When you start your own business, doing your own bookkeeping is just one of those things that you do, like responding to potential customers or stocking inventory. It’s not too difficult – a few invoices here and there, filing receipts, doing the bank reconciliation, perhaps paying an employee or two.
But as time goes on and business improves, these small tasks loom like storm clouds on the horizon. You begin to dread the monthly tasks (much less the daily ones), and your pile of receipts in a corner or on a desk grows in size. You keep telling yourself that you’ll get to it when you have a chance, but meanwhile you have an angry customer to deal with, and a shipment that didn’t go out when it should have, and an excited new customer to meet, and more phone messages than you can count.
You do eventually get round to it, but it takes you several days when you could be out sailing or spending time with your family or just kicking back with a good book. Let’s think about what doing your own bookkeeping could be costing you, and what you can do about it.
Doing Your Own Bookkeeping Costs Your Time
The sheer number of hours spent on creating invoices, marking them paid and unpaid, chasing up those who haven’t paid, reconciling bank accounts – it’s likely many more hours than you realize. Try keeping track of the time your spending on bookkeeping for a month or two. You’ll be very surprised. The busier you are, the longer these tasks take – and the more interruptions you get, the longer they take again. It’s a fact that one half hour task, uninterrupted, is equal to four or five hours of interrupted time.
Doing Your Own Bookkeeping Costs You In Stress
You already have enough to worry about; knowing that your bookkeeping isn’t done (or done properly) adds a weight to your mind that you may not even be aware of. This increased stress can cause increased anger and frustration, which isn’t a good environment for your business. Your frustration spreads out to others in the business (your business partners, spouse, other employees) and makes the working environment difficult.
Doing Your Own Bookkeeping Costs You In New Business Opportunities
That’s right, you’re very likely losing major business opportunities because of these “few extra hours” of bookkeeping. As we’ve seen, those few hours often multiply, especially if you’re interrupted, and you forget about that friend of a friend who needed some repairs done on their house, or that contact on Twitter who was looking for a graphic designer, or the email from your website. You could lose several opportunities a week simply because your energy is not focused properly.
Doing Your Own Bookkeeping Costs You In Creativity
With all that effort being spent staring at numbers and invoices and expenses, your mind is full. Ever notice how you go on vacation and suddenly start coming up with great ideas that you’d like to implement in the business? That’s because your mind is clearing, and you are beginning to see the woods again, not just the trees. Even a few hours a week, or a month, on bookkeeping could cost you that brilliant new idea that could bring in major business. Or if you have the great idea, you may not implement it – and that has the same result. Worst of all, one of your competitors may very likely have the same idea and implement it, and you’re left not only with no great idea and no new customers, but seeing someone else reap the rewards you could have!
Doing Your Own Bookkeeping Costs You In Mental Energy
It’s often exhausting trying to keep track of everything you need to do. Whether you have an online or offline calendar, or you scribble notes on your desk or your hand, things slip through the cracks. You’re often exhausted mentally, and that has its effect on you physically as well. Imagine knowing that your bookkeeping was all taken care of, on time, every day or every month, and if an issue arises you can just pass it off to someone else. What a relief!
Doing Your Own Bookkeeping Costs You In Lost Opportunities with Existing Customers
Many business owners who insist on doing everything themselves lose opportunities to serve existing customers, because they’re too busy to make check in with them or see if they need more products or services. If you’ve got a few extra hours each week or month, you can pick up the phone to your best customers or clients, or just check in some other way to make sure they have everything they need.
What if your top three customers didn’t realize that you just added a new service? What if that new customer who popped into the shop didn’t see the new products you were featuring? With more attention to spare, you can notice and address these things.
Doing Your Own Bookkeeping Costs Your Employees
Many businesses who do their own bookkeeping end up assigning it to an employee who is not too busy, rather than choosing someone who has the skills and talents for the job. If you remember our fictional story about Jim and his family business, he had his wife do the bookkeeping simply because she had some time to spare. You can really lose momentum for your business by using the right employee for the wrong tasks.
Hopefully it’s obvious by now that by choosing to do your own bookkeeping, it’s likely you’re losing money elsewhere. Whether you ask us at Henry H. Jones, CPA to take care of it, or you hire an employee skilled in this area, we’d highly recommend that you save yourself time, money, creative energy, and mental energy, and gain all those new business opportunities that are waiting for you!