It may not be where your hiring strategy goes first, but it should be.
90% of start ups fail. Often that’s because owners see it as their duty to do everything themselves, DIY everything. We sometimes romanticize that idea when we talk about Amazon starting in a garage – but let’s be real: it’s no fun to bootstrap everything by yourself. And even more important than if it’s fun or not, it can actively hurt your business. Why? Because if you’re bootstrapping everything yourself, then you’re not really focusing on doing the one thing that will help you succeed: growing your business.
No matter the industry, that sort of micromanagement is just not conducive to providing the best product or service your business or startup needs to survive. So what should you do? The answer is actually: Find a CPA you can trust and hire them! A CPA and an attorney are the two first and best hires that you’re going to make. An attorney will handle the legal structure and set-up, but what will a CPA do? We’re glad you asked.
There’s a common misconception that CPAs just do the tax math for their clients. It’s simply not true. A CPA is a repository of information. If they’ve been operating for any length of time, they’ve probably seen dozens of businesses in your exact same position – or worse. One of our accountants, Eric Joern, has a great anecdote about how a business owner received a huge lesson in creating a business plan.
“The new business owner did have his legal entity started, and he did open up a bank account in the name of the business. So those are probably the best two steps to start with. But he had no business plan, which was crucial – not just for getting a bank loan, but to have an idea of what his year one would look like and understanding where he’d end up,” Eric said. “I said OK, we need to take a step back and start from scratch. We needed to set expectations, instead of just going in and letting it fly and hoping for the best.”
Eric asked him some simple questions. Did he have employees? No, so payroll wasn’t yet an issue. But when asked about his taxes, his business wasn’t registered to collect and remit sales tax – so that’s already an issue. He didn’t have insurance or a way to track parts and invoice customers. Eric was able to refer him to an insurance agent, help him implement a shop management system, and encouraged him to register to file and pay sales tax. This was all in just an hour-long conversation.
It wasn’t the “math” the business owner needed help with, it was everything else. A CPA can give you direction and help you figure out a business plan.
There are two ways to compete for the customer: better prices and better service. A CPA can help you compete better on price. How? It’s not as if they’re sourcing your components for you. But, they can help you map the money coming in and out of your business. They’ll help you open up a QuickBooks account while also giving you a better understanding of the internal workings of your business. They’ll ask questions like:
Answering those questions, developing a business plan, and creating a pricing matrix will help you set your prices to where you can be competitive while still keeping a good margin for your goods and services. You’d be surprised at how many options you have when you’ve got a complete business roadmap.
When it comes down to it, a good CPA will still mainly focus on getting your books done. They’ll also get your people paid and file your tax return — all things that need to happen and things you don’t want to be worried about. That way, you can focus on offering great service to your customers, instead of worrying that you’re not filling out the right tax form, which might be something you’re not immediately great at (like most people). You can pass that over to your CPA – who actually IS good at it.
That’s a twofold recipe for success. Now you’ll free up time to compete on better service AND you’ll be less stressed about the financial goings-on of your business or startup.
There’s a saying we often use — Not hiring an accountant because it costs you money is like “jumping over dollars to pick up pennies”. Maybe you don’t want to hire an accountant because they feel too expensive. That’s simply not the case. Most likely, an accountant will save you money in the first year, and a TON of money over the lifetime of your relationship.
Here’s the other thing: the longer you wait, the more expensive it will be to untangle the mess of your finances and optimize your business. This isn’t to shame you as a business owner. You may not have the vocabulary necessary to be fully successful in this part of your business.
Are you ready to start saving money and growing your business? Contact us today for a no-pressure call and find out what we can do to help.