Fixing the Shortage (by Explaining What We Do)
A few weeks ago, we wrote on where all the accountants have gone (largely, to better-paying jobs with better work-life balance and lower education requirements). I posited the idea that we might be able to address this shortage partially by improving the image of accountants, by explaining what we actually do. Spoiler: it’s not meticulous bean-counting and ledger maintenance.
Accounting is a language of numbers, but it’s equally important that modern industry professionals be fluent in technology. Understanding where a transaction hits debit and credits is no longer enough; accountants now often have to also manage tech stacks. For example, one e-commerce customer purchase may hit four different interwoven softwares: a merchant processor, an inventory-tracking system, a sales tax calculation and filing service, as well as all feeding directly into a cloud-based accounting system. If those integrations are not structured correctly, errors can occur that not only affect year-end taxes but inventory showing available for sale, sales tax filings, or even customer fees. An accountant is often the person responsible for not only structuring those system, but for reviewing the data and ensuring accuracy.
If, for example, entries were double-feeding into the sales tax processor how can you tell? How do you fix it? What if the sales tax has already been overpaid?
At this point, people skills become crucial, as the error has to be communicated not only to the client but addressed with departments of revenue to obtain refunds, or file correcting amendments. Of course, people skills aren’t crucial just when there is an issue. Accountants serve roles not just in business, but sometimes in court. Expert witness testimony is used to present forecasts and potential payment plans in bankruptcy court, or to help validate a business valuation in divorce court. In these situations, an accountant doesn’t have to just know what they know and exhibit their own expertise, but also has to present the information in a way that makes sense to those outside of any finance-related profession.
In some ways, what can be even more difficult is interconnection with finance professionals who don't always know accounting in-and-out. This is much of the day-to-day experience for CFOs and accounting managers. (See our article on the difference between the two here.) Beyond quarterly presentations to owners, board members, stockholders, etc., accounting professionals have to “tell the story” of an organization’s financials to lenders, or partner with revenue recognition specialists on structuring systems. These are people on the other side of the equation, who understand money but not perhaps where the debits and credits go. In these situations, it’s not enough to know and understand what you're doing, you have to be able to explain it. There is a quote frequently attributed to Einstein which applies: “If you can't explain it simply, you don't understand it well enough.”
This understanding and explaining has to take place in a format that suits the audience, whether that’s graphics, or slide decks, or a verbal presentation. So, a degree of marketing skills come into play. That’s compounded by a need to understand which information is most relevant, how frequently it should be revised (as in the case of projections), and when priorities shift. (A company looking to scale quickly is very different from an established business looking to sell.) Throughout all of this, there is an innate challenge in communicating information that is equally important and, to most, boring.
But, as we alluded to earlier, this is not what anyone pictures when they think of an accountant. And that perspective has to change, not just so that there’s better appreciation for the work (though that would always be nice), but so that potential new accountants can understand the diversity and appeal of the profession. Until we can move public opinion beyond the stock photo vision of “accountant”, it will be hard to recruit into the industry, and the shortage will worsen.
Where Have All the Accountants Gone?
In a season one episode of the HBO show “Our Flag Means Death”, Blackbeard attends a formal party in disguise as an accountant named Jeff. It’s played for laughs, to show that he is so out-of-touch with high society that he thinks an accountant would be an interesting or, in his words, “fancy”, guest.
It’s hard to think of many positive depictions of accountants in popular media. Not only is a career in accounting entertainment shorthand for “dork”, but they are not frequently portrayed as the kind of quirky, happy nerd cast as a programmer or scientist. Accountants in television and movies aren’t just uncool; they’re miserable.
The accounting shortage has done little to disprove this stereotype. The US Bureau of Labor Statistics is projecting a simultaneous 6% decline in employment for accounting clerk jobs alongside a 184,000 increase in new job openings. (US Bureau of Labor Statistics) And there are not new accounting professionals “in the pipeline”, so to speak. According to Financial Executives International, colleges and universities are reporting a 17% decrease in students enrolling into finance and accounting degree programs. (Why Are Students Leaving Accounting?)
