How Using a Bookkeeper Can Help Grow Your Business
look i get it you're running a successful business but you're constantly stressed about where the money is going or where it should be going so should you hire a bookkeeper as one of my clients puts it colin i love working with numbers but working with my dollars makes me nauseous wow business owners we wear many hats the owner the manager sales person administrator customer service benefits manager and bookkeeper wait bookkeeper are you running a successful business but you're doing your own books are you doing your own books because you're a solo entrepreneur stop right now what about your cpa is your cpa also your bookkeeper i would think twice about that this week i got the chance to catch up with parker stevenson parker is a managing partner and the chief business officer at evolve finance a bookkeeping firm in california specializing in helping online entrepreneurs build a more profitable and stable online business stick around as we discuss how to handle bookkeeping as a small business owner colin exelby certified financial planner here and i own the virtual advisory practice celestial wealth management where we provide financial planning to business owners and our families that just makes sense and today we're talking about bookkeeping and small business now we all hear from politicians all the time that small business is the lifeblood of america and you know why according to this data this data is from the bureau of labor statistics small businesses created 10 and a half million net new jobs between 2000 and 2019 and that accounts for 65 of net new jobs created since 2000 sometimes that's just mind-blowing stat 19.9 of businesses are owned by women and that number is growing but 20 percent of new businesses close within a year and while many businesses will find short-term success only a handful have long-term staying power just 34 percent of businesses make it to their 10th anniversary and many times it isn't the lack of sales that's causing businesses to close it's managing the cash flow of the business properly that's why today i'm bringing you an expert on how small business owners should handle bookkeeping mr parker stevenson welcome parker colin thank you so much for having me that's the applause i love it yeah well i'm glad that you're here um parker is the managing partner and chief business officer at evolve finance which is a bookkeeping firm specializing in helping online entrepreneurs to build more profitable and financially stable online businesses for over seven years i can't believe it's that long already seven years parker's been advising some of the top coaches course creators influencers and thought leaders on how to make more sound business decisions using their data and before evolved parker spent five years at adidas america where he became the us product manager for golf footwear so with that being said parker why don't you give us just a little overview of what it is that you guys do at evolve finance and who you serve best yeah so uh colin thank you for the great intro um for for evolve finance we really niched down to uh serving online businesses i give all the credit to my business partner corey on doing that 11 years ago when he started um this little bookkeeping firm but he was serving online businesses before anyone else really was the reason we kind of focused on that niche is because like any business model there's kind of nuances to it and what we found is a lot of bookkeepers didn't really understand what to do with the merchant accounts and the crms and how to categorize certain expenses for these new businesses that were kind of popping up in the online space and you know like you had mentioned now we've been you know we work with some of the top people who are course creators and influencers and thought leaders and coaches and consultants and these sort of online service or online information based businesses and we've just watched the industry absolutely blow up over the at least the last seven years that i've been involved in the business and have just been blown away by the amount of money and and just the the quality of businesses that these people are able to build when just seven years ago most people would be like you can make money on the internet so it's come a long way and that is correct i can't believe now we think about that like wow this is really possible and you have so many people like you said that have just outstanding businesses that are all virtual that are built off of the internet but along with that when you start growing and you get the successful business right you're as a business owner you've got so many different things that you're doing um often times we can we can divide ourselves too thin right and so you become kind of this jack of all trades and a master of none and that's not a good formula for success so i would ask you how can a competent bookkeeper add value to a business owner very few people start businesses because they're pumped to work in spreadsheets and like get to know quickbooks online or get to know xero or whatever bookkeeping software right i think a lot of business owners do it because uh maybe they don't trust someone else to do it or maybe they can't afford to do it in the early stages of their business but they at least know someone's got to be tracking what's going on with cash flow in my business and usually i think most business owners are just thinking about it from a tax perspective they're just going well we got to put the books together so that way the accountant can file the taxes and i don't go to jail for tax fraud and that's a great goal don't go to jail over your business definitely a great thing to uh want to uh try to achieve in your business but um what we found is that bookkeeping it's so much more important than just getting you ready for taxes it's meant to show you what is the financial health of my business how is money flowing through the business how much money have we made how much money have we spent and that takes some some skill like you have to have an a real kind of understanding and knowledge around bookkeeping that maybe in the early stages of your business your business is just getting going that uh maybe you can do that yourself in a spreadsheet i