sheet out, think about the economic units. Meaning, can you build this sheet out showing # of units x price per unit to get to sales? This allows you to make different assumptions around growth. On the Cogs side, it is variable with revenue. We do build them from the bottom up and get a sense of the costs needed to produce one unit of revenue. But we also look at it from the top down and look at the overall gross profit margin as a gut check. Again, this is done monthly at a detailed level.

Financial Statements

This is where the magic all comes together. 

You should have a good understanding of the financials since the budgeted financials are just a forward looking picture of the actual financials you review at the end of each month.

In our framework section, we discussed the basic layout as follows:

  • Balance sheet by month
  • Profit and loss sheet by month
  • Cash Flow Statement by month

Your traditional financial statements that give you a sense of how your business is performing from a financial perspective on a month to month basis. And we have both the actual historical financial statements for each month as well as the future oriented budgeted financial statements out into the future.

Your Actual and Budgeted Balance sheet will show all of your assets, liabilities and equity.

Your Actual and Budgeted Profit and loss statement will show all of your revenue and expenses.

Your Actual and Budgeted Cash Flow statement will show you where your sources and uses of cash are coming from.

All of the financial statements in our budgets are linked up to the input sheets. So any changes you make in the input sheets ripple through the financial statements automatically.

We feel it is important to take a detailed approach to budgeting and have your budgeted financial statements mirror your historical actual financial statements which we discuss in the next section.

 

Utilizing Your One-Year Small Business Budget to Obtain Your Treasure

Now that you have a one year budget in place, let’s talk about the ways to use it.

  • Variance reporting  – Variance reporting is something that happens at month end. Once you close the books for a month and have your actual financial statements we review a variance report. This can be system generated from an accounting system like QBO. The value here is understanding which line items are on track or off track against the budget. Then you can assign a team member to look into why and help understand if any necessary changes are needed to get things back on track.
  • What if scenarios  – We often get asked questions like “can we afford to hire?” Or “if we do hire, what is the impact on profitability”? While most entrepreneurs have a pretty good gut answer we prefer to utilize the data. We would run the hire and salary through the staffing tab to see the impact on the profit and loss statement. Then we can answer the question accurately as to the financial impact of that decision. So you can use the budget to get a sense of the financial impact of any decision you are about to make in your business.
  • Reforecasting  – As the months march on we should be learning about the business. We are aiming for the results laid out in the original budget. However, much of the learning we are obtaining may result in some re forecasting. For instance, maybe we want to increase marketing spend above the budget amount because it is resulting in revenues above the budget amount. So you can use the budget to create a reforecast which is simply changing underlying assumptions in the input tabs based on the direction of the business. But be careful, you want to continue to hold yourself accountable to the original budget.

There you have it. We hope the  road map above gets you closer to your treasure.

Here are three key takeaways:

  1. First and foremost, every Company needs a budget. A budget will help you understand the resources needed to chase after your vision. Further,  budget will help you to determine on a month to month basis whether or not you are on track.
  2. Leverage your data to make smart decisions. If you have questions or decisions to make, use your budget to understand the financial implication of those decisions. You now have a tool to help corroborate your “gut” response to decisions.
  3. Turn your budget into a forecast. Every month, you will be gaining new insights into your business. You have the opportunity to apply that learning along with the financial impact by reforecasting your numbers. We suggest doing this on a monthly or quarterly basis. But keep your original budget intact as those are the goal posts for the year.

 

Small Business Budget

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.

Schedule a time to meet with our Founder, Jeff, and discuss how we can add value to your situation.

3 Ways to Boost Your Confidence in Your Small Business

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How Leveraging Financial Data and Your Accounting Team Can Help.

As a growth-stage entrepreneur, you’re constantly dealing with emotional highs and lows based on the various circumstances thrown your way that are not in your control. 

We feel your pain. 

And we have learned that this can impact the confidence you have in your small business. But what really is confidence?

Here are a few definitions. 

