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Most businesses are started by someone who mastered a trade or is a wonderful salesman. For example, a Carpenter becomes a contractor, the mechanic starts an auto repair shop, a welder starts a fabrication business or a great salesman decides to sell the product for his own business rather than someone else's company. However, none of these guys have any training in running a business. As part of the natural progression of the business, the owner ends up doing most of the work, works more hours than anyone else and the business becomes owner dependent. The owner feels that without his/her expertise, there would be no business! The problem is, the owner has to be a salesman, a production person, and a financial expert in order to make the business succeed. That is impossible for any one person to do! In order for a business to succeed and grow, the business owner must create an organization with three strong legs that are not dependent upon him for everyday events. Envision a three legged table. One leg represents sales and marketing. It is responsible for selling products to new and existing customers. The second leg represents operations. This leg produces the product that was promised by the sales and marketing leg. The third leg is the finance and bookkeeping leg. This leg is responsible for billing, collecting, compliance with tax codes, and providing money for the business. The 50% of businesses that fail in the first year, fail primarily because the owner could not do all three critical functions in the business in order to succeed. The remaining businesses that fail in the next five years typically fail because they cannot build their business like a well balanced three legged table and the owner runs out of energy trying to keep the table top balanced. What most business owners fail to realize is that the table can be built as tall as you want. Each leg just needs to be lengthened in unison or the table top begins to lean and fall over. So why can't business owners create a balanced three legged table? Typically its lack of knowledge that a three legged table is necessary to be successful in business. Also, improper allocation of limited funds causes the table to become unstable. Most business owners allocate their resources to sales and operations. They make sure their employees get the equipment, training, and materials they need to sell and produce the best product possible. As sales grow, the owner tosses a financial recording software package to an administrative employee with limited finance training and experience and tells them to get it done! At this point it's not hard to see what is happening. The sales and marketing team become polished at what they are doing and sales are increasing. The operations group is keeping pace with production by purchasing more equipment and getting more employees to keep pace with the orders and the administrative employee is doing the best he/she can with the limited skills and training that they have. After a while, the business starts to have delinquent accounts receivable, cash flow is nonexistent and the company can no longer pay its bills timely. Now the business owner starts to run around trying to figure out how to get more money to keep the business going without a clue as to where to go to get the money and with no idea as to what would be a good solution to the cash flow problem. Now the three legged table is out of balance and the table top is falling. To maintain the strength of this third leg (finance and bookkeeping), and maintain the balance of your company, you'll need a financial management plan to keep your business level. At Ledger Solutions, we built our business with the three legged table in mind. Most businesses don't have the resources to obtain the financial knowledge necessary to grow with their business. The cost of a clerical employee is usually bearable by most businesses, but the cost of a fully trained Bookkeeper and then a Controller and a CFO are beyond what most can afford. With Ledger Solutions, you can find the help you need, when you need it! With a strong financial leg to your table, you can concentrate on building your customer base and your product line. With that kind of focus, you can't help but grow your business. So now you have a decision to make. Do I want to keep struggling with my business or am I going to look at it like a three legged table and get the help I need to make it grow? Let Ledger Solutions bring stability and balance to your finances by contacting us today.
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