Have you heard the following myths regarding accounting and finances?
- I need a bookkeeper to clean my books so I can file my taxes?
- I don’t want to spend time forecasting the unknown. I need to just do the work.
- I am going to outsource everything I don’t need to know any Accounting & Finance.
- I have to spend money to make money.
- Cash is king so that is all I will look at.
- Starting a business is risky because most businesses fail.
- I am not large enough to worry about CFO-type work such as strategic planning, financial reporting, and forecasting. I will hire that position when I can afford it.
- I am a Creative, I am not good with numbers.
- All I need is a good product and service and I can get the cash I need.
- I can clean up my finances later, right now I need to meet my customer needs.
Why the Misinformation?
There seems to be quite a bit of wild misinformation out there. These are the kinds of things I hear from entrepreneurs, prospects, and people that I meet while networking. Sometimes they don’t say these exact words but this is the way they behave. Where do these beliefs come from?
Some of these ideas come from business school. Students are asked to declare a major and focus on accounting, finance, information technology, marketing, management, or operations. Most of the time they have to take the basics in each subject, but then they forget most of it after they finish the course. Students tend to focus on their major and let the other subjects slide.
I blame accountants for some of the problems. Accountants haven’t properly communicated the value of timely accounting and financial analysis and forecasting to the business community. For most people, the term CPA is synonymous with doing taxes. The thought is that an accountant will be hired to do the taxes because that is the end goal and purpose of having books. I know I am generalizing here. As a CPA, I'm working to change this perception.
Common Quotes and Phrases
I think certain phrases such as “Cash is King” or “Outsource what you don’t want to do” are misunderstood. There is some truth to these statements; however, if you interpret “Cash is King” to mean focus only on cash, then you might only check the cash balance in your bank account and neglect to focus on other financial elements. This is very short-sighted because a large bill or payment may be coming up due. Accruals are necessary to account for this. Cash in the bank does not tell you the whole story.
Some people are still thinking with a 20th Century mindset. Years ago, it was harder to start a business. The Internet and social media hadn’t been invented. A business needed a large budget for proper television, radio, or print marketing. It was harder to work remotely. Technology and computers were expensive, and only large businesses could afford them. People worked at companies for a long time and earned a nice pension. Workers were able to retire at 65. The 21st century is very different. It is much easier to start a business, and startup costs are relatively inexpensive.
How Can We Put a Stop to These Myths?
In my book, Forecast your Future, addresses these myths. I give practical financial advice regarding forecasting your revenue, managing your expenses, controlling your cash flow, and much, much more. The book is available in many formats including Kindle, Audiobook, Hardcover, and Paperback.
Bender CFO Services wants to help you look past these myths so you can gain better insight and command over your finances. Curious about other ways your business or marketing agency can save money and be better positioned for the future? Contact us today.