never recommend anyone try to use bookkeeping software or business owners don't try to use bookkeeping software because they'll probably screw up their books more than if they just did it in a spreadsheet but especially once your business starts to get into that six figure realm and especially beyond that's where it's like getting a bookkeeper in especially a bookkeeper who knows your business model like if you have a restaurant i'm gonna go find a bookkeeper that actually has done the books for a bunch of other restaurants so that they can use their expertise to really put the data together in a way that's going to help you understand the business better but also make sure they're they're thinking about the things financially that a restaurant owner needs to be aware of that maybe just a general bookkeeper wouldn't be able to think about because they maybe they're just working with any business that comes their way they're kind of going to do a crappy job of doing the books for every one of their clients instead of doing a really good job for one specific type of client so that's where i think as your business grows and you're thinking about well what are you spending your time on should you really be the one spending time doing your bookkeeping when you don't really know how to do it that well and then what's the value a bookkeeper really can be providing you aside from saving you time with with our service we um really are trying to not just get the books ready for for their you know our clients taxes we want them to understand their numbers so they can make better business decisions be more profitable and you just can't do that if you don't have a good bookkeeping system in place i mean that's spot on and i think your point of having a bookkeeper that works with the type of business that you're in is is really good because we talk about that with with financial advisory firms and wealth management firms is you know you can have firms that specialize in working with corporate executives and or retirees or sales professionals or college planning or business owners and you can't be really really good at all of those you can be okay but you can't be really really good so um you know i think that is a really good point of finding a bookkeeper that you know works with businesses that are like yours and i always say i like i don't know if you believe this or not but kind of if you are starting off and you are doing the books yourself you know getting a little bit of experience around that is important too so you understand kind of what reports would be good to have what numbers are good to track and you do it a little bit yourself but as soon as you can get moving to having a professional helping you i think the better yeah i just think as business owners our time is so valuable especially as your business grows and in the early stages of a business again you have to do all the things unless you're getting funding or you have money saved up and you're just going to start hiring people and building out the business a little faster than maybe your revenue is growing at because you can afford to do that great but for everyone else especially our clients in the online space you don't need a lot of money up front to get a business going because you don't need an office space you don't need to buy inventory it's just get your website up get some software going and you can start serving clients and or selling digital offers um but i think for you know our clients um they can it's actually an easy trap to fall into when you don't have a lot of overhead to start doing all of the things but eventually as your business starts to generate more revenue that revenue is probably coming in because you as the business owner have figured out how to drive revenue and so the more you can free up your time to focus on those revenue generating activities the faster your business is going to grow and likely the more profitable it's going to be but again a bookkeeper that actually knows your business model and is really competent is going to be worth their weight in gold because again it's not just about saving you time the more money your business makes the more important it becomes that you have clarity on how is money moving in and out of this business are the decisions that i'm making in my business actually helping this business to become more profitable and make sure it's taking care of my team but also making sure this business is taking care of myself as the business owner and i think a lot of the times people will just look at a bookkeeper and go oh we'll just pay the cheapest and you get what you pay for right whether it's your accountant your lawyer your bookkeeper if you just look for the cheapest they're not going to really add value but i think especially as your business grows a good bookkeeper almost becomes an insurance policy because we we can trust the data we're looking at we can trust that when we're making decisions from these numbers that it's not put together by someone who doesn't get our business model or is taking shortcuts with how they're organizing that data and so that's where you know as your business grows it becomes more and more and more important that we can trust that data and that the books are actually getting done in a reasonable amount of time that we're not waiting for you as the business owner four months later to start reconciling your books because you just didn't have time to do it i think if you are going to be making really smart prudent um sort of data driven decisions in your business which i think we all have to as business owners do more of that as our businesses grow um having someone who really knows what's going on in your business and is experienced um as a bookkeeper again i think it's worth their weight in gold and i think entrepreneurs overall in general sometimes look at bookkeeping as as commodity instead of looking at as an actual value add to your business that's actually going to help you make more money and keep more the money that you're bringing in i mean that's those are all great points as well and you know at my firm we're always about trying to figure out how we can keep more money for our clients and i remember when i first started this company and i was running the books myself one of