The Five Common Mistakes Small Businesses Make At Tax Time

Small Business Accountants | NetSurplus

Growing a small business is difficult at the best of times, let alone in a challenging economic environment like we currently have. And yet at the same time it can be an exciting endeavour, and if you’re successful, the sky really is the limit.

Being able to successfully grow your small business comes down to understanding where the challenges are, and being able to overcome them – or find support from the right business advisory services with experience in helping small businesses to grow.

Just some of the challenges that small business owners face when targeting growth include:

Infrastructure and Equipment: One of the most significant challenges a growing small business faces is the capital expenditure costs that come with setting up a business or growth. As a company adds more people and services more customers it needs more technology and equipment, and these have a significant up-front cost and that can significantly affect cash-flow, or require finance to support.

Hiring and Workforce: Expanding a business often requires hiring new employees or increasing the existing workforce. Recruitment costs, including advertising, interviewing, and onboarding, can add up quickly. Additionally, expanding the team means additional payroll expenses, benefits, and potentially more space and resources to accommodate the growing workforce. Finally, providing training and development programs for new and existing employees also incurs costs but is crucial for maintaining productivity and ensuring quality standards.

Marketing and Advertising: For a business to grow, it needs to find new customers, and that means investing in marketing and advertising initiatives. Costs here can be wide and varied, from having specialists build and fully optimise websites, to paying for creative assets to be created, and then paying for the placement of ads.

Research and Development: Small businesses need to find their point of competitive differentiation to grow and compete with other, related businesses. This typically involves research and development – R&D. R&D activities include market research, prototyping, testing, intellectual property protection, and hiring specialised personnel. These all have significant costs attached, because of the high levels of skill involved.

Inventory and Supply Chain: Expanding a small business typically involves scaling up inventory levels to meet rising customer demands. Increased inventory requires additional storage space, carrying costs, and potential risks of overstocking or obsolescence. In addition, expanding into new markets or geographical areas may necessitate establishing or optimising supply chain networks, which can involve costs such as logistics, transportation, warehousing, and inventory management systems.

Regulatory and Compliance: As businesses grow, they often encounter a more complex regulatory environment. Compliance with various laws, permits, licenses, and industry-specific regulations can be expensive. Small businesses may need to allocate resources to ensure legal and regulatory compliance, including consulting services, legal counsel, training programs, and documentation. Failure to comply with regulations can lead to fines, penalties, or even business shutdowns, highlighting the importance of investing in this aspect of growth.

Financial and Operational Management: Managing the financial and operational aspects of a growing business requires additional resources. Hiring professional accountants, bookkeepers, or financial advisors becomes essential to handle more complex financial statements, tax compliance, budgeting, and forecasting. Implementing enterprise resource planning (ERP) systems or specialised software may be necessary to streamline operations and enhance efficiency, but it comes at a cost.

Scaling Customer Service: As a business expands, maintaining high-quality customer service becomes increasingly important. This may involve hiring additional customer service representatives, implementing customer relationship management (CRM) systems, improving response times, and investing in training programs. Ensuring customer satisfaction and retention is vital for continued growth, but it can require significant financial investments.

Scaling for Unforeseen Challenges: Growing a business is not without risks and uncertainties. Setting aside funds for contingencies, such as economic downturns, industry disruptions, or unexpected emergencies, is crucial. A business that doesn’t have the capacity to cover the unexpected will generally find that an unexpected event causes any growth to stall and fail, as the business simply runs out of money.

Across all of these challenges, finding the right small business accountant that offers the right business advisory services is the solution. From budgeting and cashflow managements, to assistance with structuring and executing the business plan and identifying opportunities for growth, good business advisory services are not transactional, but rather strategic. You want a partner that will see themselves as an arm to your business.

Netsurplus’ services include supporting your business to make insightful decisions every step of the way. We are the ideal business advisory services for any small business that has growth ambition, so contact us today to start the conversation.