The Flywheel Effect
The Flywheel Effect is a podcast designed for entrepreneurs, small business owners, and professionals seeking to win in luxury home services businesses. Each episode dives into the nuances of growth, profit and prosperity, offering insights on leveraging data for informed business decisions. Through a mix of candid conversations and interviews with industry veterans, suppliers, and service providers, the podcast aims to inspire listeners to think bigger and transition from technicians to visionaries. This podcast is a guide to refining business acumen and achieving competitive excellence.
The Flywheel Effect
E16 - Hiring and Managing Great Accounting Talent
In this episode of The Flywheel Effect, Brent Sonnek-Schmelz and Matt Bernath tackle the crucial topic of accounting talent for small businesses. Brent and Matt emphasize that strong accounting practices are essential for growth and offer practical advice on how to build a reliable financial team.
Matt explains the common mistakes business owners make when hiring accounting personnel, such as prioritizing trust over capability. He provides insights on establishing systems for oversight, creating clear KPIs, and the importance of hiring a bookkeeper sooner rather than later.
Brent and Matt encourage business owners to develop a basic understanding of financial statements and key metrics. They also recommend seeking guidance from trusted advisors like CPAs or outsourced CFOs when needed. This episode offers essential advice for any entrepreneur looking to build a solid foundation for financial success.
Key Insights
Capability Is Critical When Hiring Accounting Talent
While trust is important, don't make the mistake of hiring accounting talent based on trust alone. Capability is equally important to ensure accurate bookkeeping, insightful financial reporting, and the long-term financial health of your business. A capable bookkeeper can help you identify profit opportunities, manage cash flow effectively, and make informed decisions to drive business growth. Don't let a lack of financial expertise prevent you from making a strategic hire. Seek help from a trusted advisor if needed to assess capability and ensure a good fit for your business.
Investing in Accounting Talent Is Investing in Profitability
Viewing accounting solely as a cost center is a mistake. Investing in skilled accounting talent is an investment in your company's profitability. Strong financial management leads to better cash flow management, smarter resource allocation, and the ability to identify growth opportunities. Accurate and insightful financial data allows you to make better business decisions and can even improve profitability by 1-3% of revenue, according to Matt.
A Little Financial Literacy Goes a Long Way
You don't need to be a CPA to run a successful business, but having a basic understanding of finance is crucial. Take the time to learn how to read and understand financial statements such as the profit and loss statement (P&L) and balance sheet. Familiarize yourself with key performance indicators (KPIs) relevant to your industry. This knowledge will enable you to have more productive conversations with your bookkeeper or financial advisor and make informed decisions about your company's financial future.