Is It Time For a New Inventory System?

December is the time of year when everyone starts thinking about changes for the upcoming new year. For companies, that often means analyzing their current systems and thinking of what they want to improve.

One area in which we’ve seen a large number of clients update their processes this year is in inventory management. Many companies began selling more online during the pandemic, and quickly found that their old inventory systems couldn’t keep up. Those clients turned to us for guidance on the best solutions for those issues.

As we’ve worked through helping clients select, implement, and troubleshoot new inventory systems, we’ve encountered several questions, and have made a number of observations, which we would like to share.

Question #1: How do I know it’s time for a new system?

Unfortunately, many companies do not feel the need to begin the search for a new inventory software until an error has been identified. In the accounting systems world, errors are like cockroaches: if you see one, you probably have one hundred.

Errors can occur for a number of reasons, but, in essence, will always boil down to a failing of either man, machine, or both. Machine errors occur when outdated systems fail to integrate appropriately, or when data stops populating in a timely manner. Human error is simple mistakes, often due to manual mis-keys, or rushing. But often, it’s some combination of both. One common issue is that an outdated software no longer provides the functionality required, so the people using it create a manual “workaround”, that is subject to human fallibility.

Errors often coincide with another sign that it’s time for a system update: the current system takes too much time. It’s too finicky, not automated enough, and requires too many man-hours. These outdated systems may have a cheaper price tag, but cost too much in lost productivity (or having to pay accountants to fix the problems they cause).

Finally, it’s a clear sign that it’s time to update your inventory system when it is costing you revenue. If you can’t quote a customer because you aren’t sure if you have the job materials, or if you fail to fulfill an order on-time because product is missing, you can be certain your inventory needs to be updated.

Question #2: How do I choose a system?

Clients will sometimes ask us, “Which inventory system do you recommend?” While it’s true that there a few we work with more frequently than others, no one system is best for every company. Even businesses in the same industry can have very different needs and priorities, necessitating different software options.

A good first step is to establish your priorities in selecting an inventory software. It’s not guaranteed that you will get all of the features and functionality you want (especially if you have a limited price range), so it’s good to know what bells-and-whistles are “must-haves” versus “nice-to-haves”. It’s also crucial to ensure that any software you pick accounts for the people who will be using it; a Cadillac ERP is useless if it’s too complex for any of the end users to understand.

You also have to determine whether you are looking for a short-term solution that will build upon your current systems, or something scalable that will replace current systems and be used indefinitely. For example, many companies will purchase highly-modular inventory software packages that can integrate with their accounting software, and have additional features unlocked over time. Other companies may select an all-inclusive program with high start-up costs, but that should suit all of their needs in perpetuity. This is where cost becomes a huge factor.

In analyzing multiple system options, it’s important to calculate the ROI on each one. In making this calculation on a software option, it’s important to not only weigh it against the cost of any systems it might be replacing, but to also consider labor hours saved, potential revenue gained, loss prevention, etc. You might even be able to incorporate functions you had not considered. (For example, a trades inventory software might come with scheduling applications which can save dispatch time, or improve marketing.)

Of course, once a new system is selected, the project is only beginning.

Question #3: How do I get started with a new system?

Implementation is the toughest, most frustrating part of any software project. There are almost always unforeseen challenges, and it is often a highly iterative process of testing different types of transactions, seeing what errors are thrown, and making adjustments, just to test again. However, there are steps you can take from the onset to minimize the pain of systems transition.

Your first step is to establish your transition “team”: this is a mix of the system’s end users, both internal and external, and any consultants or experts who are helping you along the way. It’s good to clarify each team members role and duties early on, to avoid duplication of efforts or tasks being missed.

Once you have pulled your team together, you’ll want to schedule out milestones for your transition project, as well as touchpoint meetings. This will keep everyone focused, and will help prevent you from losing momentum. Too often companies purchase expensive new softwares without a clear implementation deadline in place, and end up letting them sit unused, while everyone continues to work in the old, more familiar software.

In putting together your transition timeline, you’ll also want to consider how long of an overlap window you want with the old system. Overlap windows, where both systems operate concurrently, not only make the transition smoother (because you’re not trying to cut off one system at the same time you begin a new one), but also help provide a data backup in the (nigh inevitable) event the new system needs some troubleshooting once it goes live.