I was curious as to my colleagues’ opinions on why this is happening, so I conducted an informal survey of a local accountants Facebook group. The responses were consistent; most reported feeling overworked and underpaid, with the additional knowledge and requirement of the various COVID-era initiatives (PPP, ERC, etc.) paying a toll. Others discussed the stigma and misinformation around accounting, that it was boring and that it was only used for paying taxes. (This has been a soapbox of mine for a long time.) Many discussed the barriers to entry, particularly the 5 years of college required for a CPA.
One long-term friend and colleague made an especially salient point about accounting professionals leaving for other industries. She wrote about how many accountants have discovered they have skills transferable to professions with better pay and better work/life balance.
These are all thoughts I have had myself, but there is one perspective which I feel like does not get mentioned often enough. So many whom I have seen burn out quickly are those who, in my opinion, got into accounting for the wrong reasons. There is a perception that accounting is a safe career that can result in easy pay in the long-run. While I think it certainly has a great deal of job security and can be very financially rewarding, I think that, in order to reach those benefits, you have to stick it out for a love of the work. The harsh deadlines, busy seasons, and inevitable headaches will not be bearable if you don’t love what you do. My first accounting job was 22 years ago and, if I didn’t love this work, there is no chance I would still be doing it today. I don’t anticipate leaving this industry for a long time, but I’m just one employee.
As for the accounting shortage overall, I do think there are solutions, but I think a radical perspective shift of the industry itself is necessary. There are undoubtedly young people who would make great accountants someday, and would love their jobs, but the image they have of accounting is endless forms and number-crunching. Our next article will be on what, as accounting professionals, we actually do.
Accounting in Space
With the recent (as of this writing) “rapid, unscheduled disassembly” of SpaceX’s Starship, private space travel is back in the news. Though it seems like a unique industry, more the hobby of billionaires flaunting their wealth while simultaneously striving for mass techno-visionary appeal, space travel is a business like any other. And every business, regardless of how frequently its product, quite literally, blows up, needs accounting.
Obviously, companies like Blue Origin need accounting for the basic things, like running payroll, setting up cap tables, or recording expenses. But there are a few things about space travel that make the necessary accounting much more unique.
A spaceship poses an interesting challenge when it comes to fixed asset management. Typically, a multi-use vessel is sent into space with single-use boosters. Of course, despite their limited lifespan, boosters are still massive expenditures which must be capitalized. If doing a cost-segregation study on a building for accelerated depreciation is complicated, how much more so is the accurate recording of disposal of rocket ship components? What even is the depreciable life of a spaceship?
When discussing accrual of activities within the fiscal cycle, you would also think of the subject of unearned revenue. Unlike Southwest, I doubt anyone is buying LunarX tickets same-day. Since space launches can be delayed for any number of reasons, it would make sense that revenue would not be recognized until a successful launch. However, in the event of a multi-day trip, is it recognized as time of launch, or after landing (presumably, with all passengers alive and well)?
How are the flights being paid for? Are foreign currencies accepted? Cryptocurrencies? If so, there would be additional conversions and gain/loss on those conversions to account for.
Of course, one of my favorite accounting topics is sales tax. Though, as of this writing, there is no sales tax on space travel, the idea has been floated by politicians before. The proposed SPACE (“Securing Protections Against Carbon Emissions”) Tax Act would charge passenger taxes and increasing excise taxes for orbital height. This act was proposed in 2021 and appears to have not yet gone any further, however, it is not unreasonable to think others might be forthcoming. If such a tax were to pass, the process by which nexus was determined could be fascinating. Would only the point of launch have nexus, or could states try to establish nexus for commercial space travel going over their airspace?
In addition to operational accounting topics, it stands to reason that these billionaire-founded companies would find ways to get considerable tax considerations, potentially even laws and loopholes (or at least incentives) written solely for their benefit. Fortunately for them, I am sure they have teams of accountants at their disposal, on standby to address every question and concern.
Caught Any Interesting Banking News Lately?
Though banking news typically sparks little interest in the general public, it was hard to avoid finding out about the collapse of Silicon Valley Bank last week. On Friday, March 10th, 2023, it became the second-largest bank failure in US history. The largest was when Washington Mutual Bank collapsed in September 2008, heralding the housing crisis.
