Whether you’re an architect, solar-panel installer, product designer, or animator, if you’re running a small business, you’re hopefully doing work that you’re passionate about. But you’re also probably spending time on work that you really wish you didn’t have to do.
For over 25 years, San Francisco–based financial advisor Kathryn Amenta has counseled small-business owners and discovered that many of them make the same mistake: “Say you’re the best pie maker, and all your friends tell you that you should open a pie shop,” she says. “So you open the pie shop, but instead of making pies, you’re hiring people and dealing with retail-space contracts, insurance contracts, and employment issues. So many businesses fail because the person who starts the company has passion and talent but doesn’t have the other skills necessary to ensure success.”
Amenta, who offered sage tips for startups in Reality Check: 4 Best Practices to Start and Stay in Business, is back with four more tips to help your business survive and thrive. Here, she discusses the benefits of putting together an advisory board and outsourcing your billing, bookkeeping, and payroll.
1. Assemble an Advisory Board. “If you’re the manager and you want your business to grow, it’s a good idea to set up some kind of advisory board immediately. It could include someone you admire who’s been in the industry a long time and is successful in a way that you want to be successful, someone who is a client, and maybe someone in another business entirely. Take them out to a very nice lunch quarterly, ask hard questions, and insist on honest answers. We all need input. We can’t run our businesses in a vacuum.”
2. Get a Virtual Assistant. “Architects always say to me, ‘I’m out looking at work all day, and then I have to come back to the office, use AutoCAD, and do some work for these people. It takes hours and hours and hours. And then, when do I do the billing? It’s always late.’
“One of the issues that I see is that these people are so tired from just putting out the fires for 14–15 hours a day that the billing gets left until last, they’re late, it screws up their whole cash flow, and then it makes them hate the money piece even more, which makes them want to sit down even less to do anything about it.
“That is a supereasy job to give to a virtual assistant. Virtual assistants are amazing. The woman I’ve been working with for years, Nina Feldman, was the first person I knew that has an employment agency for virtual assistants. They can do anything but wash your dishes.
“You can track billable hours on your smartphone, and then it’s as easy as emailing it to your virtual assistant, who then creates invoices, does the mailing, and follows up.
“It’s X-number of hours per month, and you don’t pay benefits or have to have office space for that person. It could be someone who works for more than one client to create full-time hours, or it may be someone terrific who only wants to work a few hours a week.”
3. Hire a CFO on the Go. “When I switched years ago from QuickBooks to QuickBooks Pro, I brought in a QuickBooks Pro expert—Pamela Lyons of Advanced Business Consulting—to set it up for me and be in conversation with my accountant, so that all the line items were set up in a way that my accountant wanted them.
“Pamela is the only person Intuit allows to use the title, ‘Queen of QuickBooks.’ Once a quarter, she comes in and does the bookkeeping, does the cleanup, and all the reconciliation of the bank statements. She can even send a statement suitable for taxes to my accountant. She is the QuickBooks Pro expert, and she’s also a ‘CFO to go.’ So for small or startup companies that really don’t know what they need in the way of financial setup, she’ll come in and set it all up for them.
“Of course, it requires that [the small-business owner] has some money to do that. If they’re living hand-to-mouth, forget it. You can hire somebody on the cheap, but you get what you pay for very clearly in that area. I don’t recommend people hire someone at $10–12 an hour if they want their books to be clean and authentic. They really need to have someone who knows what they’re doing.”
4. Find a Payroll Service. “I would recommend that people avoid a lot of pitfalls in employment issues by hiring an outside payroll service because they handle payroll and tax reporting. One of the biggest mistakes that small-business owners make is taking money for payroll taxes, which they’re required to put aside for their employees, and spending it on something else. That will put them out of business quicker than anything. The IRS does not put up with that.
“But you can hire a payroll service—that, by the way, has an entire back office of lawyers and HR—to teach you those things or handle them for you. They can also help the employer with money that they can get back from the government, so payroll services can be worth their weight in gold.”