After you’ve been active in the new system for a while, it’s also good to have established check-ins to be sure that everything is remaining accurate, and that there aren’t any “behind the scenes” problems to be addressed. Then, you can work in confidence in your new, updated inventory program.

We’re Not Business Coaches

I’ve written before about the role of a CFO versus an accounting manager, but have found that there is still a good bit of confusion surrounding what an outsourced CFO/accounting consultant does. The major misconception is that we offer business coaching. In order to clarify how that is not what we do, I thought it might be helpful to expound upon the differences.


Coaching is directed toward an individual, often a company owner or higher-level executive. Financial consulting is based on the needs of the company as an entity. While a business coach might direct an owner to how they might discover their personal passion, and build a company around that, a business consultant would view the areas of profitability for the company, and help devise a plan for focusing toward the best area of ROI, while still serving a diversified client base. Someone struggling to define their personal vision would make a better client for a business coach, than for a consultant.



Financial consulting is based in quantitative data. We do work in forecasting, with margin for error, but all analysis of future possibilities comes from what is quantifiably measurable in the present. Business coaching can be based around more nebulous information, and be more aspirational in pursuing goals. Financial consulting can be used to deal with a moving target, as opposed to aiming for a destined endpoint.


Though we love our clients and are always willing to lend a sympathetic ear, we recognize that we are not trained therapists. (I do feel like we should at least get an honorary license for talking hundreds of people through PPP applications, however.) We want what’s best for our clients, and sometimes that means having to have difficult conversations. Our role is not to be a cheerleader, but an arbiter of fact-based truth. If a client is dead-set on a given business path regardless of the data, and is seeking encouragement only, they are not a good candidate for our consulting.


In short, via our consulting services, we seek to assist a business owner in improving their company. We do not endeavor to improve the performance of the business owner his or her/self.


The Four Pillars of a Financial System

Every business has, whether by intention or default, a financial system. In a “default” financial system, the movement of money just…happens. Bills might be tracked on a notepad, customer invoices are saved on a spreadsheet, and the accounting is just something the tax preparer does with the bank statements at the end of the year, wholly unaffiliated with anything else going on in the business. The chaos that results from these default systems leads to owners out-of-the-loop on their own companies’ financials, and has caused the shuttering of more than one small business.
Building a solid business financial system requires focus, planning, and four crucial pillars: software, workers, processes, and product.


An accounting software is necessary for a solid financial system, but does not have to be pricey nor extravagant. It is easy for SMBs to rack up hundreds in monthly subscriptions by trying to find a software, or combination of softwares, that will automate every aspect of their business. Though automation has come a long way, it is inevitable that some work will have to be done by a human.
It is most important to find a software that meets the needs of the business while simultaneously producing accurate financial reports. Choosing a software is too long a process to cover here, but there are a few guidelines to keep in mind:

  • Does this program meet double-entry accounting standards?
  • Does it save me time, or create more effort?
  • Will one software cover everything, or will other softwares be needed? Can they be successfully integrated?
  • Can everyone working in this program learn to use it accurately and effectively?
  • Will everyone working in this program use it?

As you can see, those utilizing the system are as important as the system itself.


In speaking of workers, I am not referencing general employees but rather all those, internal and external, who are operating in the space of the business’s financial system. This could include the business owner, a W-2 admin, a tax preparer, or an outsourced consultant. In developing the system, practical considerations have to be made regarding the ability and willingness of those expected to work within it. One software might be flashier than another, but too complicated to learn alongside keeping up with other work duties. Or, a business owner might be interested in highly granular data regarding their supplies inventory, but it would be impractical to ask for a daily count of individual nails.

Like other aspects of the system, the workers may shift from time to time. A business who relied on an in-house admin to fulfill bookkeeping tasks may choose to outsource those duties as they grow, or to find a CPA who can better meet their needs as a scaling operation, versus a smaller “mom and pop” shop. Regardless of who currently performs the work, it is important that everyone’s tasks are clearly outlined and delineated. This is where processes come into play.


Documented processes are vital to any business operation, and financial operations are no exception. It is important to have processes well-recorded not only to ensure that things run smoothly, but also to protect the company’s fiscal assets. A messy financial structure is one that is vulnerable to embezzlement and mismanagement of funds. In developing processes, consider the following:

  • What individual is responsible for which tasks? Are duties separated to prevent misbehavior? (For example, requiring a second approval to add a new vendor to the bill-pay system.)
  • Which tasks are dependent on each other?
  • What are the deadlines for each task, and how do they affect subsequent dependent tasks? (For example, what if reimbursement receipts aren’t submitted prior to the payroll run?)
  • How can natural consequences be utilized in order to ensure that tasks are met with accuracy and timeliness? (Ex. If reimbursement receipts are not submitted on-time, they will not be paid out until the next payroll run.)

