In Pursuit of Profit
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Our partners over at CFO Selections have a number of financial resources meant for executive leadership, one of which breaks down the business sales process and explains why a CFO (Chief Financial Officer) is important during the sale of a business. As you get closer to selling, we would suggest reviewing that resource and reaching out to them if you need help.
However, today we are going to look at some best practices for creating and preserving value in your business well before you start going down the path of selling it. Our team of accountants will give some tips on what you can do financially to set yourself up for success as you get closer to selling.
Do We Need a Chart of Accounts?
We’ll break down what a COA is and why you need one, give you some pointers on how to create a COA, provide an example of a chart of accounts for you, and give you some helpful reminders to be aware of as you create your own COA. Let’s get started talking about accounting chart of accounts fundamentals:
What is Growth?
For our firm in the early days, growth was not a given. In fact, we didn’t really plan to grow at all. Growth was much different in those early days. But because we had a very talented consultant group, we were able to land quite a bit of business and our team would get full. Unfortunately, at that point you have two choices – add to the team and grow organically or slowly lose market share as clients go elsewhere because you’re too busy. Now, 20 years later growth means somethings completely different. In today’s world growth for us means geographic expansion across the US. It is a very carefully planned strategy that we work very hard to execute. But our definition of growth may not be your definition of growth.
The author, Peter Cappelli, a professor at the University of Pennsylvania’s Warton School of Business, highlighted the ways in which he believes that pursuing financial goals causes businesses distort their hiring and training objectives and deprive employees of the benefits they deserve. His summary for the article was as follows:
Many HR practices in the United States are bad for companies, employees, and shareholders. Firms skimp on training and development, for instance, and tightly limit head count even when they’re understaffed. They increasingly move work to nonemployees, like leased workers, and replace pensions with more-expensive 401(k) plans. They do such counterproductive things because U.S. financial reporting standards treat employees and investments in them as expenses or liabilities, which make companies look less valuable to investors.
The solution he proposes is to change SEC reporting requirements, which would only help publicly traded companies, though he seems to indicate that these struggles are being felt by a broad array of business types and sizes.
Unfortunately, it seems this article misses one very important point – the ways in which accounting and HR can work together to benefit the overall business. As a result, we’d like to cover that aspect of the discussion to help remind companies that their accountants are not the villains in the discussion of hiring and employee retention.
We are in a time of change because that’s what the business world does – change. Whether innovation happens slowly or quickly and whether advancements are small or massive in scope, the world doesn’t stand still.
Amid the ever sweeping winds of change business owners must return to the core of management – asking the right questions to keep their businesses moving along at the same pace.
Only time will tell if/when a recession will occur. Right now, business owners are collectively holding their breath as they wait to see how the economy will progress over the course of the next year, which begs the question: “What should your business be doing during this waiting period?”
Knowing what you will do during an economic downturn is an important part of any risk management strategy, especially when economists are warning that the nation may be headed for a recession in the near future.
It all comes down to cash flow management. Cash flow is the tie that binds. Everything your accounting and finance personnel do is centered around managing the company’s finances to ensure they can acquire customers, run daily operations, pay staff, meet financial obligations, make necessary expenditures, and reinvest into the company. Simply put, they ensure that cash will be there today and tomorrow to keep the business going (and hopefully growing as well!).
Similarly, the recruiters at The ASP Team follow a process to help their clients find the right candidate who fits with their available accounting and finance position and culture – a work match!