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17/03/2016 07:14:36 PM

Accounting Strategies for Growing a Business

Accounting is an important business function companies use to gather, record and analyze financial information. This financial information often provides detailed information regarding business operations. Companies may also use historical financial information to plan new strategies for growing business operations. Developing a growth strategy centered on financial information may give business owners and managers reasonable expectations for future operations. Owners and managers may also use financial information to determine where to make improvements in their businesses.

Facts

Many companies start out external financing from banks or investors. These initial loans often create negative cash outflows companies must repay on a monthly or quarterly balloon payment system. Companies must find ways to generate capital through business operations to repay these loans and generate a profit for the new business venture. Business owners and managers may spend time reviewing financial accounting information for developing strategies to generate capital and grow the business organization.

Types

A few accounting growth strategies include expanding through profits, accelerating income, building strategic business relationships, diversifying business operations and streamlining current production operations. Each type of growth strategy requires business owners and managers to focus on different aspects of their company. These growth strategies may also depend on the size and strength of current business operations. Smaller businesses have fewer options available when creating new types of accounting growth strategies.

Features

Expanding the business through profits usually relies on business owners forgoing large upfront salaries and reinvesting capital back into the business venture. Accelerating income may require businesses to raise their prices on various goods or services. Strategic business relationships might include contracts or partnerships for obtaining lower cost economic resources. Diversifying business operations often includes selling new goods or services and expanding into other business industries. Streamlining production operations forces businesses to reduce wasteful spending and increase the production efficiency of the business.

Considerations

Companies might be able to develop other strategies for growing business operations. Focusing on accounting growth strategies sometimes upsets a delicate balance relating to the price consumers are willing to pay for goods or services. Raising prices above the market rate can lower company sales. Lowering consumer prices may significantly reduce the profit the company has available to pay for business expenses. Businesses might also be unable to achieve an economy of scale, where producing higher amounts of goods or services does not reap any financial reward.

Expert Assistance

Business organizations can obtain information for growing a business from a local chamber of commerce or the Small Business Administration (SBA). These organizations offer businesses information regarding current economic trends or other information that can help to determine which accounting strategy should result in the best growth opportunities. Information may include consumer income levels, target market or demographic groups, number of competitors in the market and other important financial analysis information.