If the workers are utilizing the software appropriately, and are following processes, you will receive a timely and accurate financial product.


The financial documents resulting from your system’s work are your product. As we’ve previously discussed, this shouldn’t be just your end-of-year Balance Sheet and Profit & Loss Statement for tax filing. You should receive and analyze financials on, at minimum, a monthly balance. Reviewing the financials while they are fresh allows you to make timelier and more relevant business decisions. Beyond the standard financials, developing KPIs, and the appropriate reports with which to track them, is crucial as well. One company facing cash-flow issues might want to examine Average Days to Pay on customers, as well as their monthly Statement of Cash-Flows. Another company might want to review profitability within one division of their organization. Much like the rest of the financial system, this product can also evolve over time.

Developing a financial system can be a daunting task, but help is available. If you would like better structure within your financial system, but aren’t sure where to start, contact us for a free consultation.

man holds papers

What Does a CFO Do?

If you asked the average person what a CEO does, they can probably give you a fairly detailed answer, somewhere between the truth and the truth as influenced by pop culture. CEOs are visionaries who run companies by giving presentations and going to board meetings.

By contrast, if you ask what a CFO does, the answer you might get is, “Shred documents.” CFOs rarely get famous, and it’s even more rarely for good reasons. But CFOs do serve real, legal, purposes. So we seek today to answer the question: What does a CFO do?


sign papers

CFO vs. Accounting Manager

It might help to start by clarifying what a CFO does not do. Though a CFO is, by definition, the Chief Financial Officer of a company, their role is not the same of that as an Accounting Manager. An Accounting Manager directs the accounting department and ensures accuracy and timeliness of company financials, as well as making sure the day-to-day accounting operations run smoothly. In contrast, the CFO is responsible for the financial health of the company, as well as leading its financial direction. To put it in simple terms, if the power gets shut off because someone forgot to pay the bill, it’s the Accounting Manager’s fault. If the power gets shut off because the company can’t afford to pay the bill, it’s the CFO’s problem.


How Do Big Companies Use CFOs?group looks at laptop

A CFO’s role is to develop and implement the financial strategy of an organization. They not only analyze the present financial position, but develop projections and forecasts for where the company is headed. If an accountant is a historian, the CFO is a futurist.

Beyond analysis of the basic company financials, they develop KPIs to track financial health, and are a key figure in making financial decisions, such as issuance of shares. In publicly-held companies, the CFO also ensures that regulations are being met and obligations to shareholders fulfilled.


women look at laptopWhat Can a Small Company Do?

Per, as of March 29th, 2022 the average CFO in the United States makes $412,529 per year. This is an expense that is not an option for many small-to-midsized businesses. Many small business owners choose to cover those duties solo, though some choose to outsource the work to a fractional CFO.

An outsourced CFO can help with obvious needs, like pursuing financing from lenders or investors, or special reporting required for grants and government contracts. However, they can also help with everything else the big companies get: budgets, pricing strategies, expansion planning, etc. The trick is in finding a good outsourced CFO.


collaborate at workWhat Makes a Good Outsourced CFO?

Projects die when there’s a lack of focus, and that includes financial projects. A good CFO consultant will help determine what CFO services are needed, in what order, and the timeline for their implementation and overlap. (Since the CFO is not a full-time employee, and human capital in a smaller company is more limited as well, it’s impossible to start all projects desired all at once.)

The good CFO will not just assist with the higher-level thought exercises, the analysis of data already collected, but will also help with practical implementation. A company who is outsourcing CFO work may also not yet have an Accounting Manager, and the CFO consultant can help fill in those gaps, and be sure that financial systems are well-developed and running smoothly. Since the CFO cannot provide good analysis without good data, it benefits all for the books to be clean and timely.

Most importantly, a good CFO will exhibit flexibility in working with a client, not trying to sell a set package of services, but developing plans unique to that company’s needs. A sales bonus plan doesn’t necessarily help a company with receivables issues, nor should a company with poor cash-flow focus on immediate expansion. A good CFO will be dynamic, instead of taking a one-size-fits-all approach, and will be honest with the client, even when they don’t want to hear it.

