Recently, I met with a small business owner to discuss the state of their organization’s accounting function. During our discussion, they expressed a common concern among growing businesses: they felt like they were flying blind when it came to reporting and data. As their organization expanded, they transitioned from the owner personally handling financials to relying on a bookkeeping service. However, while the business scaled rapidly, the financial processes did not evolve at the same pace.
The Growing Pains of Financial Management
For many small businesses, financial management in the early days can be relatively straightforward. When operations are lean, it’s easy to operate with a simple mentality:
- Vendors and employees are paid.
- Customers are paying their invoices.
- There is money in the bank.
By these simple measures, it appears that everything is going fine. However, as the business grows, this approach becomes unsustainable. The company’s financial complexity increases with more customers, vendors, projects, and employees. Before long, business owners find themselves in a position where they lack visibility into key financial insights.
This particular business owner had reached that realization—their company was operating blindly. They had no insight into their monthly financials, project costs, or key metrics that could highlight areas for improvement. This lack of visibility is a dangerous place to be for any business. Without proper financial oversight, an organization may face cash flow shortages, inefficiencies, profitability issues, and even compliance risks.
So, how can a business overcome this roadblock and step out of the dark?
The Key to Overcoming Financial Blind Spots
When it comes to accounting and financial management, there is no substitute for having a knowledgeable, competent individual—either on staff or contracted—who can guide the organization toward financial clarity. This person should have significant experience in the field and be capable of identifying weaknesses, improving processes, and implementing best practices.
Hiring an experienced professional is not just about keeping the books—it’s about:
- Establishing strong financial controls.
- Creating reliable financial reports for decision-making.
- Improving cash flow management.
- Identifying areas for cost reduction and profitability improvements.
- Ensuring compliance with tax and financial regulations.
Bringing in financial expertise allows a business to right the ship and establish a structured financial system that supports rather than hinders growth.
Key Areas for Discussion and Improvement
A business looking to improve its financial reporting should start by addressing critical areas of weakness. These include:
1. Reviewing the Current State of Affairs
The first step is understanding where the business currently stands. Questions to ask include:
- What financial software is being used?
- Is it outdated or inadequate for the company’s size and needs?
- Are financial reports being created and shared with leadership?
- If reports exist, are they clear, detailed, and useful?
- Who is responsible for financial management?
- Are current bookkeeping or accounting personnel equipped to handle the business’s needs?
A thorough assessment will reveal gaps and inefficiencies that need to be addressed.
2. Implementing Financial Reporting Best Practices
A business should establish a structured approach to financial reporting by:
- Generating regular financial statements (profit & loss, balance sheets, cash flow statements).
- Tracking job costs and project profitability to understand where money is made or lost.
- Developing Key Performance Indicators (KPIs) to monitor financial health.
Without structured financial reports, a business cannot make data-driven decisions—they are left guessing, which can lead to costly mistakes.
3. Selecting the Right Accounting and Reporting Software
Many small businesses outgrow basic accounting tools as they scale. Investing in a modern, cloud-based accounting system can drastically improve reporting capabilities and data accuracy.
Choosing the right software can streamline financial processes, reduce manual work, and provide real-time insights into a company’s financial health.
4. Establishing a Strong Financial Team
As a business grows, financial management becomes more complex. Depending on the company’s size, leadership should consider building a team that includes:
- Staff capable of handling daily transactions.
- A Controller to oversee accounting operations and reporting.
- A CFO (Chief Financial Officer) for strategic financial planning.
If hiring a full-time team isn’t feasible, outsourcing financial functions to an experienced fractional CFO or Controller can be a cost-effective solution.
5. Setting Up a Financial Review Process
Financial reports are only valuable if they are reviewed and acted upon. Leadership should establish a monthly financial review process to:
- Analyze trends and identify areas of concern.
- Assess project and operational costs.
- Ensure the company remains profitable and financially stable.
This structured approach prevents financial surprises and allows leadership to make proactive, rather than reactive, decisions.
Navigating Toward Financial Clarity
For many small business owners, letting go of financial uncertainty is a challenge. It’s easy to get caught up in the daily operations and overlook the importance of structured financial management. However, failing to address financial blind spots can hinder growth, cause cash flow problems, and create unnecessary stress.
By bringing in expertise, implementing financial reporting best practices, and leveraging modern accounting tools, a business can transform its financial function from a source of confusion to a strategic asset.
If your business feels like it’s operating in the dark when it comes to financials, it’s time to turn on the lights. Investing in better reporting, financial controls, and expert guidance will not only provide clarity but also position your business for long-term success.
Contact Bringman Consulting today to learn more about how we can tailor a program to address your blind spots.