The Number One Mistake Business Owners Make When Hiring a Bookkeeper
In the grand tapestry of running a creative business, there are countless threads, each necessary for building the bigger picture of success. One of these threads, often overshadowed by sales or marketing, is bookkeeping. The accounting aspect might not be the most glamorous part of your business, but it's arguably one of the most vital. And when it comes to ensuring your financials are in order, lots of business owners make one detrimental mistake: they believe that merely throwing money at the problem will solve all their bookkeeping and accounting problems.
It's a common belief: if you hire the best bookkeeper and pay top dollar, your financial woes will miraculously disappear. But that’s not the reality. If business owners aren't actively engaged in their own accounting and bookkeeping, the most expensive bookkeeper in the world won't make a difference. Sorry, I know.
Why Simply Spending Money Isn't the Answer
Money is a powerful tool. It can buy expertise, software, and even give you peace of mind to some degree. But what money cannot buy is your commitment, your willingness to engage and your desire for understanding — all of which are essential when it comes to bookkeeping.
Imagine you wanted to get into shape. Hiring the best personal trainer in town and then not showing up to the gym won’t yield results. The same principle applies here. Hiring a top-notch bookkeeper, but remaining disengaged from the financial processes will keep you in the dark about your business's true financial well being.
The Importance of Active Engagement in Your Creative Business
Understanding Your Financial Health: Being active in the bookkeeping process gives you insights into the financial health of your company. It can provide a clearer picture and understanding of your cash flow, expenses, and profits, guiding better business decisions.
Building a Financial Strategy: Beyond the basic numbers, an understanding of your bookkeeping informs and guides you in building a strong financial strategy. Knowing when to invest, when to cut costs, and how to manage cash flow during lean periods can be the difference between business success and failure.
Spotting Mistakes and Fraud: Remember that no system is infallible. By staying engaged, you're adding an extra layer of oversight. This can help in spotting mistakes or even malicious activities faster than if you were completely hands-off. The faster you find an issue, the less costly it is to remedy it.
Participation Doesn’t Mean Doing It All
Now, this doesn't mean you should be making journal entries, reconciling bank statements daily or diving deep into every financial transaction (unless you’re into that sort of thing). After all, there’s a reason you’re considering hiring a professional.
However, participation is as simple as:
Regularly Reviewing Financial Statements: Make it a monthly habit to review your reports. Understand the basic elements of your balance sheet, income statement, and cash flow statement. Your bookkeeper can guide you through these if they seem confusing at first. Remember, when you’re a business owner, for better or worse, understanding the financial side of things is part of your job.
Asking Questions: If something doesn't make sense or seems off, ask your bookkeeper. An excellent bookkeeper will appreciate your engagement and will be happy to explain or rectify any issues. Most bookkeepers want to add value and be helpful.
Setting Goals and Discussing Them: Your financial goals can shape bookkeeping strategies. Regular discussions with your accountant and bookkeeper can ensure that you're both aligned.
Finding the Right Balance
Make no mistake: engagement does not mean micromanagement. Trust in the expertise of the professional you've hired. The aim is to find a balance where you're an active participant in your business's financial journey without being bogged down by every minute detail.
Remember, bookkeeping is not just about record keeping. The numbers tell the story of your business, with highs and lows, challenges and successes. By actively engaging in your bookkeeping process, you're not just a passive reader but an author, shaping the narrative and ensuring a successful story line.
Throwing money at a problem, especially one as intricate as bookkeeping, rarely provides the desired outcome. Engagement, understanding, and active participation are the real keys to unlocking the value of a professional bookkeeping. As a business owner, you have a responsibility not just to hire the best talent but to work alongside them, to understand your financial narrative, and steer your business towards success. Remember, a business that knows its numbers knows its strength.
If you're a creative business owner in need of bookkeeping and accounting support, we’re here to help!