Today, I’d like to talk about a book I’ve been reading- Scaling Up by Verne Harnish, a very influential leader for entrepreneurs . I wanted to discuss a very interesting section of the book especially for Entrepreneurs, whether it’s for a big or a small team.
A section of the book states, Accounting Underappreciated- the number one weakness of growth firms is Marketing. The second one is Accounting, which is often seen as an unnecessary evil as it keeps tax collectors at bay, invoice collection, pay bills and provide monthly accounting statements, and to review P&L. Accounting is often underfunded as a result because most businesses invest more on making or selling their products. However we’ve seen profits and cash double when we see people devote just a little more resources in Accounting. Adding just 1 resource allows the workload or enables the entrepreneur to see the following:
- Better Cash management
- Waterfall graphs to share more granular accounting data to make better decisions in the business. At CPA on Fire, we use a third party reporting software that keeps everything in a dashboard form, very graphically oriented so we get to the profit drivers and show results and trends clearly.
- Trends Analysis/ Early Warning system- to support better prediction since things move quickly in the business world.
- Two sets of books for the right reasons– having sets of books help the entrepreneur to focus on the very important aspects of your growth. The first is on Tax saving strategy to put your company in the most advantageous position and then the second would be the regular accounting and bookkeeping, and we usually run a 3rd book for ROIs to see both long and short term perspective.
That’s all for this week, I’ll catch you again next Friday!
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