  • It is the feeling or belief that one can rely on someone or something.
  • Or defined another way, a feeling of self-assurance arising from one’s appreciation of one’s own abilities or qualities.
  • Or the state of feeling certain about the truth of something.

Which begs the question: Do you have confidence in your small business? And can you increase that confidence in your small business using financial data and leveraging your accounting team?

At New Economy, we believe so.

Why, you ask? 

It aligns with our efforts of helping you gain control of your finances to make smart decisions to build and grow your company. 

In this article, you will learn: 

  • What types of issues might be eroding your confidence in your small business
  • What you can do to overcome these issues 
  • Three key takeaways related to improving the confidence in your small business using data

Let’s dive in.

Small Business Confidence

What Issues May be Eroding Your Confidence in Your Small Business?

There are a few important things to discuss here. 

First off, there is no silver bullet and the game of business covers a lot of ground. Therefore, we will focus on issues on the financial side of your business, which is the space that we play in. But this approach can be applied to any department such as marketing or even operations.

So what could deteriorate your confidence in your small business as it relates to the financial side of your business?

Maybe it’s people, maybe it’s process, maybe it’s technology, or maybe it’s a combination of all three. 

Let’s Talk People

Start with the Right Seats

Before we dive in, let’s discuss the seats in your accountability chart. And here is a question–Do you have a sense of the right seats and core functions needed for your business based on your stage, growth trajectory, and goals?

We believe every entrepreneurial, growth-minded company needs 3 foundational seats, each with a different set of skills and unique abilities (for more, check out our blog on the difference between an Accountant, Controller, and CFO). Here they are:

  • Bookkeeper / Accountant – They focus on tactical things like payroll, bill payment, bank reconciliation, credit card reconciliations, and invoicing and collections. This team member may have 3-5 years of experience.
  • Controller – They focus more on the output which would be things like accurate financial statements, accounting processes, managing the Bookkeeper, and working directly with the CEO or CFO. This team member may have 10-15 years of experience.
  • CFO – They focus on the business. They are a strategy partner to the CEO and they oversee everything related to accounting and finance and will get involved in budgeting, forecasting, and helping to bring plans to life. This team member may have 20+ years of experience.

Now that we have the right seats in place, you need to find the right team members and this is where people come into the picture.

Then Find the Right People to Fill Those Seats

At New Economy, we ask ourselves a few questions about placing a team member in a seat such as the ones mentioned above.

First, are they aligned with our core values at New Economy? If not, they will not be a good fit for our company, and we don’t place them. If yes, we move on to the next question.

Do they get it, want it, and have the capacity to complete the functions needed for the seat? If not, they will not be a good fit for the seat and we move on. But maybe through training and development, we can get them there. And if yes, then we place them in the seat.

So, if you don’t have the right seats, or maybe you have the right seats but the wrong person in them, you will face challenges. Chances are:

  • You are frustrated
  • your team member is frustrated and feeling burned out
  • You are not getting financial information to make smart decisions to build and grow your business

So your confidence could be down to not having the right structure and seats in your accountability chart or not having the right people sitting in those seats.

Consider stopping doing your own bookkeeping or using Tom’s uncle’s cousin who really is a party planner! Take the time to get this right. 

If you get this right, you will have an accounting and finance department that is aligned with your vision and provides useful financial data, actionable insights, and business improvements all to help you build and grow your business. This is an investment in your business that will return extraordinary results.

Let’s Talk Process

The next issue that might be eroding your confidence in your small business is the lack of process. At New Economy we are consistently reviewing our core processes, documenting them, and training others to ensure they are followed by all.

By having documented processes in your accounting and finance department you are ensuring that team members are clear on how to do things and you are mitigating the chances for errors, inefficiencies, or even fraud. Yup, we said fraud which nobody thinks about until it’s too late.

But here is the real reason the documented process is important: It will ensure that over and over again you have a procedure in place to consistently produce a desired outcome in a timely and accurate manner. 

