"Aren't You Done Yet?!?!"

“Why is it taking so long to get the books done?!?!”

Why Accounting Isn't As Easy As It May Seem...

Many accountants are often asked why it takes so long. This is because many people are under the impression that accounting isn't that complicated. These people assume accounting is just adding and subtracting with a little division from time to time. That may be true in some circumstances; but, that's like saying auto repair is just turning a wrench. Like most occupations, there is far more to it.

When a business is small, accounting is generally fairly simple. As the business grows and sales increase, everything becomes more complex. Hiring people and doing payroll means understanding when a person can be a contractor or must be an employee, what taxes must be paid, what insurance coverage is required, and what withholding is necessary. Selling products will require collecting sales tax and setting prices to be profitable. Manufacturing products will require determing costs of good sold and how to classify inventory at different stages of production. When you buy assets like real estate or equipment, depreciation and amortization need to be calculated and adjusted over time. And if you have multiple owners, raise money, have investors, or take on bank loans or other debt, there is a great deal of complexity involved in determining who owns and who is owed what throughout the year.

Another consideration with accounting is knowing the legal requirements and regulations. This can get overwhelming very quickly as some things that seem simple are more complicated than they seem, especially when federal and state governments have different rules at different times. These rules also tend to change periodically, which means needing to stay current with the new regulations. All of these factor into taxes as well as making sure the company is in compliance so it can avoid fines, but there is far more value to accounting that that.

If an accountant is doing their job right, they're doing more than just paying taxes. The deeper understanding there is of what the company does and how the company operates, the more value the numbers have in not only understanding the impact of past decisions, but also in determining the opportunities and best options available for the business to make going forward. Does it make sense to change business structure? Will decisions increase or decrease the value of the company? Does it make sense to start a new copmany?

All of this, however, depends on the owners of the business understanding that accounting is a valuable tool to help them understand their business. It requires communicating with the accountants, answering their questions, and providing not only the numbers but the reasons for those numbers. When accountants have that, they can help the managers and owners understand what's really happening with their business and to make more informed and better decisions faster.

Accounting is more complex than you think, which means your accountant is helping to make it look easy. But is your accountant helping you understand what the numbers mean? Are they helping you make better decisions? If not, give Brightleaf a call and let's talk about how we can help your business.

- John Thrush

Two Businesses (or More) for the Price of One!

Using DBAs to Expand Your Company's Potential

The Same Company Can Do Business Under Multiple Names

As small businesses mature and grow, they often find that differences start appearing in the clients and customers they serve. This often results in having to market different product and services to different segments in different ways. This can get complicated, particularly if a company has developed their brand in a way that is very successful for a specific segment that may not necessarily translate to other segments.

A way that a company can handle this divide is to use a different trade name. This is commonly referred to as a DBA, or "Doing Business As”. A DBA allows businesses to operate under a name that resonates more clearly with or clarifies a type of service aimed at a target audience. A strong, recognizable name can be a powerful marketing tool that makes it far easier to attract clients seeking specific services.

For instance, The Gap, Inc. started out selling as Gap, but also owns several other brands targeting different segments. These brands include Banana Republic, Old Navy, and Athleta. All are part of the same company, but "do business as" different names with different levels of product quality at different price points.

This is not restricted to large corporations. Brightleaf Consulting Group started out as a strategy consulting company; however, we started providing accounting services shortly after starting out because we found that many small businesses had issues with their books and weren't using them as a management tool. Because people don't necessarily associate accounting with consulting, we registered a DBA as Brightleaf Accounting to more clearly communicate these services. This not only helps in building a distinct brand identity but also aids potential clients in quickly identifying our expertise in accounting.

Operating under a DBA provides legal and financial flexibility. It enables a company to expand its service offerings without the need for establishing a separate legal entity, allowing the company to adapt and expand services while avoiding some duplicative expenses such as a different set of books, a separate tax return, a different office, different IT or telecommunications services, etc.

Because a DBA often targets a different market segment, it often means that marketing efforts will be somewhat different in order to make your services more relatable and accessible to clients. This allows the company to craft tailored marketing messages and branding strategies that align closely with the needs of target clients and to increase client engagement.

From a financial management perspective, a DBA simplifies banking and transactions by using the same bank accounts to process financial transactions under multiple names. This streamlines financial operations and presents a professional front to clients and vendors.

This varies from state to state. For example, filing for a DBA in New York is done at the state level. In California, this is done through the County Clerk's office of the County where the business is located (or in Sacramento County if the business is located out of state). This can often be done online, but some states still require that a paper form is filled out and mailed in.

If you're interested in knowing more or need assistance setting up a DBA, Brightleaf Consulting Group would be pleased to help!

- John Thrush

Seeking Investment For a Startup? Do Your Market Research!

Being Prepared For Raising Funds For A New Venture Means Doing The Research to Understand The Market

As a company that has created business plans and investment packages to attract investors and get debt financing, we can't stress enough the critical role that market research plays in convincing investors or lenders to back a new venture.

We’ve seen many early stage companies and startups struggle to gain traction, not because their product or service was lacking, but because they failed to do their homework on the market. Investors are bombarded with pitches every day, with founders and managers claiming their idea to be the next big thing. To truly get the attention and respect of investors, you need to demonstrate a realistic understanding of the market you're entering. This is where market research comes into play – it's the foundation upon which you build your entire investment case.

Think about it from an investor's perspective: they're putting their capital on the line and they want assurance that they're not throwing their money into a black hole rather than investing in something that will multiply that capital. Market research provides greater perspective and a stronger chance by validating the market opportunity, quantifying the potential customer base, and identifying the unique selling propositions that will set your company apart from the competition.

