How Much Is Your Time Worth?
What could you do with an extra 5-10 hours in your week? That’s an extra 1-2 hours a day (Monday through Friday).
As a small business owner, it can be hard to delegate. Entrepreneurs are used to wearing all the hats- salesperson, marketing director, CEO, COO, CFO, HR, etc. However when you are at a point in your business where you’ve enjoyed remarkable growth and you want to get to the next level, but seem to be stuck in a rut, it’s time to take a look at your operating processes. And it’s time to think about delegating the process that takes a lot of time, skill, and discipline to do: bookkeeping.
In this newsletter we will examine some of the common objections to outsourcing bookkeeping services to a professional. The point is not to convince you that it’s a good idea (you probably realize this already!), but to give you a different perspective so you can make the best decision for you.
“It’s Too Expensive”
In the startup phase, this is a valid point. Here at Accelor8 we mentor many startup businesses who genuinely can’t afford to delegate any operation of their business because their goal is to make that first sale (and the second, third, and on and on). However we also work with businesses that are well into the growth phase. If this is where you are and you’re still doing your books in house, it is time to analyze costs vs. benefits. Here are a few of the benefits of outsourcing bookkeeping services:
- Saves you time so you can focus on running your business
- Less stress and hassle for you
- Third party can monitor for fraud and tax deductions you may not otherwise catch
Have you calculated how much your time is worth? Let’s say you want to make $250,000 from your business this year. There are about 2,000 working hours in a year (assuming you take a two week vacation- very important, but I digress). $250,000/2,000 hours equals $125 per hour. This means every hour you work is worth $125. That means every hour you spend working on bookkeeping, you throw away $125. Now that’s expensive!
You’ll have a difficult time finding bookkeeping services that cost more than $125. Most charge anywhere from $50-$85 per hour. So by outsourcing you could save up to $75 (125-50) and use that time savings to focus on building and growing your business so you make your $125 per hour. It should be an easy decision!
“My Spouse/Child/Assistant does It”
In some cases business owners have family members in the business, which is great. The problem with this is that the designated bookkeeper usually doesn’t have any training/experience with accounting or accounting software, and a lot of times doesn’t like to do it but got the job by “default”. Same goes for a non-related assistant.
Is it time to have that conversation? Ask your spouse, child, other family member, or assistant if they like what they’re doing. If they do (and they’re telling the truth), you could offer to purchase QuickBooks training for them so they can do their job more efficiently. If they don’t, then it’s the perfect opportunity to give this duty to someone who does so that they can do something else!
“I Do That At Tax Time”
We’ve known many small businesses that operate this way, and it’s a nightmare. Not only for them, but for the one who has to clean up a year’s worth of accounting (us). Not keeping on top of the books creates all sorts of issues. For example, a bank account could be out of balance by $50,000 and there’s no practical way of finding when or where it got out of whack. Not keeping an eye on the accounts also creates opportunity for theft. Journal entries could have gone to incorrect accounts for months and cause data to be incorrect, leading you to make decisions for the business that weren’t the best. When all is said and done it could mean a very large bill for you because cleaning up messy books takes a lot of time and effort to do.
So is outsourcing bookkeeping services worth it? Ultimately only you can answer that. We’ve shown you some of the benefits, including the time and money savings, the ability for you to focus on running and growing your business, the third party fraud and tax monitoring, the value of having a trained professional performing this key function of your business.
By: BizBlog Advisor, Kjell Andreassen