For example:

  • Processes will support the release of timely and accurate financial statements. A process around the month’s end will allow any controller to step in and provide you with financial data that you can rely on to make great business decisions.
  • Processes will ensure that bills are paid on time for goods and services that we have received (we have seen vendors getting paid for things they should not) and that payments are going out at the right amount per the actual purchase order and invoice.
  • Processes will ensure that your business is on track to meet its annual budget. At month’s end, the actual financials can be compared to the budget to show what is on and off track. From there, you can forecast the future based on what you are learning to see how you are lining up compared to the budget. 

We prefer to rely heavily on processes. The process runs the business and the people step in to run the process. This takes time and effort but it is worth addressing in all departments in your company.

So, if your accounting team is always late with providing information, missing key information, or off on the accuracy we can see why your confidence might be down. And it may be due to a lack of processes needed to support where the business is currently at today.

A few final thoughts:

Having a documented process may not be enough. We believe that team members need to be trained in processes. Further, the process needs to be followed by all. So, you need a process to ensure that processes are being followed – yikes! 

But in the end, the process will give you the confidence that you are receiving financial information that is both timely and accurate. And this will give you insights as to how your business is performing.

Let’s Talk Technology

Remember the old days when you used to get a set of financial statements printed on ledger paper?

We don’t! And if someone handed us a set of financial statements on ledger paper our confidence would certainly drop. We’d question, in a healthy way, if we could rely on the numbers.

See, we have built New Economy from the ground up by leveraging a technology stack that allows us to provide virtual accounting and finance services worldwide. It’s faster, more efficient, more cost-effective, easier to build processes, and easier to train team members on how to use technology tools.

However, many companies’ accounting and finance departments are still struggling to adopt new technologies that will increase efficiencies, reduce errors, and allow team members to spend more time analyzing information and providing actionable insights.

The point is: Consider what technology you might be able to use to change the game and build your confidence. 

Here are some examples:

The list goes on and on. 

But the main point is that the use of technology can speed the flow of information up and assist with increasing the accuracy. Further, processes can be wrapped around these technology tools, meaning technology has an impact on increasing your confidence in your small business.

 

What Can We Do to Overcome the Issues that are Decreasing Your Confidence in Your Small Business?

The very first thing we suggest you do is step away from the day-to-day of the business. Most growth-stage entrepreneurs have too much on their plate and it’s hard to reflect and think strategically when you are in the business.

So what do you do?

Take clarity breaks. A clarity break is a regularly scheduled appointment on your calendar with yourself. You define what regular is – a half-hour daily, two hours weekly, a half-day monthly. It’s up to you. The doing of it is what matters.

Note: We like to take these in physical spaces that motivate, inspire, and encourage us. For example, I like to take my clarity breaks in my 1986 VW camper van by the ocean. Some team members like to take them at Starbucks. But the point is, get away from your regular space.

OK, so I am in my van, now what?

We would encourage you to reflect on the above and ask the following questions:

  • Do I have the right accounting and finance seats on my accountability chart?
  • Are the functions for each seat clearly defined?
  • Do I have the right team member with the right skills sitting in the seat?
  • Do I have processes supporting each function in these seats?
  • Are the processes being followed by all? Are they evolving with the business?
  • Do I have the right technology to increase productivity?

Reflecting and answering these questions will increase your confidence in your accounting and finance team and provide you with the information you need to build and grow your business such as:

  • Ways to increase profits
  • Ways to mitigate risks
  • Ways to run smoother
  • Ways to improve business insights
  • And ultimately increase business confidence

We have subscribed to this approach to help build and grow New Economy. You can do this for literally any department in your business. 

But should you want to get there quickly, consider hiring a company like New Economy that has done the hard work for you 🙂

And once you have the confidence in the back end of your business, you are ready to go and ready to grow. You have the foundation built to support the needs of your customers while capturing market share.

3 Key Takeaways Related to Improving Confidence in Your Small Business Using Data and Leveraging Your Accounting Team

If you want to improve your confidence in your small business, consider leveraging your accounting and finance team and the data they provide.

