Tag Archives: business

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Launch Your Part-time Business

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Here’s a sampling of part-time business suggestions that will jump start your brainstorming and get ideas flowing for a business you can run while also keeping your nine to five.  Oh,  and do be sure to keep your business activities separate from your job,  meaning,  don’t tell your boss and co-workers what you’re up to.

Baker

First,  decide if you’re a bread baker or a pastry chef: will it be baguettes and croissants,  or cupcakes and pies?  You can sell your wares at neighborhood street fairs and farmer’s markets.  Do some market research and take a tour of local venues,  to see what sells in which marketplace,  at what prices and to which customers.  Check the licensing requirements of your state and city health departments and also find a commercial kitchen to give yourself the capacity for high-volume baking.

Bookkeeper

Those with experience in corporate finance departments,  payroll departments or accounts payable/receivable are the best candidates to set themselves up in a tidy little part-time bookkeeping business.  Brush up on your QuickBooks skills and promote yourself to Freelancers,  churches and small businesses.  Join your neighborhood business association to meet potential clients.

Caterer

Are you a fabulous cook who knows how to serve and present food elegantly and efficiently?  Does the prospect of preparing Christmas dinner for 12 or a buffet Easter brunch for 50 fill you with excitement and make your organizational skills shine?  If that is the case,  then catering on the side may be an ideal money-making and creative outlet for you.  Hone your chops by taking over the preparations for a few large family events.  Graduate to getting hired for dinner or cocktail parties held by friends of friends.  Consider renting commercial kitchen space to make cooking for large events easier.

Floral designer

If you’ve always known how to compose a pretty bouquet,  upgrade and refine your natural abilities by taking a flower arranging course at an adult learning center or community college.  Next,  identify good flower market and floral supply wholesalers,  so you can provide a wide selection of fresh and exotic blooms arranged in the loveliest vases and still earn a good profit margin.  Promote your services to those celebrating anniversaries,  births,  christenings,  graduations or other special occasions.  Form a strategic partnership with a (part-time) caterer who needs to decorate a party.

Gardener

Do you have a green thumb?  Do you know people who have no time for yard work?  There is money in mowing lawns,  trimming hedges,  tending window boxes, weeding and coaxing roses to bloom.   My mother’s uncle started a part-time gardening business which he ran for at least 20 years.  My father worked with him on many spring and summer evenings throughout my childhood.  The more artistically inclined can create a niche in landscape design for residential clients and neighborhood merchants.  Remember to include Christmas decorating in your list of services.

Hair stylist

So maybe you were a hairdressing school dropout? Pick up those scissors again and revive your skills,  so you can offer wash,  cut,  blow-out and maybe even color and straightening services at your kitchen sink or the client’s.  Friends and friends of friends who need makeovers,  or maybe just maintenance,  will appreciate both your talent and at-home discount prices.

Photographer

If you’re a clever shutterbug,  invest in a good digital camera,  become a Photoshop expert and  pull together a portfolio of your work to show to prospective clients.  You may even want to specialize in a niche,  like weddings  or family reunions.  Form a strategic partnership with a web designer who creates sites for Freelancers  and make money taking the all-important website photo.

Tutor/coach

Are you a good teacher?  What is your area of expertise—golf, tennis, algebra or languages? Open an account at Craig’s List,  to advertise your services.  Those who teach an academic subject should also contact local parent’s groups, neighborhood blogs and local schools.  My brother’s wife has taught piano for several years and she’s quite busy.  She is a full-time wife and mother of four.

Thanks for reading,

Kim

Survival Strategies , Leave a comment

Having it Both Ways with a Job and a Business

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To my readers in the weekly paycheck world: do you sometimes wonder what it would be like to chuck your day job,  become the captain of your destiny and start a business of your own?  Maybe you have a special creative talent,  something you do that makes you feel proud and fulfilled,  something that friends and colleagues always compliment you on?

