Want to grow your business? Fire your bookkeeper

Lots of businesses have bookkeepers but if you really want to grow your business, you need to tell them to pack up their general ledgers and hit the bricks!

Okay, I might be incurring the wrath of bookkeepers everywhere, so let me explain myself before an angry mob of them come knocking on my door with torches, pitchforks, pencils, and calculators.

Bookkeepers ARE valuable to have a in a business. But the function of bookkeepers is largely administrative. They may manage your receivables and payables; they may manage your income statement and balance sheet; they may manage your payroll… and without those functions, your business would not run.

But here’s why I suggest that you fire them:  Read More »

3 of the Biggest Causes of Financial Problems in Business – Part 2

It takes a lot of work – as well as some risk – to get a business off the ground. The risks include things like getting enough money to run the business, extending credit to customers so they can buy now and pay later, and buying things you can use to help your business grow. These risks are necessary but they can also hurt your business. In a previous blog post we listed these three financial challenges and explained them briefly. Today, we’ll give some ideas to manage them and remove some of the risk.

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3 of the Biggest Causes of Financial Problems in Business – Part 1

Running a business can sometimes feel like running through a minefield. You try to get to the other side and do your best but you live with the fear that every step will bring a new disaster. Survival comes from knowledge and the best way to navigate the difficult world of business is to know exactly where the financial pitfalls will be.

Businesses that face financial problems typically face them from 3 specific areas. In this blog post we’ll outline what they are and in the next blog post we’ll give you some ideas to manage them.

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Sunk Costs and Costly Decisions

Want to know why some people lose so frequently at poker? It’s not because they’re unlucky. It’s because they’ll often add chips to the pot generously during the early bets while they’re figuring out if they have a good enough hand to play… but by the time they realize they DON’T have a good enough hand to play, they feel that they’ve paid so much already, they should keep playing just in case (even though the odds of winning are now largely stacked against them).

This happens in business, too. A business owner will invest in something (a tool, a piece of software, an employee, or a new asset, just to name a few) in order to help their business. Things go well for a while, but sooner or later that thing is no longer useful, but the entrepreneur keeps using it because they feel that they’ve paid for it so they should try to derive as much value as they can out of it.

Although it’s a common practice, it’s a mistake… and it’s often a costly one.
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Proceed With Caution: When NOT to Change

If your business is just starting out, there’s a challenge that you’re about to face that you might not even realize. Yes, there are numerous business challenges you’re already going to be wrestling with over time, but here’s one that you need to figure out early.

Fortunately, this decision is a “set it and forget it” decision because once you’ve decided, you shouldn’t change.

I’m talking about depreciation. When you buy an asset, you spend a lot of money all up-front but it won’t always be worth that amount. To use a really simple example, if you bought a $25,000 car and kept it for 10 years, you know it wouldn’t be worth $25,000 in the asset column of your balance sheet the entire time. Cars depreciate just as all assets do.

So here’s the “set it and forget it” decision you have to make:

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