Bookkeeping —Don’t Miss Out. But miss out on what? I would call them missed opportunities, both personal and business. I had an interesting call with Jon yesterday afternoon. He was recently let go from his IT job with a large company. He wasn’t a lover of the job and was planning a career change. Working with people’s feet is the plan – podiatry. Jon could get other IT jobs, but if he did, he would miss out on his passion of starting a new business. And he’d have less time with his family, given the long hours.
The meeting with Jon got me thinking. We spend so much time doing things we don’t like doing. Plus, not doing things we should be doing. And doing things that we’d be much better off getting someone else to do.
My child arrived the other day
He came to the world in the usual way
But there were planes to catch and bills to pay
He learned to walk while I was away
Let’s look at
- Time
- Business
- Personal
- Summary
Time
The Rolling Stones wrote a song called Time is on my side. But time isn’t on your side. It isn’t on my side, either. We don’t have an infinite amount of time. We are living in a cash-rich, time-poor society. Take your average working week. From that, take out the time you work, sleep, and eat. If you have kids that play sports or have other activities, the weeks pass by in a blur. And what do we fill up our spare time with? Are we watching Netflix, exercising, or scrolling through social media? Different strokes for different folks.
Can we free up more time by doing things differently? And what would we do if we had an extra 5 or 10 hours a week? We had an accountancy coach called Rudi in the UK who had a Not to Do list. There was no way he would cut the grass. In his mind, why would he do something that he hated doing? Ironing and cleaning the house would be top of my list. When it comes to business, I love what I do, but there are some things I don’t like doing. Things I don’t do anymore, and a few others are for the chopping board.
Business
Mick has a wholesale business. He’s 64, and after working hard for the last 40 years, he’d like to take things easier. It saddens him that none of his family would like to take over from him. Maybe they were put off by the 60-hour weeks their dad was putting in. Mick has plenty money and has decided to sell the business. His last set of accounts were to 31 December 2023. His accountant will do his 31 December 2024 accounts in July 2025. Mick is happy. There’s a few bob in the company bank account, and all the company taxes are up to date.
He knows a few other business owners in his space that could be interested in buying his business. Frank has a wholesale business in a neighbouring county and would like more of Mick’s patch. Frank asks Mick for his last set of accounts and most recent set of management accounts. He gets the December 2023 accounts and passes them to his accountant, Thelma. There are no management accounts. Frank places huge trust in Thelma’s opinion, and she isn’t impressed because
- The last set of accounts is 15 months old
- There are no management accounts, so no up-to-date numbers and
- The 2024 accounts won’t be ready until July, which is 4 months away
Thelma thinks it’s too risky to buy a business without proper numbers being available. Frank isn’t interested in buying now. Mick is very disappointed as he thought it would be ready-made for Frank. Mick has no option but to close the business.
Why didn’t Frank make an offer?
There was too much uncertainty for Frank. Thelma wasn’t keen, and she’s never too far wrong. And Frank could pick up a lot of the customers anyway when Mick closes down. But what created such uncertainty for Frank? The lack of up-to-date numbers was the main thing. It’s hard to judge a business with accounts that are 15 months old. Uncertainty equals a lack of confidence in any deal.
But let’s suppose that Mick gives Frank accounts to 31 December 2024. And he’ll have management accounts to the end of March 2025 on the 7th of April next. This is a whole new ballgame. Thelma is impressed. She can see that the numbers look good. Plus, she can do an up-to-date valuation based on the most recent figures. Having an accurate valuation is vital for Frank so he can make an offer that’s backed up with facts and figures. There is much more certainty, and Frank has confidence.
Will Mick sell to Frank? Who knows, but what we do know is that Mick has put his business in the best position to sell. He does this by having a proper finance function in his business. This not only gives him confidence but shows confidence to other interested parties. Purchasers, Revenue and finance providers. Mick increases his chances of selling and maximising value from his business.
By having a quality finance function, he doesn’t miss out on the opportunity to sell. There are hundreds of businesses that are like Micks. Business owners retiring, closing down their companies, and missing out. It’s a question we always ask our clients. What’s the long-term plan? We have a client who recently sold her business. She never thought she could until she had this conversation with Ger.
Personal
Our business and personal lives interact hugely. Sure, we don’t have enough time to think about it! I met James last week. He has a great business in the events industry. But he hasn’t done accounts or tax returns for 4 years. I couldn’t understand this as he told me he was registered for Income Tax. “You can’t be; surely Revenue would be hounding you for Tax returns and payment” was my reply.
But why did James visit us? A personal issue. He and his wife want to buy a home. So, the wife sent you down! She keeps sending him pictures of houses for sale in the area. The banks or mortgage broker will be looking for the most up-to-date accounts and tax returns. She has a good job and good income as does he, but he has nothing to prove it, but she does. He has to get his house in order- pardon the pun. And if he doesn’t, then there’s no new home and possibly worse.
Like in Mick’s case, James doesn’t have the opportunity to buy a new home with his wife now. But, by getting things sorted, he will put himself in the best position possible to buy. Swap Frank for the bank in this case. The bank wants up-to-date numbers to give them confidence that James and his wife will repay the mortgage.
Business Journey
We are all on a business journey. The more our business grows, the more time and effort it takes to look after the numbers. More sales, more customers, more staff, and more compliance. We beef up our finance teams so we have the expertise to ensure the business runs well. This can mean hiring a
- Bookkeeper
- Payroll person
- Admin person
- Accountant
Cash is king, so invoices need to go out on time. Payroll is tricky, and there are lots of new rules about reporting expenses. Someone has to track the numbers and file the VAT returns, and keep the bank accounts reconciled. Plus, we’ll need someone to analyse the number to see if we are on the right track. But it’s so hard to get people these days, not to mention getting the right person. And can one person do all those jobs? In some cases, yes. But it’s as rare as hen’s teeth.
Are you a business owner spending more and more of your time looking after this stuff? Does it eat into your personal time? I talked earlier about a “not-to-do” list. If you are one of these business owners who is under pressure, what would you put on that list? Would it include
- Issuing invoices
- Calling customers to get money in
- Making bank payments
- VAT returns
- Payroll
More time with family
Outsourcing your finance function can give you more time with family. Like the dad’s relationship with his son in the Cat’s in the Cradle Song. The dad regretted not spending more time with his son because he had a lot to do. The irony was that when the dad got older, he realised this and wanted to spend more time with his son. But the son didn’t have the time then, and he turned out like his father.
I’ve long since retired and my sons moved away
I called him up just the other day
I said, “I’d like to see you if you don’t mind”
He said, “I’d love to, dad, if I could find the time”
“You see, my new job’s a hassle and the kids got the flu
But it’s sure nice talking to you, dad It’s been sure nice talking to you”
And as I hung up the phone, it occurred to me
He’d grown up just like me
My boy was just like me Harry Chapin
Summary
This blog isn’t to make you feel guilty or bad about yourself in any way. The world of work and business is a hectic place, and most of us do our best every day. It’s more to think about how we do things and the way we do them. We do things that are not important and leave the important things on the long finger.
There are ways to improve and do things better. If we embrace that in our business and personal lives, then we are adding value to both. Enriching our lives and caring for those who are near and dear to us. Business can be a lonely place, too. Having a closer relationship with your accountant can be rewarding for both. You get the help you need when you need it, and the accountant gets great satisfaction working with you. A partner helping you along your business journey.
Don’t curse missed opportunities. If you need help, start here