Here are three key takeaways related to improving your small business confidence:

  1. Make sure you know the needs of your business and that you have clarified the roles. Further, make sure that you have the right person with the right skill set to meet those needs by being able to perform the core functions of the role.
  2. Lean into your process and technology. Make sure that you have a documented process followed by all. Further, make sure that you are using the best-in-class technology for efficiency purposes.
  3. Take time away from the day-to-day to reflect. Think about what’s working and not working, and what next people move you need to make. This time is valuable in that it will provide new ideas and actionable insights to chase down your goals.

Small Business Confidence

New Economy Team Members are Experts in Accounting for Entrepreneurs

If your Company’s accounting and finance team is not providing data to help build your confidence in your small business, let’s talk.

New Economy makes an excellent partner because we want you to gain control of your finances to make smart decisions to build and grow your business. 

We’ll help you get your accounting done, and done right.

Schedule a time to meet with our Founder, Jeff, and discuss how we can add value to your situation.

3 Ways to Cut Business Expenses

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As a growth stage entrepreneur, you’re constantly thinking about ways to grow your Company. 

An important thing to consider as you grow is keeping expenses on track. We have learned that growth can suck cash and a big part of that is expense management. 

This begs the question: Do you have an expense management process in place that effectively cuts unnecessary business expenses?

At New Economy,  this is on our minds too.

Why, you ask? 

It aligns with our efforts of helping you gain control of your finances to make smart decisions to build and grow your company. 

In this article, you will learn: 

  • What an expense management process looks like
  • What types of questions to ask when identifying expenses to cut
  • How to actually cut or reduce expenses
  • 3 key takeaways related to cutting business expenses

Let’s dive in.

Cutting business expenses

What is an Expense Management Process?

There are a few important things to discuss here. 

First off, before we get into the process itself we’d like to quickly cover an important financial tool. 

Every business should have a detailed budget. The budget should be prepared monthly and be detailed by line item (Refer to our blog post on top 4 financial tools). In this case, our focus is on the expense line items. If you don’t have this in place, you should. 

Why? You are making important bets and decisions on where you need to invest your resources to achieve your goals. 

Ok, now we can move on to the process which can be achieved at a detailed operational level and at a higher financial level.

Let’s start with the detailed operational level. The benefit here is: 

  •  You are ensuring you are obtaining the proper tax deductions
  •  You are able to manage expenses
  •  You are going to get more insights to budget 
  •  You are minimizing fraud

Every business is different and there are employee expenses such as travel and meals and then business expenses such as inventory purchases and marketing expenses.

Here are a few keys for every business regardless of the type of expense:

  • Have a written policy that is followed by all
  • Keep everyone from employees to managers accountable to the process
  • Ensure the process has built into it proper documentation such as expense reports and purchase orders
  • Ensure the process has proper approval built into it. Meaning, make sure a manager is approving the employee expense report or purchase order

Moving on to the higher financial level. The benefit here is:

  • Having data to make timely decisions
  • Knowing what is on-track or off track
  • Identifying root causes of overspending
  • Fixing problems real-time

Here the process goes back to the budget we discussed. At month’s end, the actual amounts for all expense line items should be compared to the budgeted amounts. All line items should be analyzed to determine what we are learning. 

For instance, if a line item is over in a particular month, why is that? Maybe it’s a timing issue and we had to front-load expenses and no additional action is required. Or maybe, the marketing team has overspent and this needs to be brought to their attention to reduce expenses in a subsequent month to keep things on track.

The key here is to create both types of processes, put someone in charge of managing them, and use the information you are getting to cut business expenses to help you achieve your financial goals.

What Type of Questions Should We Ask When Looking to Cut Expenses?

We believe cutting expenses to achieve your financial goals is both an art and a science. You don’t want to simply cut an expense because it is over your budget. Maybe the expense that is over budget is helping you to achieve your business goals. In that case, why would you cut it?

This leads to our first question. We like to ask: “Does this expense get us closer to achieving our goals?”.

