Businesses are built on money – after all, it is the purpose of a business to generate income for its owners, executives, and employees. Yet, that doesn’t mean all the money your business generates is yours to use however you like. Unfortunately, not all entrepreneurs are cut out to run a business’s finances, and if you feel overwhelmed when looking over your business’s bank accounts, you aren’t alone.
From its very foundation, a business is in dire need of a finance professional to monitor its money. To prove you need to outsource your business’s books to a qualified finance guy, here is a guide to the complex world of business finance – and why you probably can’t manage it alone.
What Finance Departments Do
Even a finance department that consists of a single finance guy is vital to the stability of a business. At its least impactful, a finance department manages day-to-day accounting, which includes tracking transactions made by management – i.e. you. The finance guy will observe the business’s cashflow, ensuring there are enough funds to make the purchases you want. Typically, the finance department also governs the credit and collections realm of your business, confirming that customers are paying on-time and in-full.
Of course, most finance departments will do much more than simple bookkeeping. A few times every year, the finance guy will aggregate these records and to generate financial accounts. It is common for finance professionals to use the data they compile to generate financial forecasts of cash needs, so you will always know how much you have available to reinvest into your business. Additionally, because they already have a familiarity with the business’s finances, finance professionals can effortlessly complete your business’s tax forms quarterly or annually.
Those who are well-educated in finance can help your business secure enough capital through long-term financing options. Eventually, your startup might need backing from angel investors or venture capitalists, and your finance guy should be able to research likely candidates and draft the documents necessary to capture their cash. Though your finance guy shouldn’t necessarily be given free reign over the funding for your business, it will be beneficial to listen to his advice. Once your business becomes massively successful, your finance department will have an even more vital role in managing operations and assisting with growth. Using budgets and close supervision, your finance people should be able to accurately predict staffing requests, expansion opportunities, and cash needs before they occur. Staying aware and ahead of your business’s demands will help you stay solvent while maintaining growth.
Why This Isn’t a Time to DIY
As a business owner, you don’t need anyone explaining too you that you have too much to do. Even assuming you have secured enough funding through loans and investors to get through a year, you still have marketing strategies to develop, growth models to build, licensing to secure, products to test, sales to make, and customers to please – and that’s the least of it. The last thing you should want to do is add to your to-do list with a monumental task like finance.
Finance is complicated, which is why the good finance guys make an extraordinary amount of money. If you ignore these warnings and attempt to navigate the stormy waters of finance on your own, you might expect a few rough waves. For example, if your reports are incorrect, you could make poor business decisions that result in undervaluation of stock or high tax liabilities. Even worse, if numbers don’t add up, your stakeholders might find your business less-than-credible and pull out entirely, causing catastrophic failure.
The fact is that proper financing makes or breaks a business. If your books aren’t rock-solid – if you don’t know where your money is going and in what quantities it’s coming – your business will fail. Unless you are an entrepreneur with a background in finance, you simply don’t have the knowledge or skill to balance this complex task on your own. Like it or not, you need a finance guy to help you manage the money side of your business, and you need him sooner rather than later.
- Social Media11 months ago
Top 5 Advantages and Disadvantages of Social Media Marketing
- Management7 years ago
The man who destroyed his multimillion dollar company in 10 seconds
- Management2 years ago
The Five Common Materials Used to Manufacture Reusable Grocery Bags
- Innovation2 years ago
5 Ways How Globalization Impacts Small Businesses
- Management3 years ago
What Are the Penalties for Hiring Illegal Workers?
- Management7 years ago
Workforce Planning – Balancing Demand and Supply
- Management2 years ago
Pros and Cons of Offshoring
- Management6 years ago
If you fail to plan, you plan to fail
- Management1 year ago
7 Essential Tips For Opening a Mechanic Shop
- Accounting & Finance9 years ago
Advantages and Disadvantages of Taking Small Business Loans from Banks
- Management10 months ago
The Importance of Presentation Skills in Business
- Sales6 years ago
7 Steps To A Positive Attitude & Better Sales