When should you decide to outsource your accounting and book-keeping?
Did you know that very few accountants do their own accounting? The first reason for this is that they’re aware of the value of having some external oversight (your familiarity with your own business may lead you to not question something when you should).
The second reason, which is perhaps more important, is that they know time spent doing their own accounts is time they can’t bill for.
If it seems a bit illogical that they’d be happy to pay someone else to do a job they could easily do themselves, then consider the following:
- They get a tax deduction for outsourcing the job.
- If they spend an hour doing a report for a Fortune500 company, their earnings will be considerably higher than what they spend to do their own internal accounts.
In fact the very best accountants don’t do any accounting at all, because they spend 100% of their time finding new customers, meeting with customers, and setting up deals. They outsource nearly everything.
When should you do the same? Always. Whatever kind of business you are in, you will be more successful if you spend more of your time on the activities that make money for you and less of your time on activities that don’t make money for you. Accounting is one of those tasks that has zero rewards for you, so you shouldn’t be wasting time on it.
“When I was working at the Gavroche all those years ago, the duck terrine wasn’t made there. It was made outside, then brought to the restaurant wrapped in plastic. This is standard practice.” – celebrity chef Gordon Ramsay, quoted in the Times, 5 February 2010.
Hiring dedicated employees for the task is an alternative option to outsourcing, but if you do that, you’ll be taking on extra obligations and responsibilities.
Worried about the expense? Well, are you in business to save money or to make money? Success in business requires being willing to spend money on the things that will increase your profits. Gaining time to work on your main business activity by outsourcing everything else is certainly likely to increase your profits if you’re any good at what you do, so it’s a solid investment.
The open secret of successful entrepreneurs like Donald Trump and Steve Jobs is that they have been very shrewd in the matter of delegation. How many computers did Steve Jobs design and build? Absolutely zero.
Other people who worked with him did those things. Jobs just created the cult and built up the hype. During his life he became a multi-billionaire. Steve Wozniak, the engineer who helped co-found the Apple company and actually did design and build computers never made anything close to a billion.
The lesson? Doing the work doesn’t get you anywhere, selling it is where the action is. Learn to delegate effectively and you can achieve anything. The pinnacle of delegation is outsourcing, and the number one task that should be outsourced (always) is book-keeping.