When Exigo Business Solutions talks to any business owner about taking over their bookkeeping, there is one recurring question. How can outsourcing my bookkeeping make my business more profitable? What small business owners first think, is that they will save money on salary and benefits if they outsource or they finally won’t have to do it all themselves. That may well be true, but that is not the real reason that outsourcing your bookkeeping will result in more profits.
To make money in a small business you need to provide your products and services to enough people at a sufficient price to create a healthy cash flow. Then you need to keep expenses down so that you are consistently profitable.
When a person dreams of starting a small business, they think of creating the ideal product or service. They think of interacting with their satisfied customers and of out-competing the competition. The small business dream rarely has to do with making sense of the bookkeeping numbers. That is a shame, because so many small business failures result from issues that a good bookkeeper with a good bookkeeping system would spot before it is a problem. This also points to the fallacy of trying to reduce how much you pay for your bookkeeping. The most important thing that you should be getting from your bookkeeping is the insight into how the business is really doing.
The usual way to do the books is to list all income, subtract all expenses, and show the difference as profit or loss. This approach drives how small business owners handle cash flow, pay off loans, and invest in tools of business expansion. And, it tends not to help you control expenses.
Here at Exigo Business Solutions, we use a more innovative approach, called Profit First.
Here is the formula: income minus profit equals expenses! These are all the same numbers, just rearranged. So, what is the difference?
The difference is that the traditional way of doing your books creates one mindset and the Profit First method creates another. And the result of using Profit First is to make your small business more profitable, almost from day one.
Small business owners love what they do. They love to make things, provide services, interact with their clients, and see the business grow. They assume that they will need to borrow money to start and maintain their small business in the beginning stages.
This mindset sets the stage for a business with lots of work and not much profit. Because the cash coming in keeps increasing, the small business owner believes that eventually, the cash flow will catch up with expenses. Unfortunately, with an antiquated approach to bookkeeping, the owner never really sees where expenses could be cut without hurting the business and profits languish.
Outsource your bookkeeping to Exigo Business Systems and we will use the Profit First system to increase your profitability. First of all, we will help you allocate a portion of your monthly cash flow to profit. This goes to the bank and helps you build a reserve of pure profit. Then we work with you to break down your expenses. What are you doing in your business that is making money and are the things that are costing you money without any return on your time and capital? We will help you figure this out.
If you outsource your bookkeeping Exigo Business Systems and use the Profit First method, you will see profit in the bank right away and finally be able to recognize which expenses you need to cut back on to increase profits over the long term. Schedule a free consultation with us today and let’s work together to increase your profits.