One of the most fundamental questions is this one: Why do bookkeepers need business plans? I'll tell you the reason why I think personally think that every bookkeeper needs a business plan – regardless of whether they are a start-up business, already full up with clients, or a seasoned pro with a team and larger business. It's never too late to go back and lay the foundation that a business plan has to offer.
Today I'm going to answer this question for you in detail. Stick around until the end because I'm going to show you how to score yourself on the progress you've made in setting up your own business framework.
Bookkeeping business benchmark
As bookkeepers, we can automatically assume that we don't need business plans because a bookkeeper's business is fairly simplistic, and not a complex business structure. We're a service-based business, often with small teams. Many of us work solo, without any staff, and have no plans to grow big. At the end of the day, many bookkeepers start out in business because they want to create a self-employed job for themselves. That's a good goal to have, however, many bookkeepers reach a point where they would like to grow beyond themselves, or at least free up some of their own personal time.
It's easy to make the mistake of thinking that we don't need a business plan. Our career as self-employed bookkeepers often starts out by accident, we just fall into it, and then it evolves over time. Then we kind of work through in a trial and error style, trying different things, seeing what other bookkeepers are doing, and then putting those things into practice.
Planning improves chances of success
Unfortunately, for many of the bookkeepers that I've worked with, over the years, I have seen a consistent pattern in that those who do this planning ahead of time are actually far more successful in reaching their goals. Those that do not only have far more profitable businesses, but are also able to leverage their own time, giving them more freedom, and they more consistently reach their goals, giving them a greater sense of accomplishment and joy.
So where do these statistics actually come from? We have completed some industry surveys using our business benchmarking tool, Profit IQ. It's easy to go off our feelings, but as bookkeepers, we know that numbers and data give us a far more accurate picture of how something is going. I designed the Profit IQ tool so that as bookkeepers we can see how strong we are in each area of our business, and also how ‘complete' our business set-up is.
Building your dream bookkeeping business
What I want you to do for a second is imagine your dream house. Can you picture what it's like? The look, the layout, and how you feel at home. Is there plenty of storage space? Is everything where it should be? Does your house feel like a home? Is it easy to maintain and keep clean?
Now that you've pictured that house, now I want you to imagine you have to build it yourself, from scratch. Ok great, can you imagine this? How do you feel? Excited? Scared? Overwhelmed?
Ok, now I want you to imagine you have to build the house without a plan. Now how do you feel? Terrified? Perhaps wondering if it might be easier to hire a professional builder? Or maybe even better just to buy a house that's already built? Sure, the house won't be exactly what you want, but it's easier.
Now I want you to imagine that a professional builder, who has designed many houses and is an expert in creating plans for people who want to build their own home. Not only will he give you the plan, but he will also support and mentor you through the process.
Now, how confident do you feel about building your dream house?
Building without a plan is risky
Here's the thing, we would NEVER try to build a house without a plan. No sane person would just buy some land and just wing it. It just wouldn't be wise to start building a dream house without first figuring out the process, the costs, the materials and the tools needed. It's likely you would give up, or at the very least, have to call in a professional to fix it, finish it or even start again from scratch.
Yet, we start to build businesses without a plan all the time! We start because we think it will be easy, but then reality sets in and we start to wonder if it's really possible to build ourselves a business that gives us profit, freedom and joy. Or would we be better off just taking the easy way, getting a job as an employee working for someone else, and not having to worry about the hassles and stresses of small business ownership? Sure, working for someone else wouldn't be your dream job, but it's easier.
If you planned to build your dream house you would want to have a plan to ensure the end result turns out the way that you want. If we hire someone to build us a house, we would want to know that the person building our house, the builder that we've hired, has a plan. You wouldn't purchase a house and land package if you didn't even know what the house is going to look like when it's finished being built.
It's exactly the same when it comes to our businesses. Whether you're setting up a new business, or you've been working on it for some time, you need to know what it will look like when the business is set up.
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Avoid working hard but never achieving goals
When I first started my business it was very exciting in the beginning, I had a lot of motivation, adrenaline and creative energy, and I had so many ideas of things I wanted to do. But at some point, reality kicked in, and that excitement started to wear off. The reality of running put a bit of a damper on the excitement I had in the beginning.
After my first year, I found myself constantly working. One purpose that I had for setting up my business in the first place was to have more availability to be around my children. When I started the business I was pregnant with my first son. The next thing I knew my son was three years old, I was working 60 hours every week, I was never getting to have time off and my health was going down the tube because of stress, and being so busy I never had time to exercise or eat proper meals.
The birth of our second son was the beginning of a wake-up call, that something needed to change, but I was trapped and couldn't change. When I started my business, I did not have any kind of business plan. But when I spend some time reflecting on what I wanted in the beginning, the big eye-opener for me was seeing that I was not realising my vision at all. In fact, the business was taking me away from my vision, my family and my goals.
