Which do you spend more hours per month developing?
Which adds more value?
I made a bargain with my first partner. There was just the two of us and no coffee machine. I would do the bookkeeping, which he loathed, if he would get coffee from the Seven/Eleven across the street, which I loathed. The deal was accepted.
A couple of years later we went our separate ways. I was still the bookkeeper in my own firm. I was lucky, I thought, to have plenty of work the first few years. I hired a secretary and taught her how to do the books.
The first time a computerized accounting system for architects came along, I jumped on board.
Invoices went out two days after the close of a month. Payroll checks were handed out by noon after the close of a pay period. Timekeeping was less of a chore because I didn't have to update the timesheet template every two weeks. We could prepare our own income statements and balance sheets. We had project accounting to determine the winners and the losers. Our accounting system was as good as any architect's in Greater Cincinnati. I thought it was pretty sweet.
I was wrong. The price of that accounting system in 'money spent' was affordable. Unfortunately I didn't look further. In hindsight we were spending forty to sixty hours a month to get all that accounting in and out of the system. And we were just five people then.
Ten percent of all of our available time was devoted to accounting. I am convinced that the correct percent is one and a half percent. That accounting system was perfect for a firm of 40 people.
Guess what percent of our time was devoted to business development. One and a half percent. Maybe less.
Our business development strategy was to hope for a good economy. We never learned anything more dependable. We tried tons of ideas. After all that one and a half percent had to produce something.
Two thirds (66%) of architectural firms have FEWER than five people. No one giving advice to architects seems to know this. It is fundamentally inappropriate for 90% of architectural firms to be using true accounting - programs like Deltek Vision, Ajera, even QuickBooks. I say 90% of firms because that is the percentage of firms that are smaller than 40 people.
What I have learned too late is that you can have great business development and crappy accounting - and still be successful. The opposite scenario is not true. You can't have great accounting and crappy business development and be successful. (I struggled.)
The first scenario will allow you to correct the accounting problems. Say, a few more hours of your accountant's time when the need arises.
The second scenario will never help you correct the business development problems.
How to minimize bookkeeping? What is actually needed?
I am working on the solution (MyCorbu), but it won't include income statements and payroll.
What you need is a way to:
- Track your time
- Log your money going out and coming in
- Get invoices out with the minimum of fuss
- A payroll service
- A tax preparation service
- Maybe someone to prepare financial statements for the bank (or better, don't borrow money)
Think what you could achieve if you reversed the amount of effort you are currently devoting to accounting and business development!