Well, yes, no and maybe.
Are you aware of the business growth graph? It's popped up in several business books that I've read over the years and it basically looks like this very crude version that I have created on Paint.
Are you aware of the business growth graph? It's popped up in several business books that I've read over the years and it basically looks like this very crude version that I have created on Paint.
The idea is that you initially grow your business with it just being you. Your customers are happy because you give them lots of attention and do a really good job and as a result they skip away and recommend you to their friends and family. This keeps on repeating and sets you off on a journey to point A.
Point B is when you get more customers than you can handle. They've been recommended to you because you're supposed to lavish them with attention and as you're too busy you can no longer do that. Plates are dropped, mistakes are made and they go away and moan about you. You loose some of your original customers and stop getting so many new ones.
Once you have reached point B, you can then decide whether to shrink your business and go back to point A or systemise and grow it, pushing onwards and upwards to point C.
So what has this got to do with bookkeeping?
Would I be right in saying that you didn't hire a bookkeeper straight away? No one does do they. You may have engaged the services of an accountant within the first year, or even before you began trading. But a bookkeeper? Probably not.
This is because when you're small, bookkeeping is an easier task. You can spend an evening or two typing up an excel spreadsheet or writing in a big red cash book. Maybe you can even put all of your receipts into files, a bag or a shoe box and hand it to your accountant at the year end. It won't up their fee too much you tell yourself.
But as the demands of your business increases, your free time goes down. You no longer have that evening to type up an excel spreadsheet or write in your big red cash book. The number of transactions are increasing and start to become more complex so it becomes a bigger and bigger job. VAT Returns are done of their due date. You have to guess what money to put aside for tax. You make mistakes. Your accountant puts up their prices.
It's at this point that you consider looking for a bookkeeper. And you should, shouldn't you?
Well, yes. But possibly not to do bookkeeping.
Of course you could need a bookkeeper but maybe you're not ready for that step yet. Maybe what you need is a smaller step. A smaller cost. What you might need isn't expertise; it's automation.
Once you have reached point B, you can then decide whether to shrink your business and go back to point A or systemise and grow it, pushing onwards and upwards to point C.
So what has this got to do with bookkeeping?
Would I be right in saying that you didn't hire a bookkeeper straight away? No one does do they. You may have engaged the services of an accountant within the first year, or even before you began trading. But a bookkeeper? Probably not.
This is because when you're small, bookkeeping is an easier task. You can spend an evening or two typing up an excel spreadsheet or writing in a big red cash book. Maybe you can even put all of your receipts into files, a bag or a shoe box and hand it to your accountant at the year end. It won't up their fee too much you tell yourself.
But as the demands of your business increases, your free time goes down. You no longer have that evening to type up an excel spreadsheet or write in your big red cash book. The number of transactions are increasing and start to become more complex so it becomes a bigger and bigger job. VAT Returns are done of their due date. You have to guess what money to put aside for tax. You make mistakes. Your accountant puts up their prices.
It's at this point that you consider looking for a bookkeeper. And you should, shouldn't you?
Well, yes. But possibly not to do bookkeeping.
Of course you could need a bookkeeper but maybe you're not ready for that step yet. Maybe what you need is a smaller step. A smaller cost. What you might need isn't expertise; it's automation.
Ask your accountant what cloud software they recommend. Ask your friends what cloud software they recommend. But is has to be cloud based. We're moving away from the hours of manual data entry that is excel and SAGE 50. We're going modern and we're going automated. That's the whole point.
I'm a certified advisor on Xero, so I will pretty much always recommend Xero. But in a BBC style act of fairness, there are other cloud based software packages out there.
Choose your software and then contact a local bookkeeper who specialises in that software and get some training. They will ask you lots of questions about your business, set up the software so it's ready to go and provide you with training so you feel comfortable and confident using it.
So where is all this automation that will save loads of time?
I'm a certified advisor on Xero, so I will pretty much always recommend Xero. But in a BBC style act of fairness, there are other cloud based software packages out there.
Choose your software and then contact a local bookkeeper who specialises in that software and get some training. They will ask you lots of questions about your business, set up the software so it's ready to go and provide you with training so you feel comfortable and confident using it.
So where is all this automation that will save loads of time?
You can set up bank feeds so a read only copy of your statement is pushed into the software every day. This means no more typing up your bank statements as it's all there for you, fully reconciled, every morning.
You can create your sales invoices directly in the software, from your laptop or mobile phone, and email them to clients. You can add a pay now button to the invoice, linking it to your Go Cardless or Paypal account making it easier for you to be paid.
You can have an app which allows you to take photos of your expenses and this automatically creates the purchase invoice within the software. It's also a way of digitally storing your records and HMRC has said that they will accept these. So no more boxes hanging around for six years!
You can set up a payroll account which links to the software. A mileage tracking app which links to the software. EPOS systems which link directly to the software. Appointment booking systems which link to the software…
You can have an app which allows you to take photos of your expenses and this automatically creates the purchase invoice within the software. It's also a way of digitally storing your records and HMRC has said that they will accept these. So no more boxes hanging around for six years!
You can set up a payroll account which links to the software. A mileage tracking app which links to the software. EPOS systems which link directly to the software. Appointment booking systems which link to the software…
…okay so you may want a bookkeeper at this point!
The question that you need to ask yourself is, what do you need to do to help push your business either onto point C or to slow down reaching the tip of point A. If you are still comfortable with the complexity of you current bookkeeping and you still have some time to undertake this task yourself. Just not quite enough time to do it. Invest in software and training.
The question that you need to ask yourself is, what do you need to do to help push your business either onto point C or to slow down reaching the tip of point A. If you are still comfortable with the complexity of you current bookkeeping and you still have some time to undertake this task yourself. Just not quite enough time to do it. Invest in software and training.
