I’ve gotten this question a lot lately in networking with small business owners. Women wanting to know when it’s time to outsource their books, looking for a specific financial milestone as to when to make the jump from doing their own finances in Excel to hiring a bonafide bookkeeper. Unfortunately, there isn’t really a set number I can give you, because as much as your bookkeeper’s fee fitting into your budget is a large consideration, the reasons to hire a bookkeeper aren’t necessarily tied to any number.
BUT, if numbers are your biggest concern, I recommend starting with figuring out your hourly rate. Say you’re a coach, and you charge $150/hour. That’s an easy one. If you’re spending even two hours per month on your books, that’s two hours you could be coaching, so that time is costing you $300. If you can find a bookkeeper to do your books for $300, you break even, AND you get bonus gifts, like, I don’t know, not having to spend time bookkeeping. It’s also likely if you are a coach with a very uncomplicated business and only one checking account and one credit card and zero employees, you’re going to be paying more in the $200 range. So there you go, you just outsourced work you don’t want to do and made $100. And a good bookkeeper will help you see ways you could be saving and/or earning more money, so there’s more money to be made.
For those of you who aren’t service-based, just do a quick calculation of how much income you make in the average month, divided by how many hours you work in an average month. Then, how many of those hours are spent on bookkeeping? The same concept applies.
So the math is relatively simple, but the better reasons are more emotional. Here are the top 5 signs to look out for:
- When there aren’t enough hours in the day.
You didn’t start your business to work 80 hours a week (did you)? But often that’s what happens to us. Being a business owner — especially a small business owner — means juggling a million tasks. From marketing, to finances, to, you know, selling your actual products and services. If you’re feeling burnt out, feel like you’re sacrificing time with your loved ones, and not able to spend any time on your hobbies or passions, it’s time to look at what you can delegate!
2. When bookkeeping feels like torture.
Not everyone is a nerd like me, who loves spreadsheets and data entry and organization. This is just not everyone’s forte. Again, you didn’t start a business to slog through life. If entering your expenses and income, managing your receipts, and running financial reports is not something that excites you, find a way to spend your time on the stuff that does.
3. When you feel behind.
If you’re getting late fees and penalties. If you can’t remember the last time you reconciled your bank account or looked at a financial report. If you’re applying for a loan or trying to make a decision about your business and feeling lost without a clear picture of how your business is doing. All these things have easy fixes, if you find the right person to take them over for you.
4. When taxes give you panic attacks.
So many business owners break out in cold sweats come tax time. They worry what would happen if they were to be audited — not necessarily because they’re doing anything wrong, but just because they’re behind and don’t know how to untangle their mess of receipts. You might be going back and forth so much with your tax accountant that you wish someone could be doing that for you. (Spoiler, someone can).
5. When your business is stagnant.
If your profits aren’t increasing, you might think you just need to work harder. But maybe you need to work smarter. Business owners spend an average of 14.5 minutes per hour on administrative tasks. That’s 25% of your time on tasks that aren’t necessarily making you money! I suggest making a list of all the tasks you’re doing, put a star next to the ones that you love doing and that make you money. Everything else, see if there is someone you can hire it out to. That includes not just someone to handle your books, but maybe a virtual assistant to manage your calendar and paperwork or onboard new clients, or someone who can handle an hour or two of your social media marketing. It doesn’t always cost as much as you would think!
When it comes down to it, there’s a pretty easy rule of thumb. Bottom line: if you’re at the point when you’re wondering when it’s time to hire a bookkeeper, it’s probably already time.