There is an economic reaction to every action that happens in the world. A war fought thousands of miles away can affect your locality’s demand for a specific product. A change of trade laws in one country can cascade effects on supply chains worldwide. And these changes could go either way – they could boost sales and demand or create a slump in the market. Whatever the case, you, as a small business owner, have to be prepared to face the consequences and find a solution to any problem that such economic uncertainty throws in your path. But how does one prepare for a problem that is unknown and unpredictable? That’s where the expertise and experience of an accountant can come to your aid. Accountants do more than crunch numbers on an Excel sheet; they make sense of those numbers and find patterns in consumer spending and market trends that others might not see. This skill can help you navigate your small business through the tricky terrain of economic uncertainty.
Let’s see how accountants can help keep your small business on its feet through an economically volatile phase.
Counting on Accountants During Rough Times
While all businesses are affected by economic uncertainties, small businesses are more vulnerable. However, one good thing about such volatile economic times is that they eventually settle and are usually followed by a more promising phase of new growth opportunities. All you have to do is stay put and stay calm. And lending you a vital helping hand in this can be your accountant with a few timely plans made much in advance.
Accountants Can Help Financial Forecasting for Future Needs
Every figure in the accounting books of your small business tells the story of how your business is faring. And this story can only be properly and rationally translated into useful financial information by a trained, professional accountant. Using historical data, your accountant can study past market trends and the resultant consumer patterns. They also have quantitative and qualitative tools to forecast future demand and supply patterns. Accordingly, they can adjust your budget to set more realistic business goals and identify potential threats or opportunities in the future. Moreover, they can also tweak your existing business plan to make optimal use of your resources so that you have enough ‘emergency funds’ for when the times turn difficult.
Accountants Can Help Managing Cash Flow
A smooth cash flow is the bloodline of every business, especially small businesses. Disruptions in cash flow during economic uncertainty can make it hard to meet even day-to-day expenses. To avoid this, it is essential to have a plan for contingencies from the start. Accountants can analyze your financial statements and inventory ledgers to identify areas eating into your cash flow and suggest strategies to rectify the same. They can also negotiate better deals with vendors and suppliers to save more cash. They can even suggest ways to diversify revenue streams to balance out the impact of the impending volatility on your core business. These measures can create a cash flow contingency plan and stress test cash flow projections to ensure your small business does not suffer from internal overlooks in times of external turmoil.
Insurance and Tax Planning
As a small business owner, you always hope your business grows. At the same time, you are also aware that planning for the opposite outcome is also necessary. Economic uncertainty can hit businesses hard, making it hard for them to get going again. Getting your business insured can reduce the impact. Many types of insurance, such as property insurance and liability insurance, protect your business and its assets against fire, flood, and even legal or financial problems. Your accountant can guide you correctly regarding the type of insurance and the amount you need to insure your business.
Also, proper tax planning and compliance are necessary for a small business to survive and thrive. Tax laws and regulations keep updating, and navigating through these complex laws can be frustrating even in times of economic stability. A professional accountant can make this task easier by guiding you about the various taxation rules and which incentives or deductions your small business is eligible for. The money you save through such shrewd tax planning can be better used for fortifying your business against future economic threats by channelling them towards your emergency fund or by investing them smartly.
Adapting to The Market Environment
Despite its obvious problems and fears, an economic downturn can be advantageous. The changed market environment could be an opportunity to explore new business avenues. Economic uncertainties very often lead to changes in consumer preferences and buying patterns. Also, not all markets are equally affected by a common problem. While some take a tumble, others are relatively less affected, and it is such markets that can present an opportunity to expand your business. By reviewing these changes and adapting your small business to these changed market conditions, you can upgrade and innovate your products and services to meet new consumer demands. With technology bringing even distant lands within a click’s distance, changing to an online model for enhanced market penetration could also be an option. Your accountant can be an invaluable asset here as not only can he or she help you come up with ways to innovate and expand, but he or she can also advise you on tax implications and other financial nitty-gritty.
As mentioned before, an accountant’s job goes beyond just tallying numbers. By making him a part of your core planning group, you can use his expertise to maximize your monetary resources. Even the slightest change can snowball into significant savings, which can eventually help you during tough times.
Contact Edelkoort Smethurst CPAs LLP in Burlington to Help Prepare Your Business for Economic Uncertainties
Talk to a professional accountant to discuss their services to help you improve your business financials. At Edelkoort Smethurst CPAs LLP, our accountants and bookkeepers can provide services such as preparing and analyzing books and business consulting. To learn more about how Edelkoort Smethurst CPAs LLP can provide you with the best accounting expertise, contact us online or by telephone at 905-517-2297.