Most small business owners dread the bookkeeping functions necessary to run their business.
Why do we fear this aspect of our businesses so much?
We know deep down it is important, and possibly integral, to the success of our business, but we just don’t get it.
All those numbers and categories.
What’s an expense vs. a prepaid expense? How do I know if it’s prepaid or accrued? Is this a long-term liability or short-term? Does it go on the Profit & Loss or the Balance Sheet? What’s the difference between a P&L and an Income Statement?
Fear is a primal part of what makes us human. We all have fear.
Really though, fear is a lack of control, or a feeling of helplessness toward a threat.
So let’s take it back!
Most small business owners have backgrounds and talents in areas other than finance and so bookkeeping can be overwhelming because you just don’t know the rules & language yet.
The reverse is also true. Most bookkeepers and accountants do not have a background or talent in the more creative aspects of a business.
For myself Marketing seems like magic. You shout out 📣 into the world and somehow find people who need and want to buy your product? See, magic.🧙♂️
But, the good news is that "magic's just science we don't understand yet." (Dr. Jane Foster - Thor ).
This means that we can learn the language and rules for what seems like magic. Maybe we will never be fluent, but at least we can ask where the Library is.
“donde está la biblioteca” (I don’t know why that is one of the first phrases you learn in a foreign language, but there you go).
Once you understand the basics, you can dig into your books specifically.
If you have a Bookkeeper or Accountant, ASK THEM. Remember, these are YOUR BOOKS and you have a right to understand them. Any Bookkeeper or Accountant worth their salt WANT you to understand your books.
How do you know if the data is accurate?
If you bring your books up to date will it paint a picture you’d rather not see?
Would you be better off just going with the flow, I mean you know your business best.
Information is Power.
Once you take Control of your books, you will be sure that the information and data is accurate. You will always be aware of the current status of your business or any department, product, or job.
As Bookkeepers and Accountants one of the hardest parts of our job is delivering bad news to people, especially when we know they are not fully prepared for it.
While yes you can “go with your gut”, having data to back up your decisions is always the better option. This is especially true if you have stakeholders besides yourself in the business, be they partners or investors.
Having the right data also allows you to set meaningful goals and SMART metrics.
3. Cost vs. Value
At this point you are probably still freaking out about HOW you are going to do these things.
As with many parts of a small business you have 3 options:
Do it yourself
Hire an employee
There are obvious pros and cons to all 3 options, you need to determine what is going to be best for you and your business.
What option is the best use of your resources?
This means not just money, but also time AND capacity.
Now regardless of which option you choose you will need to invest in learning the basic skills, so we will call that a wash for all 3 options.
If you do it yourself you will need to invest in additional advanced training. Do you have the time to learn the language & rules PLUS actually do the tasks needed without harming other areas of your business, or your life?
What is your time worth? ←- one of the biggest questions we as small business owners face. Many will say $0, but that is simply not true.
Think of it this way, you can spend 5 hours on your books, or you could be making those follow-up calls you need to do and land a new client, or get that new product site up & running so you can go live.
For example, I have a client that brings in $200 per hour. A good accountant will cost them between $50 - $100 per hour. This is an obvious choice as they will easily make more money outsourcing their books, and be able to grow their business since they have the time to bring on more clients or projects.
What if the client also brings in $50 per hour? Is it still worth it?
This is where the Value part comes into play.
Outsourcing is about saving time, money, & capacity.
What will you gain in recovering those hours? It could be for the business resulting in additional revenue. Or maybe for you personally, being able to spend that time with family & friends.
How much stress and tension will be released knowing that you have someone doing your books that is an expert in their field? That fear of mistakes you always have will be significantly reduced.
Fear should never hold you back. Take control and figure out what will work best for you.
Talk to colleagues and experts.
Take advantage of free consultations, a good accountant thinking of the long-term will want your business to succeed, which means helping clients determine the right path.
Maybe you just need a few hours of one-on-one training.
Maybe you continue to do the basics and therefore only need to outsource 2-3 of the 5 hours.
Maybe it is worth outsourcing all of it.
Only a deep look at your business, your capacity, and your sanity will lead you in the right direction.