The goal of every small business is to succeed. Noone sets out on their own to just break even. What is
the difference between those businesses that seem every year to gain more and more ground and more growth and those that simply
struggle to get by? A lot of times it's a matter of converting the financial data accumulated through daily receipts and monthly
expenses to a report that will allow you to interpret and understand correctly where you are headed. There is a 'Pyramid'
of progression in the gathering and using of financial information for the small business owner. The most successful business
owners are found in the top level. Many however, find themselves stuck in one of the lower levels.
The first level of our pyramid is Data. These are the business owners that keep all their reciepts in shoeboxes
and copies of their checks and expenses in another box. The boxes are only opened when something is going in or coming
out or at the end of the year to hand to the tax preparer.
The second level of our pyramid is Information. When the business owners have their accountant (if they
have one) prepare the reports, the expense reports, the revenue reports and the profit and loss statements. This information
can sometimes cause a business owner to make a sudden shift in ideas or priorities, to begin selling something he wasn't,
or stop selling something he is. Many business owners stop here in their quest for financial growth and while it is an important
step it is only part of the solution.
The third level of the pyramid is the level of Knowledge. This is what the business owner learns from the
analysis of his financial reports generated in the previous step of Information. One example of this is the well known story
of the man whose sole goal for his shop was to sell cowboy hats, he loved hats, it was his passion, but as he knew, boots
were an important part of the cowboy ensemble so a small section of his store was where he began selling boots. After the
first year he noticed that the small section of about 20% of his store space selling boots was outselling the 80% of his store
selling hats. He could have taken that information and used it with three options:
1. Stop selling boots because he didn't like dealing with them.
2. Buy more hats in hopes of them catching up to the boots department.
3. Start increasing the numbers and space for his boots department and grow his business to include what
the customers were buying.
When a thorough analysis of the financial information reveals such information and gives you the knowledge
you need to grow your business to the next level. The majority of business owners never reach this level, and for the most
part they do all right but their business reaches a stagnant saturation. In other words, they believe that if they had any
more clients, that they wouldn't be able to handle the work load. Why is this a barrier for some and a challenge for others?
Some take that challenge and begin to move into the final section of the pyramid.
The fourth section is Wisdom. A business owner who reaches this level can not only keep up with an increasing
number of clients, but they can also duplicate their success in different locations with different people. When a business
owner learns to duplicate his or her success and can begin to generate a revenue stream based on the efforts of those who
are working for him or her rather than on his or her own efforts, then there is a true success.
Homesoon Accounting can help you, the small business owner reach that level of success through an analysis
and monitoring of your financial statements allowing you to reduce taxes, increase profits and manage cash flows. That is
what we will do for you.
