Being a business owner is not for the faint of heart as the hours are long, the stress of managing cash and then making sure the company is growing, which often creates an overwhelming workload.
How are you as a business owner supposed to find time to develop growth strategy, set goals, create a budget and then analyze the financial statements to see if the company is on track? More importantly find the time to sleep, eat and enjoy life?
If you do a Google search for bookkeeping or accounting services, the result will be millions of companies who will do the work for you. As you begin scrolling through the list, how do you decide if you need bookkeeping, accounting or both? Is there a difference between the two services? Yes!
In simple terms bookkeepers enter the transactions (create the data) and accountants validate and analyze the data to transform into financial and management reports.
I believe that if you are serious about building a viable company that can endure the ups and downs of the economy, you will hire internally a bookkeeper and an accountant, or outsource to a company that can provide both services or do a hybrid until you can afford to bring the functions in-house.
As you can see from this first pyramid, when it is just you and a bookkeeper or it is you doing everything, the weight of the company is ALL on you. The transactions hover between you and the bookkeeper with reports traveling down to you. No wonder a business owner would be exhausted!!!
This next pyramid shows how the transactions & reporting flow when the accounting is structured to flow from the bottom up. The “weight” of the work is distributed proportionately and at the top you are reviewing the reports, making decisions and managing your company instead of your company managing you. Imagine what you could do with this extra time, energy and focus?
You aren’t risking everything so you can focus on accounting; you took the leap to start a company because you discovered a need in the market and believe passionately in your ability to provide a service or product that will fill this need and make money!
What services do you need? First it is important to understand in general terms what are the differences between a bookkeeper and a controller:
- Bookkeepers focus generally on recording daily operational transactions such as vendor purchases, customer sales, inventory usage, bank deposits, payroll processing and creating a basic income statement.
- Controllers/CFO’s focus generally on management of vendors, cash and risk, creating and documenting processes, budgeting and forecasting, financial analysis, financial and management reports and strategic business planning.
Looking at the different functions all business can benefit from having a bookkeeper and a controller, but the reality is that until your annual revenues reach approx. $25 million dollars, hiring a full-time controller isn’t feasible. Therefore, you as a business owner often end up at the bottom of the pyramid because you will take on the functions of a controller or cfo while also trying to run the company.
The good news is that cloud-based technology has created an entire industry for helping companies outsource their bookkeeping and accounting tasks. Many of the virtual or online services offer bookkeeping with a sprinkle of accounting services or offer the accounting services in addition to the bookkeeping services. Technology now makes it possible for you to have an accounting department that is affordable and that can scale with your growth until it makes sense to bring the accounting in-house.
I recommend looking for a on-demand accounting company (online or local) that offers monthly packages which include bookkeeping and account services that can be tailored to your specific needs and budget. It is also important to find a company that has experience with your specific industry such as retail, non-profit, service, restaurants and manufacturing.
The most important thing to remember is that you no longer must be at the bottom of the pyramid. Technology has evolved to give you affordable options so that you can move to the top of the pyramid and focus on running and growing your business!
To find out more about how Beyond Accounting can you help you move to the top of the pyramid, give us a call today for a free consultation at 888-893-7593
About the author: Nancy Rumfelt, owner of Beyond Accounting has always loved puzzles and mysteries and realized that she also loves helping companies solve their mysteries of what isn’t working and how to find the missing pieces to complete their success puzzle. Along the way Nancy has developed a knack for understanding manufacturing operations and finding solutions that are simple to use and work for companies small or large.
With over 30 years of accounting and business experience, she can provide a wide range of services to a diverse set of industries such as manufacturing, construction, service or retail.