The question is to get you to really think about where you are allocating your capital and get you to prioritize. If the expense is mission critical, then we often advise to proceed with caution and perhaps find other expenses that are not as much of a priority.

Another important question to ask yourself is: “Why is this expense over and above the budget?”.

We have found that getting to the root cause often requires us to go deep. Meaning, we try to ask why at least 5 times to get to the bottom of it. Here is an example.

The marketing budget is over budget for the month by 25% or $15,000 but why:

  • Why 1x – Because the marketing team overspent
  • Why 2x – Because they needed additional support to achieve lead generation
  • Why 3x – Because they underestimated the resources needed
  • Why 4x – Because their original submitted budget was not scrutinized enough
  • Why 5X – Because the process for establishing budgets was not followed

As you can see, as you keep going deeper you get closer and closer to the real why. And by having the real answer you are able to make a smart decision. You can decide to re-forecast and increase the budget over the remainder of the year. Or you can decide to work with the marketing team on staying on budget and lower expectations on lead generation based on the resources deployed. 

Lastly, another favorite question is: “Who is accountable for this expense line item?”. 

We believe that whatever we measure and manage will improve and get better. And part of this is giving responsibility to team members to manage and own the number. 

So back to the example above, we would suggest that the marketing team leader is the person that should be taking ownership of approving the budget for the marketing team. This individual is now responsible for providing thoughts and actionable insights on getting the budget back on track. Never underestimate the power of “who” …..as in, who is responsible and accountable for this.

 

 

How Do We Actually Cut Expenses?

This is a delicate topic. But as your Company is growing, you may find that expenses naturally start to grow. Growth sucks cash in the form of expenses. But cutting expenses is one way to help you stay on track for achieving your business goals.

Here are some tips for cutting expenses:

  • Communicate your “revised vision” with the reduced expenses in the form of a re-forecast to your team. This paints a new picture of what we are aiming for on the expense side. And call out those specific line items and explain the why behind them. The point is, involve your team in this conversation.
  • Have open and honest communication with your vendors. You need your vendors just as much as your team and customers. They are helping to provide the goods and services needed to grow the business. So inform them by communicating timely and clearly so they can plan ahead.
  • Continue to hold managers accountable, ensuring they are driving the change needed to reduce expenses. This should be emphasized as a top priority that needs to follow through based upon an agreed timeline.
  • Keep banging the drum so that your expense management process is followed by all. Let everyone know they can play a role here to ensure the company succeeds.

So as you can see, there is no silver bullet. No doubt you can focus on certain line items but we encourage our companies to think before acting and not making quick decisions. We like to take a thoughtful approach and balance the tension between the short-term and long-term goals of the business.

Note, per the Small Business Administration one of the top reasons Companies don’t make it is they run out of cash. And the reason they run out of cash is they have more money going out in the form of expenses than money coming in in the form of revenue.

So this is a financial discipline worth investing in for your business.

So one last question, how is your expense management process and what needs to change?

3 Key Takeaways Related to Cutting Expenses 

If you want to build and grow your business, you need to make sure you are keeping an eye on expense management.

Here are three key takeaways related to reducing your expenses:

  1. Make sure you have done the hard work of building a detailed monthly budget. Review the budget versus actual by line item each month. Reflect on what you are learning. And determine what may need to change and re-forecast based on your learning.
  2. Lean into your process. Make sure that you have an expense management process in place that is followed by all. Assign one manager to oversee this to make sure that they are banging the drum on the expectations.
  3. Assign team members to be accountable for specific line items. Have them own the expenses and be prepared to offer up the “why”, suggestions for improvement, and take on the responsibility of the execution of any change needed.

Cutting business expenses

New Economy Team Members are Experts in Accounting for Entrepreneurs

If your Company is off track and expense management isn’t your thing, you struggle with building budgets that properly allocate funds, 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.

Schedule a time to meet with our Founder, Jeff, and discuss how we can add value to your situation.

CONTACT US

 (401) 256-2404

CONTACT US

 (401) 256-2404

Grow your business by leveraging your financial data. We’ll show you how.

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