Anytime a large institution implodes this spectacularly, there are several questions, which we’re going to attempt to answer, as best as we can, with the knowledge currently available.
The first is…
What happened?
Silicon Valley Bank failed for many of the reasons it initially succeeded. It catered to the startups housed within its namesake, and had a similarly high tolerance for risk (especially compared to other banks). Compared to other banks, SVB overinvested relative to its available cash. Worse, they overinvested in long-term bonds at a time when the interest rates of return were low and, when rates rose, those bonds lost value as no one wanted to purchase a bond at a significantly lower rate of return. Once it became apparent that SVB was saddled with some poor investments, their stock dropped significantly.
Of course, if a bank’s stock experiences a significant drop, the depositors lose confidence, and want to pull their cash out. When that happens, you get a “run on the bank”; this is a downward spiral in which customers rush to withdraw their funds, of which, of course, there is not enough available in cash, creating a further drop in confidence, making more customers want to withdraw more money, etc. In this case, there were even reports of branches closing and police being called on customers refusing to leave. Amidst this, the California Department of Financial Protection and Innovation stepped in to close Silicon Valley Bank and appointed the Federal Deposit Insurance Corporation (FDIC) its “Receiver”.
How did all of this affect small businesses?
According to regulatory filings, as of December 31st 2022, 93% of SVB’s deposits were uninsured. So, for businesses banking with SVB, their deposited funds over $250,000 are not guaranteed to be safe. Furthermore, on Friday, March 10th, customers could not withdraw funds. This didn’t just affect SVB’s banking customers, but also those working with them. For example, Patriot Payroll, which kept their operating funds with Silicon Valley Bank, could not process payroll for any of their clients on the 10th, resulting in thousands of those companies’ employees not receiving a paycheck. Rippling, another payroll company, had to move funds around and delay to paying their clients’ employees over the weekend.
BILL (formerly Bill.com) held funds within SVB, and warned of potential delays, though none ended up being reported. Even Etsy had to delay payments to some sellers, due to funds being tied up at Silicon Valley Bank. So, even if a business never banked with SVB, if they used a payroll company who used them, or used a certain bill-pay service, or sold things on Etsy, they could have been affected.
What should I do?
If you banked with SVB, read this press release from the FDIC. If you have never banked with SVB, this can still be a good reminder to “not put all your eggs in one basket”. First, always be sure you’re using a FDIC-insured bank. Secondly, if you have deposited funds over $250,000, spread it across multiple banks (multiple accounts at one bank are not sufficient).
This can also be a good reminder to gain a close understanding of your cash-flow. This isn’t me just telling you to “spend less”. Understand, in-depth, the ins-and-outs of how your money moves. Know which vendors are on auto-payment from which checking accounts or credit cards. Know where your deposits go, how early before payday your payroll is deducted, etc. If you had to switch banks suddenly, would you know everything that needs to be moved over?
How did all of this affect small businesses?
According to regulatory filings, as of December 31st 2022, 93% of SVB’s deposits were uninsured. So, for businesses banking with SVB, their deposited funds over $250,000 are not guaranteed to be safe. Furthermore, on Friday, March 10th, customers could not withdraw funds. This didn’t just affect SVB’s banking customers, but also those working with them. For example, Patriot Payroll, which kept their operating funds with Silicon Valley Bank, could not process payroll for any of their clients on the 10th, resulting in thousands of those companies’ employees not receiving a paycheck. Rippling, another payroll company, had to move funds around and delay to paying their clients’ employees over the weekend.
BILL (formerly Bill.com) held funds within SVB, and warned of potential delays, though none ended up being reported. Even Etsy had to delay payments to some sellers, due to funds being tied up at Silicon Valley Bank. So, even if a business never banked with SVB, if they used a payroll company who used them, or used a certain bill-pay service, or sold things on Etsy, they could have been affected.
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.
Focus
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.
Methodology
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.
Relationship
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.
Software
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.
Workers
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.
Processes
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.
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.
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?
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?
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.
What Can a Small Company Do?
Per Salary.com, 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.
What 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.
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.
The 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.
First, 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.
So 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.
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
I 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.
All 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
As 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.