We received a question from one of our Elusive Moose readers who asked:
I’m lazy and disorganized (the whole package!) so what’s the minimum amount of effort I can get away with (as it relates to my bookkeeping)?
Having been in the small business world for over 25 years, I must say, I was taken aback by this question. How can you start, nurture, and grow a business but not want to have your hands in the books? Is there a “minimum effort” that’s really realistic?
How Lazy is “Lazy”?
So let me ask, how lazy is “lazy”? If you are willing to try anything, then you can certainly run your own books. You’re not lazy, but rather scared off by ‘accounting’. Really, it just requires some setup, some testing (recording your real transactions), then conversion (entering opening balances, deeper configuration, training, cutting the cord). Yes, you can do that. If what I just said freaked you out – work with a great bookkeeper who will explain it all, do most of the work, keep you in the loop and explain your reports weekly. If you simply want nothing to do with it, hire your mom to be your bookkeeper (or someone you trust just as much) and a great accountant you meet with quarterly, and make sure you are all on the same page and kept up to date often. I’ll let you define ‘often’.
If everything is set up and running smoothly, and you have a trusted team in place, then as the owner you can take your hands off the guardrail because you have folks doing their jobs. But what is the minimum? For starters, you should personally open your monthly bank statement and meticulously review all of your checks and charges, deposits and exceptions. If something is awry, your bank statement is the first place to look for problems. How often do you hear about some local sports league or organization who suffers from an embarrassing embezzlement because the bookkeepers were writing checks to themselves or family members? It happens because no one is watching, so opening the bank statement or reviewing your downloaded statement is an absolute must.
As owner, you should also be reviewing your cash flow (who is going to pay you this week and whom are you going to pay this week) so you know where you stand.
I also recommend reviewing your financial statements, at least quarterly, if not monthly. Aside from your bank statements mentioned above, your balance sheet (showing you your list of assets, liabilities and equity since the start of your business) and your profit and loss (for a period of time) are the output of any good accounting system. And, they are a reflection of the health of your business. Knowing your numbers is imperative, and having up to date financial statements makes it possible.
Can you start, grow and nurture a business and ‘not be involved’? I say no. Is there a minimum amount of effort that is required? Yes! You’ll need to find that comfort zone for yourself, or be stuck letting your mom do it for you…not that there is anything wrong with that!
Be sure to check out Todd’s other articles on Elusive Moose about questions to ask when it’s time to outsource your bookkeeping and understanding cash vs. accrual accounting.