Maybe you already daydream about starting a business,  but fear that you don’t have the resources or temperament to grow it into your primary source of income?  Perhaps you need a few extra dollars each month,  because your paycheck is no longer big enough as prices at the gas pump and grocery store continue to rise?

You can have it both ways and start a part-time,  on the side business while you continue to work full-time and enjoy the security of a regular paycheck and health benefits.  People have done it for years and for all sorts of reasons,  mostly as a cash flow safety net,  but also to provide an outlet for a creative talent.

Former full-time employee and part-time business owner Felicia Joy has coined the term  “hybrid entrepreneurship”  and she defines the process as  “the act of working a full-time job while building a business part-time.”  Joy explains it all for you in her new book  “Hybrid Entrepreneurship: How the Middle Class Can Beat the Slow Economy” (2011).

Joy advises that although your part-time business venture will not be your main source of income to still treat its launch seriously.  She recommends that you write a business plan to ensure that you cover all bases,  such as devising a good marketing strategy,  identifying your target customers,  perfecting the business model and assessing start-up costs.

Furthermore,  Joy says it’s important to create a professional image for your business: print business cards,  build a website,  have appropriate print collaterals,  open a separate business email account and maybe also have a separate business telephone line.

Network for your business venture,  so you will meet peers with whom you can form strategic partnerships and referral relationships that will help you to grow your business more quickly.  Join a professional association related to your business,  to receive access to information and other resources that will help you grow as an entrepreneur.

At work,  volunteer to take on assignments and lead projects that will help you acquire skills that you’ll need in your business,  such as sales,  operations,  bookkeeping or marketing.  As Joy says  “Learn to leverage your day job in a way that helps you in your business and also helps you at your job.”

Next week,  I’ll give a few examples of part-time businesses that you may want to start.

Thanks for reading,

Kim

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The Data Driven Payoff

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Because the February-March session sold out,  I have been invited to reprise my three-part workshop  “Become Your Own Boss: Effective Business Plan Writing”  at Boston Center for Adult Education 122 Arlington Street Boston MA on three Mondays,  May 9, 16 & 23 from 5:30 PM – 7:30 PM.  For more information or to register please visit http://bit.ly/becomeyourown59  or call 617.267.4430.

As Freelance consultants,  we know that information is nearly as valuable to us as our skill set.  Information leads us to make smart decisions about all aspects of business: what services to offer,  identifying target client groups,  determining a profitable business model,  understanding how to market our services,  gaining a competitive edge.  That good information is integral to all that we do comes as no surprise,  but until now there was no scientific evidence to support that belief.

New research done by Erik Brynjolfsson,  economist at the Massachusetts Institute of Technology Sloan School of Business,  Heekyung Kim,  graduate student in economics at MIT Sloan School and Lorin Hitt,  economist at the University of Pennsylvania Wharton School of Business proves that good information really does put money in your pocket.

The three studied 179 large businesses and found that when decisions enacted were based on reliable data,  companies achieved a 5+ % higher productivity level than businesses that relied more on “experience and intuition” for decision making.  The higher productivity could not be attributed to other factors,  such as the use of more sophisticated technology.

In the study,  data driven decision making was not primarily based on merely collecting data,  but was closely linked to how the data was utilized.  In the April 24, 2011 New York Times,  Mr. Brynolfsson stated that business decisions based on data and analysis “have huge implications for competitiveness and growth”.

Thomas Davenport,  professor of information technology and management at Babson College in Massachusetts supported the conclusions reached regarding data driven business decisions in a book written with Jeanne Harris and Robert Morison, “Analytics at Work: Smarter Results” (2010),  concluding that companies that rely heavily on data analysis are likely to outperform those that do not.

The big question is,  which data do we choose to collect and analyze and how do we best apply it?  Curating data is big business.  “The biggest change facing corporations is the explosion of data”,  said David Grossman,  technology analyst at Stifel Nicolaus in the April 24 NY Times.  “The best business is in helping customers analyze and manage all that data”.

