This post has arisen due to a comment I received about bookkeeping in the Tax Investigation webcast, which you will find earlier on the blog.
In that webcast I mentioned that having an independent bookkeeper for any/all businesses has many advantages, not least the fact that the Tax Office approve wholeheartedly with the idea.
Why is that??……. Well, the fact that a business owner is not doing his/her own books removes a lot of doubts about the reliability of the records. There have been many proven cases where manipulation of the records can, and has been, done by the owner. Having a different person involved doesn’t remove the general thought that things might not be as they seem, but it certainly helps a great deal.
Small businesses generally claim they can’t afford a bookkeeper. I would dispute that fact myself. Even the smallest of small businesses needs records keeping and the people involved think they need to keep costs down in all areas. I repeatedly argue this view is invalid and eventually I convince most people. Those that I cannot convince generally seem to struggle throughout their business life but can’t see why.
The fact is, money aside, even the smallest business needs help with bookkeeping. The boss should be wholly focused on growing the business and marketing it as hard as he/she can. When their time is at an absolute premium and they are stretched to the very limits of sanity, something has to give. 99 times out of 100 it is the bookkeeping. Yet the knowledge gained from having up-to-date records is priceless for any size of business. Not least the small matter of who owes you money – assuming you got around to invoicing last month anyway!
I often recommend clients read an excellent book by Michael Gerber ‘The E Myth Revisited’ ISBN 0-88730-728-0. I do this because the information given in this book about how to structure a business so that it can grow is brilliant. It starts off talking about scenarios that business owners find themselves in as they start, and then grow, their businesses. I challenge anyone to read this book and not find themselves identifying with the people spoken about in the early chapters of the book. If you haven’t read it yet – and you should – the main thrust is delegation. Why it is vital to the health of a business, and how the business is stifled and stagnant without it.
Part of delegation is having a bookkeeper/accounts department.
How can your business grow if the most valuable person in it – you – the boss – is bogged down in mundane matters. A bookkeeper has a cost each week, or month, I accept that, but the fact is, how much do you value your own time at? Surely you are worth more to your business than £5/hour, £10/hour or more. How much more growth can your business achieve if you are released from mundane matters and can concentrate on the bigger picture??
If the answer is not £50/hour, £100/hour, £500/hour… then you may as well work for someone else at minimum wage.
The reason small businesses think they can’t afford to delegate is because they have no plan, or even idea, about where the business is going, how it will get there, what it will look like in 5 years, 10 years…. They have no idea if the business will even have a value when it’s sold….
Can you business be sold? I’ll answer that in another article!! But you can be sure of this. It cannot be sold for anything like it’s true value if you are still insistent on doing everything/overseeing everything yourself – because without you… there is no real business to sell – you are the busines.
Back to outsourcing the accounts department then…. get a bookkeeper. Even if you hire a good one but they don’t have enough to do – hire them to other small businesses as well. Consider handing over all your bookkeeping to a specialist company who handle everything, including invoicing, collecting money, paying suppliers etc, or settle for something in between.
Remember. Take action every day. If you do your business will keep moving forward. If you do not, your business will never become the fantastic, profitable, ethical organization you dreamt of when you started it all those years ago!!