And, of course, they won’t rely on the paper shredder to cover up financial crimes.

basketball court

Hiring an Entire Person

Imagine you’re the coach of a winning basketball team. You’re doing pretty well but, you’ve lost a few games that you feel could have been won if your players hadn’t been out-rebounded. When it’s time to start scouting for the next season, you find yourself trying to decide between two players.

basketball players reachingThe first player is built like Shaq (the younger, leaner Shaq) and is a rebounding machine. Unfortunately, he shoots like Shaq at the free throw line (only from the field as well), slacks off on defense, and is rumored to be a diva in the locker room.

The second player is a great all-around recruit who has high stats in points, assists, AND steals, and is known to be a hard worker and generally well-liked guy. The only downside is that he’s built like Muggsy Bogues, and, unless you’re playing an exhibition game against a preschool team, is not likely to be pulling down any boards.

So, who do you draft? If you’re like me, you take the second player every time. It works this way in business too. You may find an area in which you feel your team is currently lacking and try to recruit to fill that specific gap. But that’s not always the best choice.

man makes basketball goalFirst, let’s discuss the reasons why you shouldn’t hire someone just to fills a skills gap. For starters, you may not need enough help in that particular area to fill an employee’s time. In a basketball game, there’s a lot more a player needs to do than just stand around under the goal, boxing out to get rebounds.

Or it could be that there’s too much of a need in one area, and one person can’t do it alone. Even if someone is the best rebounder in the world, if they’re the only one from their team under the net facing down five other guys, their chances of success go way down.

Finally, particularly in certain high-demand positions, an individual with a specialized skillset might not be the best fit for the team overall. They could bring an ego or simply have a personality that does not work well with your company culture. (Or they could be so lacking in other areas as to be a net drain on productivity.) In those cases, another player is a better option.

women reach for basketballSo now, let’s discuss how you can fill skills gaps in your company without making it a hyperfocus of your hiring. For starters, look at how you can train and improve the staff you already have. Rebounding stats go up when the entire team is fighting for position and going for the ball, even if no individual is a rebounding superstar.

Second, look at how other areas in which you’re stronger can be used to supplement the area of perceived weakness. To continue with our analogy, a team that struggles with offensive rebounding need not struggle so much if they improve their field goal percentage and make more of their shots on the first try.

Finally, remember that you cannot hire only part of a person; you have to take all of them, the good and the bad. Look for someone you are excited to have around for the long-term, who not only has a skillset that can be immediately useful, but for someone who can grow and develop within your company to become an indispensable MVP.

woman wearing face mask

Our Pandemic Story

This morning, I went to my first local Chamber of Commerce breakfast in over 18 months. The general attitude was as though we’d all just woken up from a collective coma: we were thrilled to see each other, but in a blur as to whatever had just passed over the last year. It was agreed that 2020 felt like a fever dream; it was interminable while we were going through it but now, is almost hard to remember.

I’m a big believer in studying the past to learn from it, and, though 2020 was hard, I don’t want to forget how it felt, nor the lessons from it. As we move through the summer of 2021, I feel like it’s time to share The Bookkeeper’s pandemic story.

Act I: Winter 2019 to Spring 2020

From the onset, we were blessed by a bit of prescience from Craig, our founder and my co-owner. We both knew that the economic bubble the country had been experiencing was due to burst and had taken precautions accordingly. However, as early as December of 2019, he was nervously following news about what was then termed the coronavirus. Not only was he convinced that it would prove to have more devastating effects than were being predicted at that time, but he called, accurately, that it had already spread from the Wuhan region prior to the instituted lockdowns. Many, myself included, thought he was probably overreacting or being a little paranoid, but he was proven right when it was identified in Europe and then later confirmed to have spread to the United States. Once we received confirmation in February of 2020 that it had spread to North Carolina, we made the decision to move all of our staff to full-time work-from-home in the beginning of March.

Though we were sure that remote work was the right decision, as everyone’s safety trumped any benefits to working in the office, it was a move that came with anxiety. We weren’t certain how people would do working from home, whether efficiency would be lost, or whether we’d lose the connection we enjoy with our staff. To our pleasant surprise, efficiency improved, and our people proved themselves as dedicated as we’d always hoped and liked to believe they were. It was an odd position to be in, to continue to thrive when we saw so many friends and clients struggling. Then, the CARES Act was passed, and things really blew open.

