There are many obstacles when owning your own small business. These obstructions can vary greatly from competition to customer retention, one of the greatest challenges we sometimes see as outsourced bookkeepers is the owner’s mindset of how they think the business should run. They sometimes think they have the best business ideas but blame everyone but themselves for it not working. To me, the mindset of the owner sets the tone for everything else within their business. Are they treating their business as a hobby and not taking it seriously? Or maybe they treat it as a lifestyle business and have modest goals. Or they understand being in business is not easy and want to create the best possible environment for profitability and growth and have the understanding of running an investor ready business.
Hobby Business Mindset
Owners that treat their business as a hobby stick out like sore thumbs sometimes. They tend to jump around from task to task while completing none of them because they don’t understand the importance of making everything runs 100% accurately. For instance, I once
witnessed a coffee shop owner flip out because her jewelry wasn’t clean enough for her standards and this day was supposed to be the busiest of the year. She yelled at her employees while she ran around looking for her jewelry cleaner. Meanwhile, she didn’t have any change for bills larger than a $10, and she didn’t have most of coffee supplies stocked to handle the long line of people waiting. While I stood in line fully in awe of this, she continued to serve people that were her friends and not necessarily help the next person in line. Needless to say, this business closed after only being open less than 12 months.
We usually do not work with this type of business owner since they tend to be out of business rather quick or they don’t see the value of keeping track of finances because they aren’t driven by data driven decisions and growth doesn’t matter. Being able to delegate to managers and set up systems that can handle changes in volume will allow any small business to grow while keeping the owner from being overloaded with small tasks. Treating a business like a hobby is risky, but can work if the right approach is taken.
Lifestyle Business Mindset
A majority of the business owners we work with tend to fall in this category. They may have started their business as a hobby and spent the first few years doing it themselves and bootstrapping. After a year or two of the DIY attitude, it becomes obvious you can’t do it all and still maintain your sanity. Certain financial goals have been met and systems have been put in place to maintain them. This is where our bookkeeping services thrive. Stepping into a business that has an owner that has been hands on fits perfectly with how we operate. We spend a decent amount of time picking the owner’s brain to learn how and why they developed their bookkeeping system. From that, we then keep their system in place and find ways to improve upon it. Then once up and running, they have up to date real time financial reporting that can always give them reassurance their business is on the right track that they developed when they first started out.
Investor Ready Mindset
More and more, we work with business owners that have the best mindset of all, being investor ready from day one. I’m not saying these businesses are actively seeking investors, but they want to be ready for when they do. Instead of keeping bad books in the beginning, they want to have them dialed from the start so they can show start-up costs if they were to
grow their business to new locations. These owners tend to be highly accountable and somewhat stern when they are talking about how their business should run. Being investor ready means every aspect of the business is put into a system and then refined until it can be easily passed from one manager to the next. This way, there aren’t any roadblocks within the organization chart and no employee is doing all the work while other employees are left twiddling their thumbs. This is our ideal client mindset. We can dial out their bookkeeping systems so the owner can spend their time on what's wrong with the business, not what's right.
As I mentioned in the beginning, it’s all in the owner’s mindset and we have seen it all. It’s sometimes tough being involved with a business that is expected someday get investors but is failing because it gets treated like a hobby. On the other hand, seeing an owner control their business so it's always investor ready is a lot of fun for us because we get ring side seats to watching a business grow and thrive, no matter how big or small they are. As bookkeepers, its great watching a business succeed and create sustainable jobs for the long haul.