the things i was thinking about was am i doing this right and i'm in finance and i'm like am i doing this right i need somebody else to bounce these ideas off of and make sure that i'm doing this stuff correctly and you know sometimes that's when people reach out to try to find a wealth manager is they're doing things on their own but they have questions about like what else is out there what am i missing what am i not seeing that's you know you're spot on of like where a competent bookkeeper that knows your industry can really help so um you know well done there uh you mentioned something that as a business approaches or gets into six figures um you know i kind of wanted to ask you what level of revenue or complexity of a business should somebody say we need to look into hiring a bookkeeper or is it right out of the gate like let's just hire it and be done with it you know as soon as we start the business it's probably it's not a great sales strategy for us as a bookkeeping company but i think an accountant is is usually the first place like if you're starting a business the accountant just do you hire first because we all have to pay taxes and we've seen not great things happen for people who try to do taxes on their own and think oh i'll figure it out or i can do this and then it's like there's a very high likelihood that if you are not a trained tax preparer you will mess something up and it'll come back to bite you in the butt so i think making sure we understand the responsibility we have as business owners to pay our taxes getting a tax professional involved in your business as early as possible is always smart i i think there's not maybe a number from a bookkeeping perspective but i think once you're relying on your business as a full-time income like this is how you pay your bills is is through your business that you have more to lose versus someone who's like hey i got a business it's a side hustle i do it while i'm still working my full-time job i'll do the books myself yeah maybe it's not as as important because you still have a full-time income and you're just kind of like bootstrapping this the side business but i think as soon as you're in your business full-time and you're relying on it for your income then again that's where we have to like really i think take ownership of the responsibility we have for our businesses which is is this business financially uh responsible do we have the systems in place for this business legally financially to make sure that we're playing the game by the rules that the irs and the government wants to play by because we don't want to be breaking rules that we aren't aware of because again you can't be an expert at everything in your business when this is a business that literally it's how you you feed your family or how you pay your bills that number typically for our clients it's around when they get to that hundred thousand dollar mark where a lot of our clients are going to be moving out of part-time jobs or full-time jobs and really diving into their businesses uh full-time and it's at that point that we're like it's for sure going to be beneficial and valuable to have a bookkeeper because you will have to get more strategic with your decision making if you want your business to be able to continue to grow um and sometimes that's not just going out and making more money it is it's sometimes it is making more money and generating more revenue but making sure we have the information we need to make sure we're making that money efficiently we're making that money profitably and that's definitely something that um a lot of business owners don't realize until it's too late that sometimes the solution isn't just go make more sales um i think when you're making a full-time income from your business you owe it to yourself to make sure that you're clear that making more sales will actually drive the bottom line as well and that we're not just spinning our wheels making more sales but not really keeping anything for ourselves from that if that makes sense i mean it completely makes sense and unfortunately that's what happens with a lot of business owners because we all get brought into this hustle hustle hustle hustle sell sell sell sell and if you are only focused on that you forget a lot of the reasons why you got into the business for yourself whether it was the the freedom to do what you want when you want or the freedom to control the where how the money is flowing through things and you know the business can end up controlling you and not in a good way um so that that does make a lot of sense and you know rather than just saying then the number is 100 000 of revenue and then you need to go to a bookkeeper it's a little bit more complex you know than that but i think both of us are kind of saying sooner rather than later is probably the way to think about it um you know if you're really serious about running a successful business so yeah and i think and i think that's a key piece just like being like how serious about are you about this business growing like how serious are you about serving more people making more income for yourself being able to hire the team and support that you need for this business to be able to scale you need financial visibility for that and if you don't have good bookkeeping you can't do that again if this is my full-time income and my family's livelihood is reliant on this i want my ducks in a row i want to do these things right so i have the visibility into what uh we're doing as a company to make sure we are moving the business in a good direction we're not like three four years down the road and then going ah crap we didn't see that i wish we had understood that or known that whether it's a legal thing a financial thing that comes back to bite you in the butt later on and i'm not trying to scare the heck out of everyone listening like something's going to get you you better be ready but i think again just taking that responsibility seriously as a business owner that yeah you got to go out and generate sales and that's your biggest responsibility but making sure we're clear that like there's the other parts of running a business that we don't always we're not always aware we're signing up for when we start our businesses uh that we just want to make sure