Oasis – Business Planning for Serious Entrepreneurs

A reliable bookkeeping system is critical to the success of any business. Bookkeeping is too important to be put in the hands of anything less than a professional.

Inexperienced entrepreneurs tend to avoid or overlook the importance of bookkeeping until disaster strikes. Too many new owners hand bookkeeping off to an unskilled buddy or try to do it themselves. This is almost always done to save a few dollars, but by the time the owner digs himself out of the resulting mess, it ends up costing a fortune.

It's impossible to run a small business unless you know where you're at with sales, expenses, prices and profit. Cash flow is the lifeblood of any business. Bookkeeping is the precise tracking of the flow of money. The only way to know where you're at financially is to have a healthy bookkeeping system. Not knowing where you're at is to invite disaster. Run out of cash and your business is sure to fail.

To manage your business you need no less than monthly financial statements within a week or two after the end of each month. It's equally important that you learn to read those statements. Reliable monthly financial statements arm you with the knowledge you need to make smart business decisions.

If your books are not up to par, you need to improve the situation soon—which usually entails recruiting a professional. Here are five things to consider when taking on a new bookkeeper.

1. Do Your Homework. When engaging a new bookkeeper, ask for references—call those references and listen carefully to what they have to say. Devote the same measure of due diligence you would when recruiting any new member for your team.
2. Delegate, don't abnegate. An owner must stay close to the bookkeeping process in order to understand the business, where the money is spent, and where the profit is earned.
3. Pay for quality. Hire a reliable bookkeeper and don't be afraid to pay a reasonable hourly rate. Good bookkeepers might cost as much as $25 to $35 per hour, but they're well worth the investment.
4. Ask for what you want. Along with your monthly financial statements, ask the bookkeeper to provide you with copies of your digital accounting files – and store them safely. That way you’re never more than a month behind – and you have a backup of all files should the bookkeeper have a fire or a computer failure.
5. Test the relationship. Engage the bookkeeper for a trial period at first, with the understanding that you only proceed past that stage if both parties are satisfied with the arrangement. This will pre-set a time and cut-off point, in case the relationship doesn't work out. Be prepared to address any issues or end it at that time.

After investing considerable time, money and energy into getting a business up and running, recordkeeping and reporting are too important to be left to chance. It's unlikely that you'll have enough hours in the day to run your business and do the bookkeeping yourself. A great bookkeeper will free up your time and energy for serving customers and doing the work you love to do.

Article first published in the Prince George Free Press.