Top Three Accounting Challenges Facing Small Business Owners

New Year or the end of the year is typically the time when most businesses stop to review and plan.

However, most businesses need to stop more regularly than once a year to see what is working and what isn’t. Every businesss faces challenges. But the successful ones acknowledge the challenges and say “right challenges, lets be having you.”

A challenge faced is a challenge halved.

Thereafter you have two choices:

1. to do something about it or

2. keep the status quo.

Lets look at the top three accounting challenges facing small business owners today.

1. Cashflow

Cash flow management for every business can be harder than the world’s most difficult crossword. Balancing who you owe, with who owes you is not easy. You have to manage all that on the careful scales of time.

Cashflow, without a shadow of a doubt, is one of the biggest issue facing business owners. Getting a handle on your cashflow will be the best gift you give to your business. For that to happen, you need to analyse and then manage the flow of cash in and out of your business on a weekly, monthly, and annual basis. Ideally you should also create a cash flow forecast for at least three months ahead so you and your senior team are aware of when cash shortfalls are likely to occur. This will allow you to cover your working capital requirements.

If you are encountering problems with cashflow in your business, you need to identify and address the underlying problems. Address these issues to avoid a similar situation occurring again in the future. Cash flow management is not a short-term fix to a problem but should be part of the very fabric of your business.

2. Not enough Focus & Accountability

I put these two challenges together as they are related.

By focus, I mean, SME’s need to know what they need to control. You need to know your costs, inside and out; you need to know debtor days and creditor days. You need to know profit margin, gross margins, breakeven sales, fixed costs etc. For instance, you can increase your profit margin by raising prices. You can do this without losing valuable customers by offering, for example, specific packages or bundles of goods or services.

You need to know your numbers. It is through focusing on the numbers that you can move your business forward. Using “guestimates’ can only take you so far. Running a SWOT analysis can be very beneficial to your business where you can assess the strengths, weaknesses, threats and opportunities. You can set key performance indicators (KPIs) to monitor targets for your business and your staff.

I can’t stress the importance of doing management accounts on a regular basis. You get to keep your finger on the pulse of your business. You can then make informed decisions on steering your business forward.

However, often you need someone to hold you accountable to adding up the numbers and assessing them. Weeks quickly give into months which quickly give into quarters. Stopping and looking at the numbers is important. A very helpful approach is to work out your break-even turnover figure which are the amount of sales required to cover total expenses without making a net profit.

It can be difficult when you’re managing a business day to day to stop and look at the big picture. But remember what I said time and time again, “Look long-term, but live short- term”. You need to keep looking at the long term when living in the short-term.

3. Lack of Systems

Focus on what you can control. There is a lot of uncertainty out there – Brexit, the economy, talent shortage, world affairs. You can’t control that but what you can control will allow you to grow. The only way to set yourself up for success is to introduce systems.

One great way is online accounting software, a complete bookkeeping and accounts solution like Clarity allows you to input data in a way so that you know your current financials. It allows you to focus on the numbers for a few minutes on a monthly or quarterly basis. This gives you control, gets you on top of your financials, in particular your cashflow and profitability.

Accountability and focus can be as little as 30 minutes in a month, once you have the right systems in place.

Now, these three challenges don’t seem such big challenges after all, do they? Once you have a solution, an organised way to manage your challenges, then every year can be your year.

So which choice will you make – keep the status quo or do something about it?

Call us if you want to do something about it – 021 482 4723, email us at or request a call back below.