Article by listed accountant Wentzel Schoeman
In the current world we are living in, the economy is pressing. This makes it difficult for any small organization to survive. Lately I have received many questions regarding business growth. Small business owners would of course like their businesses to grow. But how do you do it in the current economic climate? Obviously you have to every means at your disposal to do this.
And yes, it is still possible to grow your small business in the current economic climate! We have seen many businesses not only thrive in the current economic climate but also very successful start-ups. Despite these successes, many small businesses are still failing each year. According to the US Census Bureau, 400,000 new businesses are started every year, whilst 470,000 are dying each year. This is interesting number, because more businesses fail each year than are started. On average about 50% of new start-ups survive four or five years.
These statistics are mind-boggling. I mean, if a business is in the second or third year, it must already have a bookkeeper or an accountant doing the financial statements, an audit or independent review. Can't these trained financial gurus help the businesses to succeed? A way they can help is to at least highlight areas where the businesses can improve, or perhaps use key performance indicator's (KPI’s) to improve efficiency?
There is a possibility that your accountant or bookkeeper can help you to grow your small business, thrive or to even survive. But if your accountant is only giving you tax, payroll and re-conciliation services chances are that they are not into business growth or business survival. An organisation is in a dangerous position if it has an accountant or bookkeeper that just do the numbers.
It is entirely possible that your accountant can help you to improve the sustainability of your business. At New Creation we do it in three broad areas: aptitude, attitude and available resources. All three is necessary for success!
Aptitude, attitude and resources- an illustration
Think of it as a little kid trying to ride a bicycle for the first time. Aptitude will be the skill to ride the bike. Aptitude would include the ability to not fall over. The attitude will be the emotional drive or want to be able to cycle. It is a possibility that the little kid trying to ride the bicycle becomes frustrated or even unconfident. It would then result in negative attitude. This would not influence the hardware, as in the physical bicycle would be in perfect condition. If the kid, however, develops a negative attitude the quality of the bicycle would be unimportant. The available resources could be that the kid have the time and the equipment to ride the bicycle. The three components: skill (aptitude), drive (attitude) and tools (available resources) are necessary before the little kid would be able to cycle. That is, before success can be achieved.
Aptitude is the most obvious component of business growth. Aptitude is the proper skills and know how. Aptitude would include the leadership skills, the ability and the skills to complete the task at hand. There are various skills that your accountant can utilize to help you with your business growth. Contrary to popular belief, this does not include your financial statements! This is due to the fact that financial statements have the goal as to communicate financial information to the outsider and not the insider. This outsider might be an investor, a supplier or the taxman.
It is vital for any organisation to have some sort of credit policy towards its clients. From a non-profit that is leasing a room to a retailer that sells on credit a practical credit policy is necessary to minimise financial loss and improve turnover.
Attitude, is the next (second) area where your business can improve. Attitude would include the enthusiasm, confidence, focus and the drive of the employees and management. A decrease in attitude can be the difference between winning and losing. Success or failure. Thrive or diminish. Survival or life of an organization.
For example, the coach of a good sports team, like Rugby or Soccer, knows that it's not all about skill. Sometimes it's also about attitude and enthusiasm for the sport. If the morale of a sports team is low, chances are that they are not going to win. The same principle persist in business. Your team would have to be motivated in order to do their job effectively. This motivation can happen on a personal or organizational level.
It is a possibility that a decrease in resources or aptitude can affect attitude in a negative way. This can hinder the level of success.
The opposite of the previous bullet, however, is not true. Aptitude and resources are not affected by a negative attitude.
Deficiency in aptitude or resources could be covered by improved attitude.
Available resources is the third component of the equation. Remember, the first component was aptitude. The second component what attitude. And now the third component is available resources. Generally all three of these are necessary for success.
The last component, or available resources, is obvious. This comprises of the tools, human resources, available time, amount of clients and the equipment at hand.
You may also be interested in 5 ways to grow your small business in South Africa.
To conclude, it is vital that your accountant or bookkeeper must help you to improve and survive. Contrary to popular belief, it is not more costly for an improved accountancy service. As the accountant can help you to save money in various areas like tax liability and cluttered processes but also to survive on the long run.
At New Creation, we do not aim to replace your current accountant. We can provide a consultancy service and one consultation free of charge to see if we can help you. New Creation currently only operates in Gauteng.
At New Creation we specialize in the aptitude and attitude of thriving business. The aptitude would include financial guidance to grow your small business and attitude would include coaching employees on a personal or organizational level.