5 reasons why entrepreneurs need accountants
4th December 2015
Sooner or later, every entrepreneur must consider sharing their baby when scaling their business from a one-man band to a small team. Although the shift away from a DIY mentality can be hard to stomach, knowledge gaps should be outsourced to maintain growth momentum. One of the most crucial ingredients in any start-up model is money and advice: an accountant can provide both. Tasks like managing a budget, forecasting costs and regulating assets are all time-intensive that entrepreneurs could do without. There are many reasons why entrepreneurs should hire an accountant early on, here are just five.
- An account will discuss realistic forecasts
Any business owner will have their own set of grand ideas on where the business will be in a year's time and the steps they will make to reach that growth point. However, without a pragmatic element, these ideas can easily run into unrealistic realms. Business owners tend to sway on the side of risk-taking while a Certified Public Accountant (CPA) will take a cautious approach. The accountant will assess current and future operating costs, assets and demand using analytical tools to align an original vision with the real world.
- Time management will improve
The right accountant will take the time to get to know a business: goals, structure, and business needs, to offer the best business analysis and a different, potentially valuable perspective. This information can then be used to execute tasks that the owner is less familiar with, and thus freeing up time that can be dedicated to other areas of the business.
- Projections will help you to uphold your business commitments
Entrepreneurs have a range of commitments to uphold: fixed assets like office space and machinery; fixed payments over time, for example salaries; borrowed money; and working capital investments or start-up capital. An accountant will keep on top of the nitty-gritty running costs so that a business can meet its monetary responsibilities and stay in the good graces of lenders.
- They understand the industry
Financial rules and regulations constantly change, and with a recent influx in budget statements, businesses have been kept on their toes during the past year alone. An accountant will understand current compliances and upcoming changes, such as wage increases and tax reliefs. This information may affect finances, therefore it is vital that there is someone who knows their numbers and can discuss how best to move forward.
- A better understanding of annual success and waste
According to research in October 2014, the UK business survival rate is lower than before 2008, with more than half of new businesses failing within the first five years. Key reasons for this high failure rate came down to the cost of running a business today and cautious bank lending. The high rate of start-up loss across the UK highlights why entrepreneurs need someone who can identify waste areas to free up cash. Year-end business accounts are often long and confusing to untangle, however, these documents are vital to gain an understanding of how business improvements can be made. An accountant will be able to evaluate transactions over the course of the year, and track progress by measuring profits and expenses.
Grafton Banks Finance specialises in the provision of Accountancy and Finance staff to a wide variety of businesses in Sussex and Surrey, from part-qualified to finance director level. Find out how you can lend your expertise to the next generation of business owners by giving us a call on 01273 229 499 (Brighton) or 01737 300 933 (Reigate).