Wherever I talk to business owners, either when presenting to a group, or one to one, there will always be questions whether a business needs professional accounting and/or bookkeeping support?
“Yes, but why would I pay for it when I’m perfectly capable of doing it myself?”
Most businesses owners are more than capable of managing their own books – collate the bills, enter them into their accounting software, raise invoices, collect payments, bank reconciliation, etc..
From my experience though, they make one of two mistakes:
- they invest double the time they need to on the account’s functions.
- they don’t invest sufficient time, and end up paying double what they should have, because they eventually do take their books to the accountant come tax time, and their accountant charges them significantly more to “right the ship”.
Here’s a story about client of ours, who came to us in September 2017. (names have been changed)
Rob and Julie run a landscaping business. They employ two full-time staff. Rob works full-time in the business, and Julie works part-time approximately 20 hours a week. They have two daughters – 10 and 8. They had an average turnover of $28,000 per month.
When I first met them, I initially did a review of their administration processes, which showed that Rob was currently dedicated about 40-50 hours a week “on the tools” and then between 6-12 hours per week “off the tools”, doing things like quoting, chasing business, handling customer complaints, raising invoices, paying bills, chasing clients for money, etc… He would also try to do some business analysis and forward planning.
Julie was doing the “super mum” thing – full-time mum to the girls, heavily involved with school and sporting activities, and filled in her “spare” time running the household. Her time in the business was mainly allocated during school hours 9.30am-2.30pm, and then sometimes after dinner some nights. Her key role was to collate, process and file the paperwork, process the pays, and generally manage the accounts.
We conservatively estimated that the combined resourcing allocated to “accounts and admin” was a minimum 25 hours a week.
Because of our expertise in this space, we were able to put a process in place that included:
- Rob’s time spent on Admin & Accounts work was reduced to less than 2 hours per week
- Julie’s time spent on Admin & Accounts work was reduced to less than 10 hours per week
- Our contribution would be a time investment of 5 hours a week.
- We moved them to cloud-based job processing and accounting systems
- We set them up with bill and receipt reading apps, that meant no more manual typing of any receipts
- We linked their bank accounts to their accounting software to speed up their bank reconciliation process
For those with good math, that’s a total of 12 hours a week saved for the owners. Their investment in professional bookkeeping services, has been approximately $425 per week.
So, what did Rob and Julie do with the extra 13 hours per week?
- Rob is now regularly investing more time in the analysis and planning of the business. He has a budget review process that helps keep him on track.
- Julie has become more involved with the sales and quoting process, which is also generating more business, but also taking the pressure off Rob to do all of this. Rob is also getting to more quotes and looking at quoting on bigger jobs.
- They are both getting to the girls’ soccer games more regularly, and Rob has also attended school sports days
- They love their movies and are getting more use out of their Netflix subscription
They have said to me they would happily spend double our rate just to have the things above. (“So, your saying I should up my prices, Rob?? LOL)
However, the extra time being put into the business in other areas is reaping rewards that are well in excess of the investment.
Rob and Julie’s business, a Landscaping business, and our Bookkeeping business are both in a similar boat when it comes to a client deciding on using our services. Can we do our own landscaping at home? Most of us do have the capability to do it. It will however take me double the time to do my landscaping as it would to get Rob in to help me with it. And, I will end up making a few expensive and time-consuming mistakes along the way. I may end up with a similar result, but am I actually in front?
The difference is that a good landscaper (or a good bookkeeper) can do this for you in less than 50% of the time you will spend on it, and save you a few expensive mistakes along the way!
In my experience, a good bookkeeper will save you the value of their investment every time. Please get in contact, if you would like to test us out on this.
