There is no question that for an economy to grow, it needs small businesses to generate that activity. Again and again, it is micro and small businesses that push new ideas, create new products, produce game-changing market disruptors, and drive new market directions.

All of that happens when small businesses are successful, which is the minority, since so many fail trying to make a market permanence come into fruition. One of the key areas that help with early success involves staying on top of the related business accounting from the start. However, that can be very difficult when resources are tight and there’s not enough funds to retain accounting staff full-time.

The Sunk Cost Dilemma of Small Business

In an ideal world, every resource in a small business is working towards success, producing revenue. However, that doesn’t happen with necessary administrative areas like accounting, personnel and usually network administration in IT. These expenses become necessary as the company grows, but they don’t produce new income per se.

So, if a small business has to retain people in administrative areas year-round, it is a 100 percent unmet expense. They also add to overhead, making the income-producing areas have to work that much harder to meet the additional operating costs for break-even.

No surprise, small businesses go very thin in these areas, only adding what they absolutely need to as the business grows. That, however, can leave a lot of room for mistakes.

Switching to a Better Alternative

Small businesses can’t ignore accounting. They need it for obtaining financing for capital growth as well as for making the right decisions financially based on what has already been spent, owed or earned. Doing otherwise is literally going blind and a quick recipe for bankruptcy in a new company. That said, there’s no need to retain accounting resources when they are not working.

A small business accounting service via an outsourced partner is a very viable option and no different from outsourcing any other administrative function like IT, for example. The accounting work gets done correctly, resources can scale up as needed when the work increases, and costs are kept to just what is actually needed for the workload.

This controls overhead expenses far more effectively than trying to redirect people or make them cover two desks with one job.

Cloud Scalability is Small Business’ Best Friend

Scalability will continue to be the biggest advantage a small business can utilize, especially with the cloud and the availability of online accounting services today. This key tool shouldn’t be ignored. It solves the timely accounting challenge, and it keeps costs limited effectively.