Market research isn't just about crunching numbers and spitting out fancy charts and graphs (although those are certainly important). It's about telling a compelling story – one that paints a vivid picture of the unmet needs in the market, the pain points your customers are experiencing, and how a company’s offering will resolve those challenges and mollify that pain.

Investors want to see that you've done your due diligence in understanding the competitive landscape. They want to know that you've identified the key players, analyzed their strengths and weaknesses, and developed a clear strategy for differentiating your product or service. Market research is the tool that allows you to do just that. Further, market research is essential for developing an effective pricing and revenue model. The price should be linked to the problem it solves. By understanding the target customer's willingness to pay and estimating the potential market size, you can craft a financial model that demonstrates the path to profitability - and making sure the investors get a return on their investment.

Most significantly, market research helps mitigate risk, something investors and banks both wish to do. Companies need to identify barriers to entry, regulatory hurdles, and other challenges to instill confidence in the team’s ability to execute on their vision.

We've seen too many promising startups experience delays or fail before they got off the ground because they didn't take market research seriously enough. They relied on assumptions and gut feelings rather than hard data and rigorous analysis. Not only did investors see right through this bluster, but the people involved realized too late that they didn’t know what they were getting into or talking about.

If you're thinking about starting a new venture and raising money to do so, do yourself a favor – invest the time and resources into comprehensive market research. It's the foundation upon which your entire investment case rests and could very well be the deciding factor in whether you secure the funding you need to turn your vision into reality. If you need help with this work and don’t know where to start, reach out to us at Brightleaf. We’ve not only helped startups and early stage companies put together business plans and pitch decks to get the money to fund their ventures, but we’ve also helped investors do due diligence to see where a company holds promise or where their plans have holes.

This is what we do. And we’re good at it.

Getting There - Overcoming Challenges To Achieving Goals And Objectives

There Are Many Paths To The Same Destination

Life happens when you’re busy making other plans. Because of this, challenges will at some point prevent goals or objectives from being completed in time. Effective management involves staying informed of the current state of the work being done and having potential courses of action in mind before they’re necessary. Here are several things to consider to keep your tasks and projects under control:

Review Goals and Objectives

There are times when our ambitions simply exceed our abilities and, no matter how much we wish to rise to the occasion, the goal is simply too high. Other times we haven’t prioritized what we really need to accomplish properly and are doing more work than is necessary. When setting goals and objectives, it is extremely valuable to determine exactly what is needed and why; however, the reality is that sometimes we may not realize these things until we’ve actually started working on a task. This is why it’s important to take some time to review goals and objectives after starting a task to see if the work that’s being done is equally important. This may result in prioritizing certain portions, changing the order of operations, or excluding steps or objectives because they’re less important or relevant to the final outcome. When doing this, a difficult choice must often be made to prioritize a short term objective while making a long term one more complicated. If these decisions are made lightly, it’s almost always a guarantee that it will be necessary again. To avoid this, make sure this is strongly considered at the time of the decision and, if a shift is made, make sure to schedule time for the long term issues soon after the short term deadlines are met.

Adjust Resources

When working on team projects, we often make allocations of resources based on the expense of an individual or tool. While this can make sense, it should always consider the productivity compared to the expense. Conversely, a cheaper resource may end up costing more for the amount of work done, but they may have more capacity than the more expensive resource. There may also be instances where a more expensive resource can be used to train a less experienced person on specific and limited tasks and to then check their work. Not only does this reduce issues of overworking your experienced people, but it also provides valuable experience to others on the team.

Training and/or Research

Most people are creatures of habit and will do what they know until they’re forced to do things differently. Others, however, strongly believe that “you don’t know what you don’t know” is a challenge to seek out more knowledge to find better ways to do things. These are the people who will get training to learn better techniques or more effective tools to use. Many of these will seek out solutions on their own so they can improve their effectiveness. If there are problems in the middle of a project, it sometimes makes sense to take one step back to be able to take two or three steps forward rather than plodding ahead at the same pace. This may seem like a waste of time while under pressure, but is often the necessary step to solving problems.

Technology

Technology has changed and will continue to change how much work one person is capable of doing. If your work involves repetitive tasks, there is almost always a tool to help do it faster and possibly better. A real world example where our company used technology to solve a problem: we took on a client who hadn’t done accounting in several years, but needed old bank records added to their accounting software. Past years couldn’t be imported from the bank into the software directly, but the bank statements were available. Rather than typing each entry in by hand, we scanned the documents and used software to read the text and numbers and write them into a spreadsheet as a single column of data. We then used formulas and macros to split the copied data into multiple rows and columns that the accounting software could read. This turned a job that would have taken multiple people over a week to complete into something a single person could do in several hours. Avoiding manual entry also increased the accuracy and allowed us to put checks in place to compare to the original records before importing them into the accounting software.

External resources

Sometimes it becomes necessary to bring in outside resources to complete a task on time. Perhaps it’s because some of your resources aren’t as available. Other times it’s because there’s a lack of the right knowledge or capabilities without enough time to learn them. Whatever the reason, there are usually options to bring in outside resources to supplement your team. While the cost of doing this may seem prohibitive, most experienced business leaders consider the cost of not doing so. This could be penalties or fines for not completing something on time or could be the loss of trust of a client as well as damage to the brand that prevents existing clients from staying or new clients from signing on. The other value of bringing in external resources is that they may provide ideas or skills that can be applied to your existing operations in the future.

While challenges can disrupt even the best planned projects or most routine tasks, knowing how to handle or navigate challenges can minimize those disruptions and solve problems.

- John Thrush