Growing Pains: Understanding the Financial Experts Your Home Service Company Needs

As your home service business grows, the financial demands will evolve. Whether you’re expanding organically or gearing up for major growth, the point will come when your internal resources can no longer keep up with the increasing complexity of managing your finances.

At this stage, you may decide to go one of two routes. You could hire an internal accounting team to take the reins of responsibility, or you could opt to outsource your financial needs to a professional accounting agency.

This decision will depend on what is most financially prudent for your company, whether you are comfortable giving up some control over your accounting functions and which solution helps you regain the time you need to work on the business instead of in the business.

For many smaller companies, outsourcing their financial staff can lower their expenses because it allows  their team to expand and contract as the company grows during the summer and winter and ebbs during the shoulder months.

Whichever you decide, you need to make sure you’re opting for the right option based upon your company’s complex financial needs and your plans for the future.

Determining Your Needs

Let’s say that, for the past several years, because of careful planning and market stability in your area, your home service business has seen phenomenal growth.

Up until now, you have been keeping the books for yourself, but this isn’t a role you were specifically trained to do. But because of your diligence, you’ve grown to the point that you need to hire an accountant, and possibly even a chief financial officer (CFO).

Deciding what’s best for your organization depends on what you want out of your financial team and what kind of future you envision for your home service company. Do you need someone to simply take care of the books, or do you need a team to help you with long-term projects to scale your business?

Accountants are essential for keeping your financials in check and ensuring you’re on the right path today. A professional bookkeeper can also help with payroll and year-end financial compliance. Bookkeepers are primarily charged with data entry and ensuring the books are populated with the correct data, while accountants are responsible for managing bookkeepers, ensuring the proper reconciliation, and producing schedules that support the final numbers.

However, if you are also planning to franchise your business or looking to make major acquisitions, a CFO may also be a necessary hire. A CFO goes beyond maintaining financial records. They help develop long-term strategies, manage cash flow, and plan for future growth, ensuring your business can tackle bigger challenges and seize opportunities as you expand.

For most growing home service companies, a CFO won’t be a necessary role until your organization grows much larger. Many hiring sites say hiring an in-house CFO isn’t worthwhile until your company is bringing in at least $50 million in annual revenue. But if you are taking funding from private investors or want to find funding paths, it’s never too early to hire a CFO.

Just make sure you understand the role of each financial position so you can make the right decisions as your move forward in securing the right positions for your company.

Benefits of Outsourcing Your Team

Whatever your long-term plans are, you know that you still need a professional money manager. This means you must decide whether you want to hire an internal bookkeeper or accountant and if you need the services of a CFO. Or you can opt to outsource your financial needs to a professional money management team.

Smaller companies may only require the services of a one- or two-person accounting department. These employees should be able to accurately keep your books and manage your financial data. But be aware that you may need to hire in temporary employees to help this team during the busy summer and winter seasons.

If it’s not feasible to solve your capacity issues by hiring temps every few months, you may want to consider outsourcing these roles to a professional accounting firm. Instead of having to pay the salaries and benefits of an in-house team, you can reduce your expenses by hiring an external accounting team. In fact, nearly 60% of all businesses use outsourcing to reduce their expenses.

Other reasons to hire an outside firm to manage your finances include:

• Meeting legal and regulatory compliance: Because a bookkeeping service focuses only on accounting, they are knowledgeable about this field. That means they stay up to date on tax law and other legal and regulatory compliance actions necessary to properly keep your books.
  
  
• Hiring experts in the field: If you knew a homeowner who had a leaky pipe somewhere deep within the walls of their home, you’d recommend they hire a professional plumber. The same is true when hiring an accountant. When you hire an external accounting firm, you are hiring people who are professionals in their field. An accounting agency ensures their bookkeeping staff are trained and their knowledge on the latest best practices is kept updated.
  
  
• Getting a fresh perspective: Since an outsourced team works with a variety of clients, your company is likely to benefit from the creative insights that this diversity brings. These employees can see your market and industry with a fresh, new perspective.
  
  
• Allowing you to focus on your business. Engaging an outsourced accountant or CFO not only relieves you of the time and expense of hiring, training and retaining talent, but it gives you instant access to financial professionals. You can focus on improving your cashflow or work on marketing initiatives.

At some point in your company’s lifetime, you may want to fast-track your company’s growth with an eye on selling, retiring or converting your business into a franchise.

With an outsourced financial team, you can create the customized reporting that helps you drive profits and improve cash flow to make growth possible. A small to mid-sized home service company will find value in the reduced overhead and flexibility while benefiting from the financial expertise that your company can receive when it hires a professional accounting agency.

Whatever your goals are, hiring the right financial manager is a good first step for ensuring those goals are met. Once your company reaches the size that you need flexibility in your business operations, hiring an expert in-house accounting team, outsourcing that team or even adding a CFO to help with long-term planning will help you maintain accuracy, streamline your operations and focus on future goals.