Act II: Summer 2020 to Spring 2021

gavelI am the sort of person who addresses anxiety through research. I’ve had my share of health struggles, and am probably a nightmare patient for my tendency to do things like watch video of surgeries I’m scheduled for. However, this proved useful when the CARES Act was passed. It was rushed through (understandably so), and I knew that it would be chaos to maneuver. I decided that the only way to make sense of the thing was to read every line of it, and I did. I quickly realized that disseminating information to clients on a case-by-case basis wouldn’t be the most efficient use of my time (particularly while I was slammed), so I started a Facebook group where I would put out videos summarizing portions of the act as I read them, helpful links for grant programs, or anything else people might find useful. This grew quickly, as business owners really seemed to be craving guidance and information during this time.

At the same time, there was endless work to be done in helping clients with all of these new programs. I filled out EIDL applications for months, going from the initial form, which was a technological nightmare and took about 13 hours, to the newest and most-streamlined version (with a PDF drag-and-drop version that lasted roughly 2 days in-between). I lost count of how many PPP applications I assisted clients with, and every bank had a different format. (I did over a dozen with BB&T alone.) Then there were other local programs, the short-lived Main Street Lending Program through the US Treasury and, later, PPP forgiveness and Employee Retention Credits.

video meetingAll the while, we turned away new business clients who were calling only for help with the various CARES Act programs, as I was working 70+ hours per week and barely had enough time to help established clients. I hated to say no to people, but we had to prioritize those who were already with us, as there just wasn’t enough time to help everyone. Eventually, we got through the worst of the rush, but had to hire additional staff, which added a level of complication as we attempted to train new bookkeepers partly remote and partly in-person. In order to avoid working in a cramped office environment, we worked from Craig’s house, where we could spread out but still be physically present in one space. We all became very adept with Zoom and Google Hangouts and, to help our new folks integrate with our veterans, did many virtual teambuilding events, like screenshared party games and a virtual Christmas party, where we sent the staff GrubHub gift cards and worked through a murder mystery dinner over Zoom. It didn’t replace the real thing, but it kept us sane and cohesive.

Though this time was chaotic and stressful, it was also an inspiring time to be in small business. There was a true feeling of us all being in this together, and connections felt more genuine (even if they couldn’t be face-to-face). When someone asked how you were doing they really meant it. And if you asked someone how they were doing, you got an honest answer. That’s something I hope we don’t lose.

Act III: Summer 2021

group putting hands in togetherAs I mentioned in the beginning, we’re now adjusting to coming out of the COVID-dominated era and embracing the “new normal." We grew all throughout 2020 and continue to grow. (2020 was our highest revenue year, and 2021 is somehow up 20% over that.) In addition to the bookkeeping staff who came on, we’ve added a practice manager.

More than that, we’re meeting people in-person again. We’re doing live networking and catching up with friends for long overdue lunch dates. Though our staff is welcome to continue working from home, our office is reopened for when anyone needs to meet with clients or just get away for a bit to focus.

There is a bit of survivor’s guilt that comes with being a business that thrived during the pandemic. So many people were so negatively affected that it’s hard to celebrate personal success. But, when people have come through something like this together, celebration is necessary.

This Friday, we’re having our first in-person team event in over 18 months. We’re having a pool party, and many of our staff will be meeting each other face-to-face for the first time. COVID still exists, and the world may never be exactly the same, but we’re looking forward to the steps we’re taking to leave this era behind us.

falling man

Facing Your Fears, at Your Pace

Entrepreneurs like to embrace an aura of fearlessness. However, humans possess the ability to fear because it is a useful emotion. Fear helped us avoid lightning, and sabretooth tigers, and that same instinct exists within us today, and can help us avoid modern dangers (like human predators).

The problem comes when the fear instinct attaches itself to something which cannot literally hurt us, but which may "only" carry the risk of psychological harm. (Even then, the harm is likely overstated in our minds.)

sad man with head in handsThe instinct may exhibit itself as a fear of public speaking, or firing an employee, or submitting a sales proposal. These are all things that, in general, entrepreneurs need to be able to do. We need to be able to talk to strangers, or rid ourselves of problem staff, or ask clients to hire us. These things are necessary for the well-being of our business. Our fear instinct is actively working against our financial survival.

