The rate of failure of small business start-ups is well known. The Small Business Administration reports that among new firms with employees, 30% survive less than two years, and 50% don’t make it to five years. For sole proprietors, the survival rate is even lower.
What makes the difference between those firms that thrive and those that go out of business? It may be simpler than you think. One of the primary reasons for the early failure of small businesses is the lack of a robust and dependable accounting process. According to Brian Sutter, Director of Marketing at Wasp Barcode,
“46% of small business owners reported they do not work with an accountant. In fact, the assumption of many owners is that hiring an accounting firm just during tax season is enough. This couldn’t be farther from the truth. Not only do small businesses run the risk of owing more than anticipated in taxes, but they risk losing profits. In 2014, nearly a quarter of small business owners said they had lost track of whether a customer had paid them. Using tools like a software package or an online service to manage finances not only keeps track of all financials, but offers insight into how the business is performing and allows for accurate planning to guarantee revenue growth.”
In the recently published 2015 State of Small Business Report by Wasp Barcode Technologies, a majority of businesses with 11-50 employees cite raising capital and managing cash flow to be two of their main challenges.
From start-ups to established enterprises, businesses need accurate record-keeping and reporting systems that make their accounting simplified.To a business entity, cash flow is something that can make or break the business' ability to survive. Good cash management can improve a company's liquidity, reduce costs, and increase profitability. Further, professional support on financial issues such as initial accounting system setup, cost-containment, tax planning, investments, and employee benefit and profit-sharing plans can be critical to success.
