BY KELLY REINHART
It might surprise a lot of people to know
the number of fast growing small to mid-market
companies in their community. With the
advancement of technology over the past few
decades, a small local business can become
a national competitor or an international
business player in a short period of time.
This has created a multitude of companies
that are born of a good idea or unique skill
that can potentially sky rocket from sales
of say $500,000 to $2 million and in turn $5
million in a relatively short period of time.
This inevitably leaves the business owners
scratching their heads wondering, “how do
I run this thing?”
Interestingly almost every company in this
predicament suffers from at least one common
growing pain: Insufficient accounting
resources and upper management guidance.
As the business grows it becomes inefficient
for the owner or owners to wear many hats
and do it all as they have done in the past.
The pressures demand that the owners
focus on key driving forces behind their business,
which is what made them successful to
begin with. Whether their secret sauce is the
best Wigit in the world or a unique service,
they are forced to focus on the delivery of
this identifier to their growing customer
base. The rest of the duties they previously
patched together such as accounting suffers
greater than before. This can lead to dangerous
result for a fast growing company if left
A typical small business may have an accounting
budget of $1,500 to $3,000 a year
in tax preparation and perhaps some small
business advice here and there. It is unlikely
that once a business grows into the $2-5 million
gross revenue range that they are going
to expand this budget to include a $150,000
CFO and $100,000 on an accounting staff.
The problem is that they are typically at a
point in their growth where they need some
of these skills and this advice. As a business
undergoes rapid growth the need for financial
feedback on a timely and consistent basis is imperative, or the boom could be
short lived. The larger a business becomes
the more it must lean on accounting data
and feedback. So how does a transitioning
company get the financial tools it needs
without the $250,000 price tag?
They have to partner with an accounting
or consulting firm that facilitates a range of
services that can patch all of the holes, from
the CFO’s insight to the staff accountant’s
processes and data.
The key word and concept here is “partner”.
The accounting world has undergone
change just like all the other industries that
technology has impacted. For consulting and
multi-service accounting firm’s technology
has created an environment rich with real
time collaboration with clients.
Through tools like cloud computing, online
access and SAAS environments these
firms are able to partner with their clients to
effectively outsource increased accounting
functions seamlessly and effectively. This
fits into the growing company’s business
model perfectly. As the company grows the
service grows with it. Most importantly it provides the range of skills the company
Again, the secret is “partner” which means
that the firm you choose is in it together
with you, continually changing as the needs
change. A firm that will provide the most
basic needs such as accounting staff work
to the most complex concepts akin to a CFO.
The bad news is that the meager accounting
budget is a thing of the past. As a company
quadruples its sales its accounting budget
should more than quadruple in relation to
what it was before. So expect the $2,000 a
year to turn into $10,000 to $20,000 to find
a qualified outsourced accounting partner.
A fast growing company can by an exciting
ride but it always comes with some dangerous
pitfalls. Investing in the right accounting
resources can help you avoid some of them.
Get what you need out of an accounting
partner and make sure it includes solid
CFO type guidance as well as solid nuts
and bolts accounting or you will left always
Reinhart, CPA, is the managing partner of
Reinhart & Associates.
Photo Courtesy Reinhart & Associates