The Admin Trap: Making Accountants out of Entrepreneurs
Is it not strange how entrepreneurs turn into accountants the moment they start making money? I have had many clients over the years that started their businesses from scratch. They come from a wide variety of backgrounds like construction, farming, pharmaceuticals, hospitality, law and the arts, to name a few. They started businesses due to their expertise in their respective fields, but the most amazing thing happened after a while: they all became accountants.
You never see a lawyer starting a firm and then servicing his own air conditioners. Or a beautician opening a health spa and then doing the plumbing. So why is it that you so often see entrepreneurs start a business and say: ‘What I need to do now is become my own accountant’?
Maybe it is because accounting and financial management is all about the managing of money, and you remember that your grandpa said never to trust anyone else with that. So, you start a business with you own money and hard work and you dread the day some 20-year-old article clerk with a cheap suit comes over and tell you how much VAT you owe. Because you know for a fact that you can’t owe seventy trillion in VAT if you had to pay in from your access bond the last few months to keep the doors open. So, you start doing the books yourself.
But that is a problem. Because now you take that most precious of skills, creativity, and turn it into that most mundane of skills: routine bookkeeping. You take away Rembrand’s brush and give him a roller. You take away Husain Bolt’s spikes and give him some safety boots.
But there is method to the madness, like it or not. The one thing that entrepreneurship teaches you is to become an accountant. You must know the difference between income and expenses, and you very quickly learn to understand what cashflow is and how to manage it like a hawk. You will probably learn a little bit about depreciation, and you will learn a lot about debtor management. And as your business grows, you will learn about VAT, PAYE, Tax returns, financial statements, raising capital, the Department of Labour and all the million and one things that a business needs to attend to.
But that does not mean you should do it yourself. Having a business owner do his own books is more expensive than having Warren Buffet do his books. Because if the entrepreneur does the books, he can’t focus on his real job which is making money, going on extended lunch meetings and growing the business. And soon the business will have books that aren’t much to look at, and a bank balance that’s even worse.
That is why my first advice to entrepreneurs is always to partner with someone that takes care of the whole finance function. You need someone who is actively rolling stones out of your way and who cuts through red tape and admin like Damien De Allende cuts through a primary school backline. This allows you as business owner not only to focus on what is important, but to have on hand the expertise of a finance professional who can advise, counsel, assist and grind along with you.
Everything is better with a partner. Let CFO Consult be your partner in your entrepreneurship journey. Contact us for a free consultation. We will gladly assist you as soon as we have finished servicing our own cars…