Increase Your Service Business’s Durability

The name of the game in service-based businesses (construction, transportation, creative agency, and wholesale) is big ticket jobs. But as you know, revenue is not the same as cash flow. And cash flow is the true indicator of a company’s durability. You are the CEO/Owner and your company’s top-line is good, but you are now looking for a CPA to increase cash flow and strengthen the company.

Headaches That Are Specific to Service-Based Businesses

Service-based businesses are notorious for having tight cash flow due to the operational and financial nature of the business.

First, late payments from clients occur when agreed-upon fees are not paid on time, often disrupting cash flow and causing operational strain.

Second, unpredictable workloads arise from fluctuating client demands, seasonal trends, or market conditions, leading to varying levels of work intensity and staffing needs throughout the year.

Third, large upfront purchases of inventory (specific to wholesale & construction companies) typically involve acquiring necessary materials or products in bulk before they are needed for specific projects or client requests, often to secure better pricing or ensure availability, which can impact cash flow.

What a CPA Can Do For You

Service-based businesses that have a true CPA are like a sports team that has strong defensive players. A true CPA should take the following actions to improve a company’s defense.

First, an Op & Fin Assessment is completed within the first week to get the lay of the land. At the end of this step (one-time, est. 1-2 weeks), there should be a completed SWOT analysis.

Second, the first round of Planning & Analysis is completed based on the company’s goals. At the end of this step (recurring, every quarter, est. 1-2 weeks), there should be a Strategic Roadmap and Initial Financial Forecasts.

Third, Reporting & Tracking is done on an ongoing basis. At the end this step (recurring, every week/month/quarter/year), there should be five things:

  1. A centralized dashboard used to track progress against the goals and to course-correct in real-time

  2. Weekly & monthly financial statements

  3. Weekly proactive planning and quarterly tax planning documents

  4. Iterated financial forecasts

  5. Annual tax filings

What a CPA Looks Like

A true CPA should possess a number of functional skills and industry experience.

First, proactive tax advisory, the ability to look at all decisions with a tax saving point of view, is critical to maximizing cash flow. Why? Aside from labor and other operational costs, taxes will be one of your biggest expenses.

Second, dynamic cash flow forecasting is critical because business moves fast, and you need a model that tells you what you must do now in order to never run out of cash.

Third, experience across various industries is a competitive advantage. Why? people with diverse experience know what works in a different industry, and can apply that best practice to your industry, before your competitor catches on.