What Not to Do and How To Fix It | Part 1
Lessons from more than 20 years in accounting
Numbers don’t lie. In more than 20 years of accounting, I have seen businesses succeed and businesses fail. One lesson I want every small business owner to take seriously is this: know your numbers. The trick is to stay ahead of it instead of behind it. Unexpected situations will always happen as a entrepreneur if you can reduce the unexpected it gives you a better chance of planning for the future.
If your way of checking the health of your business is opening your banking app, you are making decisions with an incomplete picture. Money coming in can feel reassuring, especially when you are busy. But a full schedule and a positive bank balance do not tell you whether the business is profitable or whether you can afford what comes next.
You need to know what that money already has to cover.
Your bank balance is only part of the picture
Imagine a business with $30,000 in its bank account. That might look comfortable until you consider the payments coming due.
| Simplified example | Amount |
| Bank balance | $30,000 |
| Employee net pay due | ($12,000) |
| Supplier bills due | ($8,000) |
| Tax and remittance obligations due | ($7,000) |
| Cash remaining after those commitments | $3,000 |
That remaining $3,000 still has to cover anything else the business needs before more cash arrives. A $5,000 equipment repair suddenly creates a shortage.
Revenue, profit, and cash each tell you something different. Revenue tells you what you have earned from sales. Profit tells you what remains after expenses. Cash is the money the business has on hand today. To understand what you can safely spend, you also need to know your commitments and when customer payments are likely to arrive.
You can plan for predictable pressures on cash flow, including insurance renewals, tax payments, and seasonal slowdowns. A cash reserve helps you handle unexpected costs. Current accounting helps you prepare for both.
How a cash shortage becomes a CRA problem
The pattern can begin quietly. An owner is focused on getting work done, keeping customers happy, and covering this week’s bills. Bookkeeping falls behind. A large expense arrives, and there is less money available than expected.
Something gets postponed. Then something else. Eventually, filing taxes feels like a problem for another day because the owner is worried about what they might owe.
Delaying a tax return does not postpone the payment deadline. Unpaid taxes can accumulate interest, and late filing can add penalties.
The business may then be trying to cover current expenses while catching up on obligations from previous months or years. That pressure can become severe enough to force a business to close.
If you cannot pay in full, keep filing on time and speak with your accountant and the CRA about payment arrangements. An arrangement comes with conditions, and you still need to keep future filings and payments current.
Getting an accurate picture gives you a place to start. Waiting for the business to become less busy can leave the problem growing in the background.
What knowing your numbers actually means
I want a business owner to be able to answer these questions with current information:
Are we making a profit after the costs of delivering our work and running the business?
Which products, services, or jobs are making money, and which need attention?
Who owes us money, how much is overdue, and who is following up?
What do we owe suppliers, lenders, and the CRA, and when is each payment due?
What is our cash position likely to look like over the next three months?
Can we afford the next hire, purchase, or expansion while meeting existing obligations?
Your financial reports should help answer those questions. A profit and loss statement shows performance over a period. A balance sheet shows what the business owns and owes at a point in time. A cash flow forecast helps you see when money is expected to come in and go out.
Reviewing them together gives you a stronger basis for deciding what to do next.
The four business functions that need consistent attention
Large corporations can have separate departments for accounting, marketing, operations, IT, and more. A small business owner has a more limited budget and fewer people to share the work.
The work still needs to happen. In my view, these four areas need clear responsibility and ongoing attention, with support that fits the size of the business.
Marketing
Marketing builds awareness and a pipeline of potential customers. With a clear sales and follow up process, it supports more consistent sales and helps you plan for future work. It needs attention while you are busy, so you have opportunities developing before the current work ends.
Accounting
Accounting keeps records current, manages bill payments and deadlines, follows up on receivables, and schedules tax filings and remittances. Budgets, forecasts, and regular reporting help you understand what the business can afford and where adjustments are needed. That information should be available throughout the year, while there is time to act on it.
Operations
Operations covers how you deliver your product or service from start to finish. Clear systems for quoting, scheduling, purchasing, production, quality checks, and handoffs help work move smoothly. They also make it easier to identify delays, rework, and costs that are reducing your profit.
IT
IT keeps the systems your business relies on maintained and secure. It includes access controls, updates, backups, recovery planning, and replacing equipment before it becomes a recurring problem. Someone needs responsibility for keeping those systems working and helping the business recover when something goes wrong.
These functions affect one another. Marketing can generate demand that operations needs the capacity to deliver. Accounting helps you assess whether that work is profitable and whether you can fund it. IT supports the tools and information that keep the process moving.
Concentrate on your strengths and hire the expertise you need
Being good at your trade, profession, or product does not automatically give you the time or training to manage every part of a business. Recognizing where you need help is part of running it responsibly.
You can cover these functions through a practical mix of your own work, employees, contractors, and outside providers. The amount of support should fit your workload, complexity, and budget.
Hiring someone to manage your accounting should give you more visibility. Ask them to explain the reports, flag concerns, and help you understand the options. You still need to provide information, review the results, and make the decisions.
That is how you work out whether to grow, adjust your pricing, change direction, or slow the pace. A larger business needs to be able to fund its growth and support the owner behind it.
Start by contracting the work to outside organizations monthly until you are able to sustain your own teams inhouse. Getting comfortable with fixed monthly contractor’s cost lets you dial in your marketing and pricing. Once you tweak those numbers to cover your overhead and start generating pure profit, you’ve hit the sweet spot.
Start with a routine you can maintain
My recommendation is to establish a simple rhythm:
Each week, review cash, upcoming payments, overdue invoices, and anything that needs immediate attention.
Each month, bring the books up to date, reconcile accounts, review the financial reports, and update your cash flow forecast.
Before a major commitment, check the cost, timing, and effect on the business’s ability to meet its existing obligations.
Make room in that routine to plan for taxes, annual expenses, and a cash reserve. If you are already behind, start by identifying what has been filed, what remains outstanding, and what is actually owed. Then build a realistic plan to get current.
Your numbers should also help you answer a bigger question:
Does this support the life I am actually trying to build?
Knowing what the business can sustain helps you make room for reliable income, time away, and growth at a pace you can manage.
Your accounting department
At Switzer & Co., we provide monthly accounting support for small businesses in Kelowna. Depending on the support your business needs, our services include bookkeeping, receivables and payables management, financial reporting, budgeting, cash flow forecasting, advisory and tax.
If your bank balance is currently your main financial report, or you are behind on your books and filings, start with a conversation.
Switzer & Co. Your accounting department.
