WHAT IS YOUR TIME WORTH?

How much does it cost you to do everything yourself in your business?

Photo by Rietveld Ruben on Unsplash

It happens to many small business owners & managers when starting out…I bet you probably went through the same thing in your business as well. You have very few clients, your sales aren’t steady enough, all of which limits the amount of cash you have at hand…but the answer isn’t to do everything yourself.

Sure, it’s less “expensive” to do your accounting yourself. “Why pay someone else to do it when it only takes me an hour a day to do it myself?” is what most people say. The problem with this line of thinking is that it will limit your company’s growth to the time that you actually dedicate it to make it grow. Any minute spent on other things other than building & creating value is costing you money. How much? That depends on your hourly fee/salary.

The Actual Cost Of Doing Your Accounting Yourself

Let’s say that it takes you 1 hour each day to keep your accounting up to date. If you work 5 days a week, this means 5 hours per week. If a month has 4 weeks, this means 20 hours a month. Let’s say your hourly fee or salary is US$ 100.00 per hour. This means that it costs you US$ 2,000.00 per month to keep your accounting up to date. All you have to do is hire someone (preferably an external accountant) that costs you less than this.

“I’m Afraid My Business Isn’t Steady Enough”

This is a very valid point, but you have to find a way to delegate tasks to others (employees or external professionals) so you can dedicate time to strategic thinking & actions. The long term benefits of doing so surpass the short term cost of hiring other professionals.

Here are some ways that can help you delegate tasks without breaking the bank:

1. Whenever possible, hire external professionals rather than full time employees. There will come a time when employees make more sense, but if your income isn’t steady enough, avoid fixed costs as much as possible;
2. Negotiate a variable fee instead of a fixed monthly fee. Since your income isn’t steady enough, try to negotiate a fee that depends on the number of invoices you have in a month for example, or the number of employees you have.
3. Take advantage of the cloud. Nowadays, more & more accounting software, even full-on ERP’s softwares, are available without having to install servers in your company. This makes it less expensive to register all your company’s financial & commercial information.
4. Hire professionals that have other knowledge besides just accounting. Sure, you need someone to do your accounting…but you also need advice for fiscal planning & payroll. It might cost you more to hire someone more prepared (or to hire a small accounting firm with several professionals)…but any errors in your tax filings or any lawsuit from an employee will definitely cost you more.

Giancarlo Jiménez, founder of The Finance Course, is a Finance Professional with more than 13 years of experience in the field of Finance and more than 4 years of experience teaching about Corporate Finance in a Business School.

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