I just had the vision in my head but had nothing written down. I remember one day my husband was getting ready to take our son to the park, without me. Again. I felt like I was missing out on my son's life, and time was going by so fast, but nothing was changing.
Knowing when your business is ‘set up'
One day my husband said to me, “Hey, we're going to the park. Do you want to come?”, and I said, “Oh, I really want to but I can't because I've got to do this work. And I'm really busy at the moment.”.
He replied, “Why are you so busy? What are you actually working on?”. I replied, “I'm just setting up the business.”
Exasperated he responded, “Well, you've been setting up your business for a long time. When is it going to start paying off?”
He and the kids left and went to the park without me.
I sat in my home office alone and thought to myself “He's right. Why isn't the business set up yet after all this time? And what does it even look like when it is set up?”
You might be wondering “Is a business is ever done being set up.?”
Although we are always learning and finding ways to improve, the answer is “Yes, a business absolutely has a foundation and core framework that can, and must be set up properly. If not, your business will not be as successful as you want it to be. Setting up a business is a project that has a beginning, a middle, and thankfully an end! It's not this open-ended thing that just goes on for eternity.
When I realised that I needed a clear picture of what my business was going to look like when it was finished being set up. And what I'm talking about is like the core framework of the business, it's really important.
So in a nutshell, a business plan is clearly articulating what and writing down, what does my business look like when it is done when it's set up? And how will I know how will I measure that?
The great thing about having a business plan is that it will give you that picture or that end result. It gives you the ability to know you have ticked all the boxes. Or whether you still have areas in your business that need finishing.
Avoiding wasting time and money through trial-and-error
Trial-and-error seems to be an easy or even fun way to set up a business, but in reality, there's nothing worse than doing a business this way. Sure it is fun at first, but it starts to get tired fast once you realise you're wasting a lot of time and basically throwing away your money
The worst outcome and I've seen this so many times, is working your backside off for many years, only to discover that you have not achieved your goals. You don't want to work 60 hours a week as I did, yet constantly feel that even if you are achieving some of your goals that is costing you dearly in other areas. If this happens you never get to reap the rewards of your hard work or feel that sense of accomplishment, that you're getting closer to finishing your goals.
So now you know the reasons why I say that. Yes, you do need a business plan. And now you know why.
Only 20% of bookkeepers have business plans
Now, if you're thinking to yourself that you're the only bookkeeper without a business plan, let me share something that may alarm you. In 2016 the ICB, Institute of Certified Bookkeepers in Australia, released their annual survey. They asked this question: Do you have a written five-year business plan?
I was surprised to see that only 20% of us bookkeepers have written business plans because I always thought that as bookkeepers, we were very business-minded people. But the statistics say otherwise.
It was just an eye-opener for me, and it was one of the driving forces behind The Savvy Bookkeeper. Because I thought to myself, I want to do something to change this statistic.
Practising what we preach
The reason I wanted to change it was because if we're going to be advising businesses, and we're helping business owners achieve their goals, we need to practice what we preach.
If we haven't laid the foundation, created our business plan and finished setting up our own businesses – how can we expect our clients to take us seriously and respect us as peers?
When we finish our own business set-up, we can approach our clients with newfound confidence and a deeper level of integrity. We become able to speak to our clients as peers, rather than viewing our clients as our boss, or our employer. You can't be a bookkeeping business owner if you see yourself as your clients' employee.
We need to at least meet our clients face to face either as peers, or equals. Better yet, if you do this groundwork in your own business, you will even be ahead of your clients in the journey. I would be surprised if more than 20% of business owners have ever bothered to create business plans. I'd assume the percentage is even lower than it is with bookkeepers.
They don't know what their business looks like when it's finished being set up. So that's why I recommend, and that's why I give the advice, every bookkeeper to take the time to have that business plan done.
It is going to not only save you time and money, but it's also going to help you to actually reach your goals and to be able to gauge and measure whether you are actually reaching those goals. And it is going to give you leverage with your clients and help you charge the right fees.
Discover your Profit IQ
Before you go I invite you to come and find out which steps you're missing in the setting up of your business by taking my Profit IQ test. Go to thesavvybookkeeper.com.au/iq. I'll put the link in the comments.
Take the test and benchmark yourself against the average bookkeeper, and also against the “average bookkeeper” in our industry.
To find out your score you need to answer 60 multiple choice questions, it will take you 5-10 minutes. As soon as you're done, you'll get a detailed report on the progress that you've made across the 6 most important areas of your business. Visit thesavvybookkeeper.com.au/iq to discover your Profit IQ score, and give yourself a reality check to find out how well you're actually doing in your business.
And work out what are the missing steps for you? Where are your weaknesses in the business? What are some of the things that you can do in your business to bring that setup of the business to completion?
Get A Copy Of Your Client-Centric Business Plan
If you want to start working on your business plan, get a copy of your Bookkeeping Business Plan here.
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Thanks for joining me today. Can't wait to see you in the next video.
Until then, Stay Savvy.
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