Of course, being entrepreneurs and, by nature, often people of extremes, our subculture has encouraged us to take a disproportionate response. We are told to "live fearlessly" and to "step outside our comfort zone". The narrative envisions the wallflower inventor wiping off their sweaty palms, calming their shaking voice, and pitching in front of the "Shark Tank" investors for millions of dollars.

sad face drawingI believe that our comfort zone exists for a reason. Often, within our comfort zone is where we work best and most efficiently, and it should be where we spend the majority of our workday: doing what we do best, and what we're comfortable with. The comfort zone is only a problem when it is restricting.

My proposal then is that, instead of leaving our comfort zone, we expand it.

Visualize your comfort zone not as a chalk-lined circle which you can easily step out of via sheer will, but as a protective bubble. If you gently push the walls of that bubble, you can stretch it in any direction which you choose, while still remaining safely inside.

woman giving presentationFor practical purposes, this means, for example, starting with a Toastmasters Club visit before you agree to speak in front of a large auditorium. If you've never had the displeasure of leading a termination meeting with a non-performing staff member, start with leading employee performance reviews. Practice your sales proposal on a friend before you present it to a prospective client.

Don't feel pressured to be "fearless"; just start making yourself more comfortable with small steps. You'll still reach your goal, but will avoid the pain and risks which your fear exists to protect you from.

women look at notebooks

"How to Run Your Small Business Like a Large Company" by Dave Baldwin

We've all seen them, those entrepreneurs with the seeming ability to work magic. We’ve all heard the legends about the founders of multimillion-dollar empires who started with a $1,000 loan in a basement. These stories seem far removed from reality, especially for business owners who grind away at building their dreams, only to hit brick wall after brick wall years or decades into building a small business. We hear this question from time to time: how do the successful ones do it? What’s their secret? What is everyone else missing?

There’s good news and bad news. Bad news first: there is no silver bullet, no “big reveal” and no shortcut. In reality, successful startups are years in the making, and there’s no substitute for persistence and discipline. The good news: most small businesses are, indeed, missing a key ingredient, and when you add that ingredient, real success begins to feel achievable, often for the first time in the life of a fledgling business.

Here’s the big secret: build your company like you’re going to sell it.

If you don’t want to sell your business, that’s fine. Aside from the fact that you will have to retire at some point, there is an imperative and critical need to prepare every small business for the possibility of eventual sale, regardless of your exit strategy. There is a fundamental shift in the mindset and daily habits of an entrepreneur who is building a business to sell -- as contrasted with the business owner with the goal of surviving and paying the bills. This key distinction is the single difference between businesses that grow and businesses that stay small.

What if I don’t have the money?

Spending money you don’t have is not necessary to build and grow a healthy business. Some types of businesses require significant startup funding, such as real estate developers and technology companies, but a budding entrepreneur with no startup cash can bootstrap a new company from scratch. To set up your company for long-term success, three roles are needed from the outset: human resources, legal and accounting. You can think of these as “seats” to fill in your organization chart.

These are not “someday” considerations to start thinking about when a company is “‘big enough to afford that.” They are needed immediately - if you are serious about building a great company.

HR systemsHuman Resources

No small business can afford an HR director, but neither can a small business afford to hire the wrong people -- or hire the right people incorrectly. In the beginning, the owner wears all of the hats, but as soon as revenue starts to flow, a sense of being overwhelmed can quickly set in. This is the first area where small businesses miss the mark, by hiring whomever they can find quickly and cheaply. Maybe it’s the next-door neighbor’s kid, or a nephew who just graduated from college and is working a fast-food job. The results predictably range from “tolerable” to “disaster.” Outsourced human resources services are available for every stage of a growing business, and it’s never too early to start thinking about this.


You might be great at what you do, but if you can’t scale it, your business will never get off the ground.

IP development is the cornerstone of building a scalable business. Every big company became big because they built something proprietary. That begins with your processes and formulas, everything unique about the way your company does what it does. Without IP, a business isn’t a business. It’s a self-employed individual working a collection of part-time jobs. Every business needs an attorney to legally protect the lifeblood of their enterprise. Not to mention the number of legal risks that can put a small company out of business in one fell swoop if necessary legal protection is missing.

