Stop Eating Frogs

Mark Twain famously said, “Eat a live frog first thing in the morning and nothing worse will happen to you the rest of the day.”  In recent years this has become a particularly popular sentiment amongst entrepreneurs, used as a reminder to not procrastinate in completing disliked chores.  Small business owners typically have to manage so many different aspects of their company, it's inevitable that there will be some tasks they dread.

For many, their "frog" is accounting.

But, here's the secret...for some people, frog is a delicacy.

We may be in the minority, but, at The Bookkeeper, accounting and finance aren't just something that pays the bills.  We actually find a lot of it fun.

Here are a few of our services which, though business owners typically find distasteful, we really enjoy.

You know the only thing more fun than reading a collections procedure manual?  Writing a collections procedure manual.  It combines several of the things we love, like research, technical writing, and custom-tailoring business practices to an individual company.  What's not to love?

Of course, we've heard some people refer to research as "boring" or technical writing as "tedious".  But we feel the same way about SEO optimization and, apparently, some people enjoy that.

Budgeting

Budgeting seems to have a negative connotation for a lot of people.  A budget is seen as something constraining.  But we think budgeting is awesome.  You get to look at all your revenues and expenses, and figure out where you can save or earn more money.  Who doesn't like having more money?  A budget lets you make plans and take steps to achieve your goals.  Not knowing your budget is like driving blindfolded.  Maybe exciting for some, but too risky for us.

 Debt Repayment Plans

A lot of people who are in a great deal of debt don't like to think about how much debt they're in.  Of course, ignoring a problem doesn't make it go away.

For business owners overwhelmed by debt, figuring out a way to repay it all is too big a frog to eat.  Much easier to just make the minimum payments and try not to think too hard about those rising balances.  Fortunately, we love writing debt repayment plans.

Like so many problem, debt seems a lot bigger when you're in the middle of it.  That's why we enjoy taking an objective, mathematical look at the problem, and coming up with a tangible, step-by-step solution to eliminating it.  And it is so exciting to show someone how they can, often without even spending additional money, be debt-free and have savings built up in, frequently, as little as five years.

 Profitability Analysis & Pricing Strategies

Some people may be put off from some aspects of accounting because of the math involved, particularly when it comes to things like calculating gross profit margins.  We at The Bookkeeper are huge fans of math, perhaps because of its consistency and objectivity or, perhaps, as the great philosopher Cady Heron stated, "Because it's the same in every country."  (Yes, both Mark Twain and "Mean Girls" quotes in one article.  Small business accounting can be very culturally relevant.)

Math is especially useful when it comes to looking at which products or services provide higher revenues or greater returns, and where prices can be raised to improve profitability.  Using a little bit of math and research to make more money, without having to sell more or perform more work?  That's fun.

These are just a few of the services we provide for our clients, not just because our clients find them difficult or loathe doing them, but because we actually do find them interesting.  Where the client sees a live frog, we see a perfectly seared filet mignon.

If there's some chore in your business which you simply despise completing on a daily basis, whether it's finance-related or something else, consider whether it's worth it to you to pay someone else to eat that frog.

You're in business for yourself, so why do something you hate?


How much are you paying for your free lunch?

"There's no such thing as a free lunch."  Anyone who has taken even the most basic economics course has heard it.  But what does it mean, exactly?

The "free lunch" idiom is frequently used to simplify the concept of opportunity cost, in that, even as you accept a free lunch, you miss out on other opportunities during that period of time.  Investopedia defines opportunity cost as, "The cost of an alternative that must be forgone in order to pursue a certain action.  Put another way, the benefits you could have received by taking an alternative action."

It's a fairly basic definition and it's one that most business owners understand...in theory.  However, for many entrepreneurs, the desire to keep costs low can cycle into a "do-everything-yourself" mentality, which, in turn, lends to missed opportunities.

To better illustrate this issue, consider Janice, professional photographer (and fictional entrepreneur we created for this example).

After experiencing a great deal of amateur success, Janice has decided to become a professional photographer full-time, and open her own studio.  She determines that her new business needs the following things:

  • A photographer
  • Photo editing
  • Someone to answer the phone and schedule appointments
  • A website
  • Bookkeeping

None of this looks too hard to start with, and Janice figures she can handle most of it.  She's got the photography and photo editing skills already and, until she can afford to hire a receptionist, she can just take business calls on her cell.  There are plenty of places online where anyone can build a free website, and she can keep track of her own business financials throughout the year and figure it all out with TurboTax in April.  For a great photographer and hard worker, this shouldn't be any problem.

Of course, things don't go as simply as Janice has predicted.  Her phone rings with appointment requests while she's in the middle of sessions and, by the time she calls the prospective customer back, they have already booked with someone else.  Her shoots run long because she has to change backdrops, arrange props, etc. by herself.  Her days are so busy she has to stay up late working on photo editing.  The website she built is...okay, but comes across as generic and slightly amateurish.  She's not entirely sure how her bookkeeping as going because, with everything else going on, it's been the last thing on her mind.

On top of all that, she's started to notice that her business needs some things she hadn't planned for, including:

  • Photographer's assistant
  • Studio cleaning
  • Basic legal documents

For the sake of comparison, let's assume Janice continues to do all of this herself.  Let's look at how much money she is saving.

Receptionist                             -     $9/hour

Website                                      -     $500

Bookkeeping                            -     $500/month

Photographer's Assistant   -     $12/hour

Cleaning                                    -      $8/hour

Basic legal documents         -     $300

It looks like Janice has saved her business a lot of money through her strenuous efforts and "can-do" attitude.  However, we have to factor in the opportunity costs.

Let's take a look at what each of these things Janice is doing herself, each "free lunch", cost:

Receptionist                             -     Missed income from lost appointments; positive word-of-mouth; professional image

Website                                     -     Lack of professional image; loss of referrals; missed income

Bookkeeping                           -     Missed deductions; increased risk of audit

Photographer's Assistant   -     Shoots take longer so fewer of them can be scheduled, leading to missed income

Cleaning                                    -      Time and energy diverted away from more profitable activities, such as photo editing and networking

Basic legal documents         -     Increased legal vulnerability; loss of time

So, when you weigh all the opportunities to genuinely build her business which Janice has lost while she was busy doing everything else, how much money did she really save?

Now, this isn't to say that you should farm out every task you dislike (particularly early on, when small businesses are susceptible to cash flow woes).  However, it is key that, before committing yourself to something outside of your wheelhouse, you measure the benefits of DIY versus outsourcing.  In many cases, the opportunity costs will be greater than you think.