we're jumping on as soon as the business is financially ready ready to do that makes a lot of sense that's what we're trying to do is make sense we're doing it here so one of the things you were you you mentioned there i was thinking about because you said you know one of the first places people go is the cpa that you're working with and a lot of times that could be a cpa you used to work for a corporation as a w-2 employee nine-to-five and that was your cpa and they're great with that kind of stuff and then you started your side hustle you created this business it's growing it's becoming successful you leave that nine to five job you're you're with that same cpa who maybe was really good with w-2 employees but maybe not as much so with business owners you know some are very good at a lot of different some are not but uh you know the the first thought is like you said let's go to a cpa and my cpa and have them do our books for us but a lot of times what i think is that the the cpa's job is tax planning and tax prep not so much running the books can you talk a little bit about whether really the cpa should be your bookkeeper or maybe you should keep those separate oh i could talk for a long time about that column but um i i think what if there's like kind of an underlying theme here that's coming up right it's like you want people involved in your business that understand your business model right like even you as a financial planner you work with a lot of small business owners like that's something you focus on so you can bring a level of expertise and understanding to your clients that again like you said maybe a financial planner who works and it just kind of does it for generally for whoever they're going to miss things they're going to miss opportunities because they don't understand the full complexity of someone who's building their wealth from a business versus someone who's an executive or just thinking about retirement and is even working anymore or whatever it may be so with accountants i think again just as important that your accountant understands your business model and actually knows what's going on from a tax standpoint but again your your cpa your account that is their goal is to do tax planning that is their focus is to prepare you for your taxes and hopefully if your it just depends on the level of service you're paying for with your accountant they're kind of putting strategies in place to make sure that they are legally limiting the amount of taxes you're paying and setting yourself up to keep as much of the money that you earn as possible but that being said when we found that cpas do bookkeeping their goal is to just get the books done well enough for them to file your taxes most accountants and that's changing a little bit but most accountants roles are not to be your cfo or to do financial planning or to help you understand your numbers their goal is just to go okay what do we here's what we owe in taxes let's make sure we pay this and let's put some strategies in place to make that tax bill as low as we can so a lot of the times people or business owners i think like the idea of their accountanted bookkeeper all being in one place but right accountants make their money filing taxes they don't really typically make their money from doing bookkeeping so they don't really have the systems the processes the checks and balance in place to make sure that the bookkeeping team that works for them is actually doing the bookkeeping in a way that is going to help you as the business owner to understand your your numbers and make sure that you're getting your reports on time every month making sure that if you have questions about what's going on with your business financially they can answer those because they're not just thinking about taxes they're thinking about well yeah here's your your profit and loss statement this is typically what we see is your profitability should be here or your labor cost should be here and so that's why we're usually big and i know this sounds super biased but we're usually big fans of having your bookkeeper and accounting firm being separate because a bookkeeper's goal is to make sure your data is accurate and it's organized in a way that actually makes sense for your business so that doesn't mean there's not cpas out there that have great bookkeeping services and do those things but our experience has been their focus is on tax returns they make their money filing taxes and doing tax strategy so their bookkeeping services tend to not have the intention behind them to actually deliver a great experience for their customers so um i think it's worth a little bit of inconvenience a lot of the time to have your bookkeeper be separate from your cpa so your bookkeeper is actually delivering on what they're promising and then the account can focus on their zone of expertise which is tax prep smart people smart business owners surround themselves with other smart people in their network on their team and you know we're on both coasts here as we're having this interview and last weekend i went up to new york for the army navy game um it's a football game that i've gone to every single year my father is a west point alum go army navy we didn't do it this past year but uh and i'm in maryland which is a huge you know navy area uh so i'm kind of caught in the middle there but i was there a little bit early i got up on like a 45 foot navy boat uh speed boat and the the guy who was up there he was like you know i have any questions and i was like yeah you got all the nav equipment over here you have the steering wheel in the center and then you have the throttles over here on the right like you know what do you do and and you know are you doing all these things and he said no we have specialists so the the first year guy is on the nav system the second year guy i believe is what he said is on the steering wheel and the the second or third year guy is on the throttle and i i said to him so you're saying that the guy who is running the throttle doesn't have his hand on the steering wheel at all and he was like no i'm like i can't imagine driving like you're driving a car and like somebody else would be putting the gas pedal while you're steering but the whole idea there is the specialization of one