Running a successful startup is fraught with difficulty. For the bold few who make the attempt, about a third, will go under within the first two years due to any number of issues. The good news is that some of these difficulties are less insurmountable than you might think. Instead, one of the most common mistakes young entrepreneurs make is failing to ask for help.
Despite your devotion to your startup, delegating certain jobs provides you with a few key advantages. As an entrepreneur, you have just as many hours in the day as the rest of the world -- and twice as many things to get done. Outsourcing areas of your business that don't create a competitive advantage frees up valuable time for you to focus on expanding your business (or just taking a few minutes to breathe each day).
A common cause of entrepreneurial failure is poor cash flow management, so it's fitting that one of the best positions to outsource is the bookkeeper role. In fact, bringing in an outsourced financial analyst could be the best business decision you ever make.
It's a Numbers Game
Most people don't become entrepreneurs because they like accounting, but you don't want to be one of the many failings to accurately keep track of numbers. An experienced outsider with knowledge of your industry will be able to identify areas of your business model that are ripe for improvement. According to a 2016 survey by Deloitte, more than a third of companies are planning to take advantage of this by outsourcing more of their financial activities.
Paro.io, a vetted network of CFOs and financial analysts, says that outsourced financial analysts "are willing to explain things to you and can discuss complex financial concepts and metrics in a way that makes sense to a nonfinance person. The models they've built provide you with insightful information about your business and help to frame and answer questions you have."
In addition to handling the numbers side of the equation, resources like Paro can provide peace of mind by matching you with on-demand finance professionals. Paro selects from the top 5 percent of finance freelancers to ensure your books are in good hands.
Rather than merely report your financial situation, outsourced financial analysts dig deeper to determine why you've landed in your current spot. If things are down, they find ways to increase revenue and reduce costs, and if you're financially stable, they help you develop a business strategy to stay that way.
If the following scenarios describe your business to a "T," it might be time to bring in an outside analyst.
1. You don't have the numbers.
This is the first and most obvious red flag. If you don't have the critical numbers you need to make important decisions about driving company growth, it's time to turn your nonexistent financial department over to a professional. It's tough when your financial situation is a big question mark, but spending the money on an analyst is the first step to getting your cash flow situation under control.
2. You can't hire a team of accountants, but you need the capacity of one.
Outsourcing a team is all about flexibility. Once you determine your budget, you can have the team work within it to give you an accurate picture of your financial situation. As things improve and you expand, you can increase the time allotted until you can afford to hire a full-time team if necessary.
3. You have the numbers, but you need a translator.
First, give yourself a gold star for keeping track of your accounts. The next step is to interpret the information you've gathered, and if you're unsure of how to do this, it's a good idea to call in an expert. Whether sales are up or down, an analyst will be able to read into the numbers to ensure your business is pointed in the right direction.
4. You're spending an excessive amount of time on accounting details.
It's tempting to save your business money by crunching the numbers yourself, but a trained professional will do the same work more accurately and efficiently, gaining greater insights as a result. Meanwhile, this frees up your time for coming up with ways to market your brand or design your next product line.
Convinced you should outsource? The beginning of your fiscal year is the ideal time to pass the torch to your new accountant, but it's also appropriate after filing your taxes or before filing taxes for the next year. Regardless of when you turn things over, don't rush the process of finding the right expert. Being patient will help land you a partner for the long haul, which can only help as your business matures.