Small business owners often feel like they need to do everything themselves. This is a fallacy for many, many reasons. Have you ever tried to fix every piece of machinery in your warehouse? Set up computer servers or a cloud-based company file system? Contact providers to put together a company insurance benefit? Represent yourself in court? You get the picture.
As small business owners, we all have to grow our businesses and mitigate our risks. Financial management falls squarely at the intersection of those two objectives. But you don’t have to figure it out alone. Here are a few reasons that taking a DIY approach to your finances can actually harm your business.
Business Owners Don’t Know What They Don’t Know
Before our client had any financial systems in place, he’d go into the office every Saturday morning to pay bills. It was very stressful watching money go out the door and having no concrete understanding of the company’s financial position. Furthermore, they couldn’t track which bills were paid and which ones were not, which led to a number of duplicate payments. Even payments that were scheduled for autopay were often paid by check in those Saturday morning sessions. It was costing the client time, money and peace of mind. How would you quantify the cost to your business or even your mental health of doing tasks which are frustrating, lack efficiency, and quite frankly, aren’t generally in your wheel house?
My Small Business Pro created structure and efficiency by implementing an A/P (accounts payable) process. When an invoice comes in, it’s approved by one of the owners and forwarded to a bill payment software. We audit the bill to see if it’s already been in our system or if it should be matched with an existing transaction. If we need to initiate payment, the bill gets puts in a que based on its due date. Of equal importance, the client now has an accurate understanding of their financial position.
If you’re doing it yourself and you don’t have a process, inevitably some things get missed.
The Value of Your Time
The time invested in certain areas is unnecessary and costly. What are your strengths and weaknesses? What are the tasks only you can do? When you insist on doing everything yourself, the cost can be higher than you think it is. Not only might you be mired in inefficiencies that cost your business money, but you’re likely not focusing on your clients or the growth of your business. Self-awareness is a key component to being a successful entrepreneur. What are you doing in your business that isn’t serving you? Stick to your sphere of genius.
For instance, it doesn’t make sense for me to understand social media algorithms. I leave that to my marketing company. I am active on social media platforms because I value the exposure and the opportunity to support my clients. But my actual sphere of genius includes areas where I am educated and passionate: financial management, building my business and connecting with my clients one-on-one.
Even if you happen to be good at numbers, there are only so many hours in the day.
There is a cost to focusing on things that are not in your sphere of genius.
When Self-Reliance Becomes Self-Sabotage
You probably already know you need QuickBooks or a similar software, and you may even have read somewhere that you need a QuickBooks pro.
A client who came to us last fall tried to pursue a WBE certification and was asked to provide an accurate Profit and Loss Statement. She couldn’t move forward in her business because her financials were way off, and she knew it, and it was time to get help.
Together we trudged through 3 and a half years of QuickBooks entries. She simply didn’t know how it all worked together, and used it like a spreadsheet to track expenses without reconciling bank balances or accurately categorizing income and expenditures. Her subcontractors were listed as employees (that’s a big no-no, by the way). The banking connection had been disconnected for a period of 6 months and expenses had to be manually imported from the bank. There were multiple instances where she had entered in QuickBooks that payment had been received, but the bank records did not substantiate those payments.
My Small Business Pro collaborated with our client and corrected all of the discrepancies and mis-entered transactions, For the first time since she started the business three years ago, her financials are accurate and reflect the company’s profitability.
QuickBooks might seem easy, but if you don’t really know the nuances of the software, let alone how to do accounting, you could end up with a set of books that are meaningless.
Owners who avoid the pitfalls of a DIY mentality free their time and their energy to grow their businesses. They also gain trusted partners and collaborators who promote their business growth.
My Small Business Pro provides clients with accurate financial information, right at their fingertips. Sound like something that would benefit you? Call us today.