By Pamela Phillips
From the start you’ve done your own bookkeeping, to begin with, this was to save you cash while you worked hard to get your business up and running. Now your business is more established, you’re still doing it because it helps you stay close to what’s going on.
You spend too much time in the detail
But here’s the problem. When you focus on the individual transactions going through your business you miss the big picture. You know that saying about missing the wood for the trees? Well, that’s the case here. You might know how much you paid a particular sub-contractor for their last job but you miss the trends and the big picture.
This is exactly what happened with a client we worked with who was keen to keep doing their own bookkeeping for this reason. They were taking comfort that no payment went through the bank without them knowing about it and when we asked them why their gross profit margin had dropped from 55% to 45% since the last year, they didn’t have a clue. They’d not spotted that their subcontractor's costs had been increasing very gradually due to a change in the mix of subcontractors they were using and general inflation.
And here’s the other thing. Your business will be worth more when you stop doing your own bookkeeping. Here are 3 reasons why.
1. You could be doing more profitable work
When you’re spending your time doing the bookkeeping it’s taking you away from doing what you are great at and the things that will, in the long run, make your business more profitable.
2. You'll make mistakes
Unless you’re a qualified bookkeeper then I can almost guarantee you’ll be making mistakes. This means you can’t fully rely on your numbers to make decisions until your accountant has looked over your books and (in all likelihood) fixed up your errors. Some of these errors can be costly, like when you use the wrong VAT code, or overpay suppliers, or forget to collect payments from clients.
3. Multi-layered finance team
While you might be able to make time to do the bookkeeping now, it’s not scalable. At some point your business will grow to the point where the time you spend on bookkeeping outgrows the time you are spent working on all the other areas of your business that need your attention - like winning new business, developing its strategy, managing your people.
Can you stay close to your business without doing the books yourself?
Yes! What you really need is a finance team who can take the day-to-day bookkeeping off your plate while at the same time ensuring that you have the information you need to be close to your business so you can make decisions, and respond to changes like reducing profit margins, quickly.
It’s not rocket science and a good accountant will be able to work with you to set up controls and policies so you are still close to your companies spending, as well as ensuring that you get the reports you need to to know how your business is performing throughout the year.
Get in touch to find out more
If you think you need some support with this, we're here to talk. Let's jump on a call to see if we’re a good fit.