Business attorneys used to be cost-prohibitive for small businesses, but not any more. Over the last decade, legal services have sprung up, catering to the needs of startup businesses with lean budgets. And we’re not talking about Legal Zoom here. You need the expertise of an attorney to ask the questions you don’t know to ask.

growing money from dirtAccounting

At the risk of sounding shamelessly self-promoting, you can’t build a business without an accounting system, and there’s a lot more to it than buying a Quickbooks subscription and connecting your bank accounts. Businesses that stay small usually think about bookkeeping once a year, when taxes are due. But accounting is about much more than just taxes. It’s about having a clear picture of your current business reality. You can’t make good decisions based on vague data, feelings or guesswork. Sadly, that’s exactly what a lot of business owners do, whether they admit it or not.

There are three distinct types of accounting: tax accounting, financial accounting, and operational or managerial accounting.

Tax Accounting

Tax accounting is what most are familiar with: planning for taxes, minimizing tax liability, staying compliant with tax laws, and ensuring there are no ugly surprises at the end of the year. Financial accounting is reporting data to outside entities, such as prospective investors or lenders who need to gauge the viability of your business. Current investors typically require quarterly reports to keep a pulse on the health of a business. In these cases, you want to show a limited view of your financials. Operational or managerial accounting is critical for the day-to-day management of a business. It consists of many different components, and here is a bird’s eye view of a few areas common to every type of business.

Key Performance Indicators (KPIs), when they are designed correctly, provide an objective real-time view of how well a business is performing and can also serve as leading signals of trouble brewing. For instance, if sales increase by 20% from one quarter to the next, but payroll expenses by increase by 50% during that same period, that might indicate that efficiency has dropped or that the business has over-hired. But there’s a further complication: how does one measure sales revenue? That question is more complicated than it might seem, and it relates to an important concept called “revenue recognition.”

chartsRevenue Recognition

Revenue recognition is an important concept for a business owner to understand. A business is said to ”recognize” revenue at certain times. For instance, a business might “recognize” revenue when it makes a sale and sends the invoice (accrual accounting), or it might “recognize” revenue when it collects the actual payment (cash accounting). Taxes can be filed using either method, but a business has to pick one and stick with it. For management purposes, however, accounting software packages can produce reports using either method, and both views are useful for different types of decisions.

Further complicating matters, many businesses do not have useful ways of looking at their expenses. For instance, if you operate a service-based business, do you know how much it costs you to deliver a service? Is that cost broken down into labor and materials costs? If you purchase supplies that are shared between different jobs, do you have an accurate view of how much is used from one job to the next? (Hint: if your answer is “I have a good feel for it,” then we as accountants would take that as a “no.”) Expenses are “recognized” just like revenue. Cash- and accrual-basis reports are often both necessary to view a full picture of where your business is making money (or losing money).

We’ve really just scratched the surface here, but the basic idea is that you can (and MUST) learn all of these areas of management if you want to build a business that grows and thrives. If it sounds like a lot of work, that’s because it is! But the concepts in this article are examples of the areas where successful business owners educate themselves continually.

No matter how brilliant you are in your craft, no matter how delicious a cupcake you can bake, you cannot build an enduring business unless you become literate and competent in the core disciplines of business management. There is no substitute, no other option and no shortcut.

Sound like too much? It’s really not that bad; we promise. Give us a call if you’d like to hop on the phone and discuss what this means for your business (or business idea).

Dave Baldwin is an integral part of The Bookkeeper staff experienced in marketing and management consulting. His own entrepreneurial journey was spurred on by a desire to help introverted entrepreneurs succeed in business.

mother and father and two sons holding hands walking

When You’re too Small for FMLA

Per the US Department of Labor, “The Family and Medical Leave Act (FMLA) provides certain employees with up to 12 weeks of unpaid, job-protected leave per year. It also requires that their group health benefits be maintained during the leave…FMLA applies to all public agencies, all public and private elementary and secondary schools, and companies with 50 or more employees.”

Of course, most of us in the small business world, by definition, have less than 50 employees. However, we still have employees who get sick, or have kids, or have other reasons for which they need to take family and medical leave. And most employers (who are good employers), want to find a way to take care of their most valuable asset – their employees – even if it’s not strictly mandated by federal law.

