Have you ever thought about how to scale your business, but didn’t know how to take the first step? Or maybe you’ve already made some strides in scaling, but you feel you’re missing pieces of the puzzle. Maybe you’re even feeling stuck and unsure how to reach the next level in your business’ growth.
In this article we’ll go over a basic view on how to scale your business; how outsourcing your accounting can play a key role in this, and how to identify an optimal firm to help you with this.
Scaling Your Business: Some Ideas From an Entrepreneurial Classic
According to Gerber, most small business owners inhabit one out of three possible hats that are absolutely necessary for success. You’re in the Entrepreneur, the Technician, or the Manager role most of the time.
Three Hats Successful Business Owners Must Wear (Or Make Others Wear)
The Technician’s the guy who just wants to do the work and works tirelessly to give customers a finished product. A lot of businesses are really a Technician who decided to start their own thing after working for someone else. This is a problem because they usually will ignore other key crucial areas to running a business. If you’re a bakery you’re the baker. If you’re beauty salon your the hair-dresser. And so on and so forth.
The Manager is the one who wants to classify and systematize all and every aspects of the business. Instead of baking the pie, he wants to organize the menu and establish clear roles and procedures for the employees. He wants to minimize all the unnecessary inefficiencies that make the business slow down. And by the way accountants tend to inhabit this personality easily (although they can also be haunted by the Technician).
Finally, the Entrepreneur is the one that creates the job for the Technician in the first place. The Entrepreneur sparked the vision that brought the things and people for the Manager to even be able to organize. He’s the strategist, the visionary, the market-opened and often the chief sales-person/promoter.
The problem that blocks most business’ growth and ability to scale is that the owner is emphasizing only one role. They’re unwilling or unable to assume the roles they’re not accustomed to engage. There’s a reluctance to delegate those roles that they’re weakest in to people better suited to carry them out. But this is precisely what is most important to do in order to successfully grow and scale your business.
If you’re the business owner or are a partner within your organization, it’s vital that you start to reflect on this. Which of the 3 hats do you find yourself most engaged in? It will usually be just one and maybe 10 to 20 percent the other two. You must find ways to be more engaged in the other two or actively work to place people in those roles.
For businesses that are in earlier stages of their development, a good starting point is to start delegating more. That’ll usually start by having more Technicians so you can spend more time in the E and M roles. A good strategy is to delegate the things you’re not good at and those you really hate doing first. For a lot of businesses that will be the case for their bookkeeping and accounting. It’s a great first step in many cases.
Outsourcing Your Accounting Department
At this point you might be thinking of bringing in a hire to deal with your bookkeeping and financial admin. This might not be the best strategy, though, as the costs of an employee when compared to outsourcing are higher. You will also encounter a series of inefficiencies when you go this route (something that a good Manager will not enjoy and will seek a solution for).
So why not engage your Entrepreneur and Manager on this one and look to a more efficient (Manager), growth/scaling oriented (Entrepreneur) alternative.
If you were to hire a part-timer at $30 an hour for 8 hours a week, you’re looking at around $11,520 yearly staffing costs. It goes without saying that you might not be hiring the most qualified person for the job.
8 Hrs – Weekly Time Saved
$270/wk – Staff Costs Saved at $30/hr
$960/month – Staff Costs Saved
$11,520/yr – Staff Costs Saved
The Right Accounting Firm
I cannot emphasize enough that in order to outsource your accounting, you must find the right firm for the job. At Odyssey Accounting LLC, we don’t just do your tax return at the end of the year. We make sure your bookkeeping is pristine, manage your payroll, help you plan for tax savings, and prep your taxes.
This gets rid of the inefficiency of having to run to two or three different people to get your financial admin done. Unlike your typical CPA’s out there, we like to provide integral, ongoing accounting services for our clients as opposed to the once-off, year-end tax return. That way, you have someone handling the financial admin side of your business at a fraction of the cost of bring in staff.
We typically charge anywhere from $400 to $600 a month for small business, $900-$1,200 for a medium sized, and $2,000 and up for larger businesses. And everything we talked about is included in the monthly fees, including the tax planning and tax prep. In the example from the staffing costs above for a small business, that’s a potential $560 a month or $6,720 a year savings.
Imagine what those type of savings could spell for your business growth. Do you feel the E hat in you getting excited? Can you hear the M hat clamoring on about the fewer processes he’ll have to systematize and coordination he’ll save from this?
Don’t go for a lot of the typical CPA’s, which you’ll be hard-pressed to maintain ongoing contact with. Instead, try to look for proactive accountants. At Odyssey Accounting LLC, we maintain monthly calls with all of our clients so we can review the financials and periodically come up with strategies. This sets us apart as proactive accountants.
The savings you can potentially realize with a proactive accountant as opposed to a typical one can be life-changing. That’s on top of the savings you’re already having from using an outsourced staff-alternative. For example, a normal case for a business we start working with that’s a sole-proprietor or single-member LLC in an additional $6K in annual tax savings.
Check out this video to learn more about your potential tax savings if this scenario applies to you. You can also go here to get a better understanding of how our firm is qualified on tax matters and how we’re different in that area.
In closing, we hope this article served as encouragement to reflect on how to scale your business. Remember to mind the three hats of E, M, and T, and to assess which ones need work.
We hope you’ve also gained some insight into how outsourcing your accounting department could be a great step toward scaling. But you have to pick the right integral accounting firm! Give your inner Entrepreneur the room he deserves in your life and business by delegating a big Technician aspect and simplifying a lot for the Manager!
1. Gerber, Michael E. The E-Myth Revisited. HarperCollins e-books, 2007.