I’d love to have received a dollar for every time I’ve heard a small business owner saying either they personally, or their spouse/another family member, “does the books”.
Sounds logical doesn’t it – you, your spouse, your parents spent years of effort gaining knowledge, skills and experience in a respective specialist area of competency. You then go out and market to the world that you have those skills and that people should use your services rather than trying to do their own DIY job.
And then you completely contradict that philosophy by not engaging a professionally trained bookkeeper. Not only is your internal bookkeeper not qualified or experienced, they often don’t even enjoy doing the books.
A couple of months ago I was chatting to a business owner who proudly announced that his wife was about to do a Cert 3 in bookkeeping to be able to improve her on-the-job abilities. I asked a simple question as to whether she enjoyed doing the books.
The owner reflected on this for a minute and then acknowledged that she did not remotely enjoy bookkeeping – it was always put off as the last task of the week and created stress for and between each of them.
Having never thought about it before someone external asked the question, in a flash he realised this was why the books weren’t up to date, they didn’t provide quality information to help decision-making during the year and often needed a lot of correcting by the accountant at year end.
In this particular situation the wife had a strength in creativity and marketing which was otherwise in short supply in the business. There they were saving say $60 – $80 an hour on a quality bookkeeper while the spouse could have been adding $150 an hour or more in marketing value to the business, enjoying it and being enthusiastic about business matters when talking business with her husband.
This scenario is played out in so many different variations across Australia, and it is false economy. It is essential small and micro businesses follow some essential rules.
Find the strengths in your extended family and use them to their maximum. Equally so be prepared to engage quality professionals in their area of expertise. Unless they are trained and qualified you presumably don’t use your father-in-law as an electrician. Why then engage him as the business bookkeeper if his area of specialty is client liaison?
I strongly recommend you have a specific area in the family home for the business. The business is a means to an end for the family and should be capable of being shut off from the family. Work hard so that at least you don’t have your paperwork, tools of the trade or products for customers strewn around the kitchen or family room. Make sure you can, and do, close a door on the business.
As well as being able to physically isolate the business, do what you can to isolate the time. I know business owners eat, breathe and sleep their business but for the sake of your own health and family relationships do what it takes to switch off from work mode when not in formal work time.
This particularly applies to taking and making phone calls. It can be a hard thing for the indispensable business owner to acknowledge but the sun will still rise tomorrow morning even if you don’t respond to that phone call at 8.00pm.
Indeed, it’s often the best thing all round to limit your accessibility to specific work hours. Invariably it’s the high needs customers and staff who are the ones calling you out of hours, you may be better off without them, or maybe they are just using you as a crutch – let them work out their own problems for once.
This is similar to Rule Three regarding time. Many small businesses are effectively mum and dad owned and run – it’s the business that puts the food on the family table. However, it is critical to isolate your own conversations. Having discussions about work matters while with the kids isn’t good for them or you, likewise just before going to bed.
Always have post-it notes handy and jot down a topic reminder. That way your mind can switch off because it knows you’ll cover the point down the track, and you’ll be doing so at a time when you can apply full focus.
Have separate bank accounts for business purposes and family purposes. Sounds obvious but so often it is not done.
Best practice is to have the business work on an arm’s-length basis paying all staff, including the owners, a fair commercial wage for the outcomes obtained for their efforts. Your staff should be refining their family expenditure to their wage. The owners should be likewise. You are most likely kidding yourself about both the performance of the business and your personal expenditure if all bank transactions go through the one account.
Owning and running a micro/small business can be incredibly rewarding. However, it doesn’t and shouldn’t own you – work on the rules as above and have a life outside of work.