How does a Freelancer decide what to do with data available to us?  I propose that data presented here would guide readers with excellent proficiency in mathematics and possessed of an advanced degree in the subject to become data analysts!  All others might take a look at our P & L statements and examine gross revenue and fixed and variable expenses and analyze how much it costs to generate income and what can be trimmed to make the bottom line better.

Speaking of revenue,  do some research on the services that your target clients are contracting for these days.  Are you retaining clients and signing new ones, too?  How does your 2Q 2011 active client roster compare to 2Q 2010?  Do you need to tweak your business model to maintain your competitive edge,  or might it be wiser to seek a strategic partnership?

To help figure things out,  do a free online search of Google’s Key Word Tool or Wonder Wheel and type in a descriptive phrase of your core service.  How many prospects in your locale are searching for what you sell?  Next,  type in a phrase that describes the service you think might interest clients and see how many local searches it gets.  There you have it,  data driven analysis to guide your business decisions.

Use Google Analytics to track hits to your website and report which pages receive the most attention.  You can correlate that data to the number of follow-up requests you receive and  the conversion of that follow-up to new business.  Make further use of that data to evaluate the efficacy of your website and learn how you can enhance this important marketing tool.  Will adding multimedia to your website be useful?  Or will adding pages to give more information do the trick?  Or maybe you should just simplify the text and clarify and strengthen your message?  Listen to the data and find your answers.

Thanks for reading,

Kim

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Ask and You Might Receive

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Nearly all Freelancers are feeling the pain of the long slog through the sluggish economy.  Merely treading water is now considered a victory.  Even those fortunate  enough to have maintained robust billings are sensitive to the cash flow problems of their customers and fellow business owners.  Consequently,  the time is ripe to ask for a better deal,  for everything.  You may be pleasantly surprised at what people will do to keep your business.  To get the ball rolling,  all you’ll need are some creativity and moxie.

You’ll also need to remember that your goal is to both save money and build mutually beneficial business relationships,  especially when approaching fellow Freelancers or other small business owners.  Be assertive,  but considerate and respectful.  Don’t try to squeeze someone whose business may be hurting.  Think of benefits that will accrue to the other party and communicate that as you present your proposition.

The other party will appreciate that you’ve thought of their interests as well as you own,  so no matter what,  you’re likely to be seen in a positive light.  Even if you are unable to get what you want,  you’ll never lose by asking.  As they say,  it’s just business.

  • Think about bartering products or services.  What do you sell or do that suppliers and service providers might value for their businesses?  HR or IT services?  Graphics or PR or landscaping?  You’ll never know until you ask the question and get the dialogue started.  Make sure the exchange is of equivalent perceived value,  so that no one feels short-changed.
  • If you rent an office,  begin preparations now to campaign for a rent roll-back.  Commercial space is plentiful and most landlords want to keep a good tenant.  Be sure to pay your rent on time and otherwise cast yourself in a favorable light.  Get information on rents for comparable spaces in your area and determine what would be reasonable to pay for yours in the current economic climate.  Are their problems in the building?  If so,  make a list so that you can more effectively negotiate with your landlord at lease renewal time. 
  • When it’s time to advertise,  ask for a discount (try 10 %).  You’ll be more successful if the ad is larger and/or if you place multiple ads with that publication.  Ask also if you can be notified when remnant space is available,  which will save even more money.  You must be flexible and prepared to act quickly when taking remnant advertising space.  You might even spend more than you anticipated.  In exchange,  you just might get an eye-popping half page ad for the price of a quarter page.
  • Think about the products and services that you use all the time when doing business.  Do you ship items on a regular basis?  Do you travel frequently and stay at the same hotel?  If so,  then it’s time to ask for a loyalty or volume discount.  Have information about how often you use the service/product and how much you spend at the ready,  to support your case.
  • To preserve your cash flow,  request more flexible payment terms from suppliers and service providers.  Ask for 45-60 day terms,  or ask to pay half of the balance in 30 days and the remainder at 60 days.  The other party may not love it,  but the terms may nevertheless be extended in an effort to keep you as a customer.

