By Analytix Editorial Team
According to an Investopedia article quoting the U.S. Bureau of Labor Statistics, approximately 20% of new businesses fail in the first two years and only 25% new businesses survive for 15 years or more. This is also supported by a 2018 report from the Small Business Administration (SBA) Office of Advocacy, which states that roughly 80% of all businesses survive the first year. During the global fight against COVID-19 and economic prospects looking grim, it is likely that an even greater number of new businesses will struggle to stay afloat.
Business sustainability depends on several factors, the primary one being money. Financial health is the primary influencer when it comes to decisions regarding the business: expansion, hiring, purchasing, etc.
Professional CPA services can help businesses streamline accounting, leading to better financial planning and management, and eventually to success and sustainability.
Business Planning and Cost Evaluation
What are the tax obligations for a business within a particular structure? What are the relief measures in terms of exemptions or credits? What is the best way to ensure liquidity for a business?
Apart from providing answers to these questions, business plans guide operations and management, while also helping to bring funding and investors to the business. Financial projections, which contain the company description and management details, form an important aspect of a business plan, especially in relation to funding. Components like forecasted income statements, balance sheets, and cash flow statements can provide a snapshot of the financial health of a business, thus helping attract investors and other stakeholders.
Professional CPA insights can also help businesses define costs and better organize expenses. Because of mandatory regulations and compliance, many business owners spend a great deal of time researching permits, licenses, and other business requirements, rather than focusing on growth and profit. Partnering with accounting professionals allows you to focus on steering your company.
Research and Competitive Analysis
What are the typical income ranges for businesses your size, in the industry you operate in? What are the options available to your customers?
A nuanced understanding of competition and industry trends is important for your business to thrive. Professional CPA input can help guide a business in specifics like money management, income statistics, and employee pay to help ensure better cash flow within the system.
Professional CPA input are also current, real-time, and supported by hands-on experience, all of which contributes to building a realistic competitive analysis.
Funding and Management
Accounting and financial operations, however time- and attention-consuming, are vital to business sustainability and success. The availability of funds and cash flow management are the bedrock of success. Ensuring both will help your business to thrive, even in a weak economy.
Contrary to the popular belief, making a profit doesn’t guarantee liquid fund availability to a business, nor does it translate into well-managed cash flow. Funding flexibility and management is possible with diligent accounting and bookkeeping practices. In addition, a comprehensive understanding of tax obligations ensures judicious savings and investments.
Professional CPAs understand the economic landscape as well as applicable laws. This understanding can help startups and new businesses navigate obligations appropriately, while taking advantage of applicable exemptions and credits.
The Need for Proven Systems
Despite the multiple advantages that professional CPAs bring, it is important to tap into the right resources. At Analytix, we have been working closely with small businesses for more than a decade, providing customized and scalable business services, including professional CPA help. In the face of the current pandemic, we’re also offering assistance to small businesses who may be feeling overwhelmed and unsure.