One notion that can really slam the brakes on any business venture is to think that you, the owner, must handle every aspect of your business. In her article at Small Business Computing, small business owner Shari Gould refers to this condition as a mom-and-pop mentality. Running a modern business requires a multitude of skill sets and knowledge that one person cannot reasonably expect to possess.
Not only will that mom-and-pop thinking keep your business from flourishing, it can exhaust you and put your business at risk of going under altogether. If you’re able (and willing) to ease up on the controls,learning to delegate some of the basics tasks that take up your workday can reduce stress and increase efficiency.
More important, you’ll likely find that outsourcing certain functions—bookkeeping, monthly financial reporting, payroll services, and staffing come to mind—is an even more practical and effective way to move your business forward. Why? By off-loading those responsibilities, you free up time that’s better spent on revenue-generating activities.
Budgeting is the key to avoiding the mom-and-pop trap. Focus on what you do best, and budget carefully—and generously—so that you can contract third-party resources for tasks that lie outside of your business’ main area of expertise. “If you’re in the middle of the fiscal year, it’s time to plan your budget for the next fiscal year so that you can incorporate resources that ultimately help you operate more effectively,” writes Gould.
Next, bid farewell to cash-basis accounting and embrace accrual accounting instead. By using accrual accounting, you’ll have a much more accurate picture of your company’s financial status. Gould explains it thusly: “Let’s say you own a multi-family property, and someone pays May rent on April 30. In accrual accounting, you book the income when it is due (the first of the month), not when it is received. This yields a clear picture of your monthly cash flow. If you book it when you actually received it, it inflates the April rent on the books and May’s cash flow suffers by the rental amount.”
Another option: use a small business accounting software package to help you see the long-term financial picture. Of course, you might just take our budgeting advice and contract a bookkeeper, in which case, you can let him or her worry about the accounts while you get back to doing what you do best.
Finally, don’t cheap out by hiring the least expensive, entry-level people you can find. Yes, money is tight and you need to be fiscally responsible. But you’ll never regret hiring people who are better at their jobs than you ever were and who can outwit your competitors.