To even have a chance at succeeding as an entrepreneur, we have to be tough, self-motivated and goal-oriented. Since a lot of people don’t understand us or our vision, it’s hard to find people we can trust.
The self-motivated entrepreneurial spirit, combined with the hustle and limited resources we have available when we get started often leads to feeling like we can (and have to) do everything! We are our own marketing and sales department, HR, receptionist and accountant.
The bootstrapped entrepreneur needs to wear a lot of hats, but certain tasks must be offloaded as soon as possible if we are serious about growing the business or maintaining any sanity. Delegation is important, not only for the task at hand, but to free us up to focus on activities that drive the business forward.
On the Starterist blog, Dennis O’Donnell concluded his article with a summary of why he believes entrepreneurs should do their own bookkeeping:
“This new way of doing things will be tough for about 3 months, but after that, it’ll become routine and easy. More importantly, I’d be willing to bet you’ll find at least one wonky transaction that will save you money that your bookkeeper wouldn’t have found – maybe a vendor overcharged you, or your card was run twice, or the bank made an error. It happens all the time – only now, you’ll know. The biggest gain of all, though – the thing you won’t notice until about 6 months, is you’ll have a Neo-in-the-Matrix-like sense of your business. If anything is going up or down, you’ll know well in advance and can take steps to keep your business ahead of the curve. The benefits of this can’t be understated. Have fun learning DIY bookkeeping, and enjoy regaining massive control and insight at your company.”
There are three key takeaways in his summary:
1. Having forward-looking financial statements and a strong sense of your business’ standing is one of the most important aspects of your business and often overlooked.
Dennis couldn’t be more right about the importance of knowing the financial ins and outs of your business. Without being able to look forward, you’re stuck looking backwards. While you can learn from your past numbers, forward-looking financial statements will help you plan your business out more effectively and make sure your current efforts are optimized for profits.
That being said, just because we need to eat several times a day doesn’t mean we need to spend all of our time in the kitchen if we’re a terrible cook. Knowing the financial standing of your business can be simplified and shouldn’t require entering in every transaction and having no one else to help in the process.
2. Whoever does bookkeeping for your small business has to be both proficient in finance and bookkeeping AND trustworthy.
Many small businesses have had bad experiences with bookkeepers, including our founder Frank Lunn, years before he started Kahuna Accounting, and it appears Dennis O’Donnell may have as well. One of the reasons Kahuna Accounting has grown so quickly is that our team can offer trusted services and we have a team that has mastered both the software we use, Xero, and small business bookkeeping. Hiring and managing an individual bookkeeper can be risky and does come with the risk of them missing mistakes. Finding the right person or team that is trustworthy and efficient will be much more effective and a safer option than trusting yourself to do it, even if you are a natural at this type of activity.
3. Time has to be a part of your bookkeeping decision.
“This new way of doing things will be tough for about 3 months, but after that, it’ll …” Do you have three months to struggle with your business’ bookkeeping? The time it takes to learn how to do your own bookkeeping and then actually do your own bookkeeping can be better spent on expanding your business. What happens when you spend all that time learning and doing your own bookkeeping for the first time and your balance sheet doesn’t come out balanced? Was all that wasted time worth it?
Whatever bookkeeping solution your small business goes with, you must consider the value of your time and if you would be better off paying a professional to do it rather than spend your precious time on it.
DIY small business bookkeeping is a feasible solution for some, but it is not always the solution and it comes with responsibility and an investment of your time and energy.
And a point we’d emphasize is this: Financial insight and clarity does not require crunching numbers. Knowing what to look for in your financial reports can provide all the depth and visibility you need to know your business inside and out and improve your decision-making.
If looking for a bookkeeping solution, whether DIY or done for you, Kahuna can help lead you in the right direction. Contact us for additional information on how our virtual accounting team can help your business grow.