task know that task inside and out how to do it and he said once you get going with it it's like peanut butter and jelly it goes together it's nice and easy and i'm probably never gonna forget that he said that this you know well 19 year old telling me if you're looking at ship size as like the size of a business if you have a little a little like fishing boat yeah you get to steer and accelerate and do all that in one place because it's small enough that you only need one person but as the ship gets bigger then you do need more of those specific areas of expertise so i think that's actually a really perfect analogy and i think business owners always love the idea of all in one i actually did a whole podcast on this um last year and it's like yes i just want everything in one place i want one software that does everything i want one accountant that does everything i want one operations manager who does everything because it feels like it's going to simplify our business's complexity but what it ends up doing is whatever that all-in-one service all-in-one contractor is really doing for you is again kind of doing a crappy job of doing a lot of things instead of actually helping you to have the pieces in your business where each piece is being operated and managed as effectively and expertly as it possibly can there's a balance here i think again depends on the size of your business and where you're at but i think as our businesses grow the more like you said colin we can bring experts into the different areas of your business um i think the return on investment is just way higher versus just getting generalists and all in one sort of situations going in your business um let's shift gears here a second as we kind of move to the home stretch here and one of the questions that i get a lot from business owners that are expanding and we start talking about payroll is you know do i just use quickbooks for payroll you know should i use one of these other services do you have any recommendations you know since you work with so many different business owners on payroll providers can you do any yeah i mean i guess it does definitely depends on the type of business you are running um for the clients we serve we really like gusto um we found gusto and we're not even like like i don't even have like we should probably have an affiliate thing or something going on with them but uh we found like the big two which are adp and paychecks um they're just i think they're they're a little behind in terms of the customer service for small businesses because paychecks and adp are also doing the the payroll for like amazon right that's true yeah you know you know they're so they're more focused on their largest clients um we actually just talked with an adp rep recently um where they're kind of bringing out more of a small business division to give more focus and attention to um small businesses which i think is really smart um especially with some of the stats that you provided um at the start of the podcast here or the video but gusto just in terms of interface in terms of customer service uh in terms of ease of use and cost we've just found it to kind of be the the best option for smaller businesses but obviously if you're like running a huge manufacturing business adp or paychecks may be a much better option most of our clients at their biggest would have maybe 15 20 employees are we have 16 or 17 people on payroll for our company and gusto's been awesome it's been really really great and their software is really intuitive can't say the same for adp and paychecks trying to do that yourself you end up having to really rely on their customer service and if you've ever called into a payroll provider's customer service it can be a little bit of a frustrating experience so um nobody's perfect uh and gusto is is not you know necessarily perfect by any means but we've dealt we've logged into so many different type of payroll providers and gusto just is is i think uh what we found to be the best for small businesses okay great and you know we'll put a link to gusto down in the notes so that anybody who's watching this wants to check them out we can go ahead and do that um we're it's about time now i mean i this was great i'm glad we were finally able to connect uh get together uh you know virtually talk about this and thanks for dropping all your knowledge for all the business owners out there if people want to get more information about you guys and your firm where should they go evolved finance dot com e v o l v e d evolved finance dot com that's the best place to start and we actually just launched um on our website you'll see it under the learn category a free audio course you download it on your phone just like a podcast i believe it's either 15 or 16 episodes and it literally will just walk you through like how do you create this financial foundation in your business and how do you get better at the financial side of your business it's probably something we should be selling but we're giving away for free because we just know how hard it is to get um i think good financial advice on small businesses on the internet so uh we're just trying to spread the love on that so i highly recommend if anyone's interested on well how does all bookkeeping finance stuff work for a small business especially for online businesses that that audio course uh would be a great place to start and it's just on our website evolvefinance.com perfect people love free go get it watch it over the weekend well hopefully you guys like this um you know i would love to see in the comments from business owners are you doing the books yourself if you are let me know how you're handling that and let us know down in the comments and if you're contemplating hiring a bookkeeper what is the number one thing that's holding you back from doing it put it in the comments below love to hear from that and if you enjoyed this video make sure you give it a like and of course gotta smash that subscribe button baby smash the subscribe button hit that little bell so you know whenever i release a new financial planning and investment video and hey if you loved this interview got a lot out of it make sure you check out this interview next and these videos to learn more get clear be clear
2022-01-17 02:34