So, business owners are left with a balancing act, to protect their staff and keep them happy, but to not cost too much in money and productivity. To assist, we have put together this list of FLMA alternatives which small businesses might utilize.

mother crouching to look at son with a smilePaid Time Off

This is the easiest, as it’s something many businesses already have in place. Instead of designating what time off might be used for, have a clear policy (in writing), that describes how PTO is earned, how much each employee receives, and how much notice is required (if possible) for it to be put into use. Some employers like to separate “sick leave”, “vacation leave”, “personal leave”, etc. However, requiring proof, such as a doctor’s note, that leave used was sick leave is tricky, and can get into privacy issues. Also, there might be other, very personal things, for which a person might need to use leave and would not want to provide a note (a court hearing for an adoption, or fertility treatments). Having a generous PTO policy is easier to track, and allows employees the freedom to use time off as they see fit.

alarm clockFlex Hours

Obviously, certain industries do not lend themselves well to flex time. (It would be hard to staff a restaurant or construction site where anyone could come and go as they please without notice.) However, in certain businesses, where the majority of the day is not customer-facing and communication typically occurs via email (i.e. programming), it can be helpful to let staff set their own schedule. This way, they can leave for appointments without as great a loss of productivity. However, it is important that team members still be considerate of each other and, for purposes of connecting and collaboration, keep each other apprised of when they will be in-office or available.

sitting on bed working on laptopWork-From-Home

Working from home temporarily or part-time can be a great way to keep an employee who needs time away for medical or family leave somewhat connected with the office. This way, they do not suffer the loss of income associated with a lengthy leave, and the business does not suffer the loss of productivity which comes with having a key person completely unavailable.

doctor writing on a clipboardFMLA Compliance

All FLMA really means is that you keep an employee’s position open while they are out on extended leave. Even if you are not large enough to be legally required to do so, it’s not a bad idea. The gap can be filled with temporary help and, in fact, using a temp-to-hire person can be a great way to fill in (in case your employee chooses not to come back from leave).


Having an employee need to take substantial time away from work can be stressful on everyone. However, flexibility and collaboration can ensure that your business needs are covered, and that your employees feel secure in their position with you. Whatever your plan, be sure to have it documented in writing, and reviewed by an employment attorney or HR specialist.

sparkler in front of american flag

Rebellion vs. Revolution

My favorite retelling of the Revolutionary War comes from the musical “Hamilton”. In it, the titular main character bravely fights for independence, but also muses about what freedom will mean for the colonies, and how they will structure their country and face their economic woes. After serving under General Washington, he goes on to become the first Secretary of the Treasury and to put into place systems and structures which are still integral parts of our government today.

I believe that this can parallel the experience many people go through when they leave employment to found their own companies. There are those who fight valiantly for independence, but fail to plan for a replacement system. There are others who are more cautious and plan so carefully that they never take that first step to leave the security of their current situation. (You could say they “throw away their shot”.) Success is found by those who can both dare to leave the harbor, but who also know where they’re sailing.

Rebellion vs. Revolution

american flagThe word “rebellion” brings to mind images of sullen teenagers, instinctively acting out against their status quo. For a disgruntled employee dreaming of business ownership, it can be chafing against inane workplace rules, or simply longing to leave the 9 to 5. However, it’s not enough to know you are displeased with your current situation; you have to have a vision of what you want to replace it with.

We’ve met plenty of people whom have a lofty dream of how they envision business ownership. (For some disastrous examples, see our article “Living a Lie: The Mistakes that Make Entrepreneurs Go Broke”.) We even had one would-be business owner tell us, “Oh, I don’t want to work. I’m going to hire other people to do the work, and then I’ll just travel or something.” Needless to say, that plan didn’t work out.

statue of libertyThe successful businesses are those whose owners have the spirit of revolution. It’s not just that they’re unhappy with their lot, but they clearly see how it, and their own small slice of their particular industry, could be better. These are the people who desire to “build a better mousetrap” with their company, and who aren’t afraid to put in the work to do so. We have successful clients who have invented new products or medical processes, but we also have those who have succeeded by coming up with ideas for local entertainment, or who have simply found a way to be the most effective attorney, or marketer, or even HVAC person in their field. And none of them are afraid of work; in fact, the most successful all embody attitudes of continuous improvement, both in themselves and in their companies.

If this 4th of July you find yourself pondering the plunge toward business ownership, examine where that desire is coming from. If you’re ready to start a revolution in your industry and in your life, build a plan for where you hope that path takes you, and a vision of what it looks like when you’ll get there.