Thanks for reading,

Kim

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Attention Shoppers! It’s Time to Invest in the Business

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Our  “new normal”  economy has regrettably resulted in sluggish business for most Freelancers and we are forced to watch our pennies.  The financial squeeze may tempt many to cease spending on all expenditures deemed nonessential,  but it’s wise to be strategic about what gets relegated to that category.

In fact,  judicious expenditures for the right business upgrades will help us to fight back against the recession and demonstrate to clients that our business remains viable.  If your credit line can handle it,  this is an ideal time to invest in your business by purchasing almost any type of equipment or promotional service.   Fourth quarter purchases are sweetened by the knowledge that the tax deductions will flow back to you a little faster.

So let’s go shopping!  There’s plenty of inventory in the stores,  despite diminished wholesale purchases,  and prices have never been better.  Now is an excellent time to replace or upgrade  computers and other IT equipment,  office furniture or even a company vehicle.  Commercial real estate is likewise more plentiful and hence affordable,  so if trading up has been on your wish list,  investigate options now.   Plus,  if a build-out is necessary,  those in the trades are ready and willing to provide quality work at competitive prices. 

Advertising space is likewise more plentiful and hence more affordable.  Discounts are available and payment terms are gentle.  Revisit publications and online sites that were previously out of your reach and ask what can be done for you now.  Do not be afraid to negotiate.  The buyer’s market is in full effect.

Now,  take a look at your website.  Does it look a little dull?  Maybe the text could use some sharpening?  Or perhaps you’d finally like to have a logo?  What might help your website to communicate your brand and core services more effectively,  or provide a compelling  “call to action”  to potential clients?  Web developers,  graphic artists and copywriters continue to be busy,  but not so much that they won’t take on smaller  jobs and do good work at a reasonable price.

The  “new normal”  economy also makes this an excellent time to hire,  if you can make the case that an extra body or two will increase revenue.  There are so many highly qualified professionals searching desperately for cash-generating projects that you will be able to hire someone (maybe part time?) to write your monthly newsletter,  manage social media,  cold call prospects and set appointments for your follow-up,  manage the books and accounts payable and receivable or just about anything else you need taken off your plate.

Finally,  our professional skills are our most valuable asset and also deserve investment.  I’ve seen more generous than expected early-bird registration discounts offered for numerous seminars,  since organizers are anxious to fill rooms.  Take advantage of this trend and sign up for training that perhaps you previously could not afford.  You may also want to have a few sessions with a business coach,  who may now offer money-saving incentives to stimulate business,  and work on other ways you can find competitive advantages for your business venture.

Thanks for reading,

Kim

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Manners Maven

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A couple of years ago,  I had coffee with a very successful risk management Freelance consultant.  As we chatted about business,  he related an interesting story about a client who hired him earlier in the year.  The client told him that he had interviewed several candidates for the project and all were highly qualified. 

His team chose this particular gentleman because he had the best manners.  (I always knew he was a classy guy!) After considerable  experience in working with Freelancers,  the client and his team concluded that good manners matter and just about everything else can be learned on the job. 

I’m not  sure that many project leaders consider manners and etiquette as prime factors in the Freelancer hiring process,  but I am certain that poor business etiquette will have a deleterious effect on that decision.

Business schools and even medical schools have finally begun to address this previously overlooked soft skill.  Most of us have had enough of the me-first,  I’m entitled,  self-absorbed behaviors that have migrated from so-called reality TV shows and into daily life and work.  As antidote,  here are a few tactics that will incorporate some subtle niceties into your business communications and interactions:

1.  Dial your business phone and listen to your outgoing message.  Does it sound professional and welcoming?  Would you want to do business with the person who created that message?  If your OGM is less than pleasing,  re-record and smile as you speak.  Smiling forces us to slow our speech,  enunciate clearly and adopt a pleasant tone of voice. 

2.  When in a meeting,  devote your full attention to the proceedings.  Turn off your phone,  computer (unless you will use it to take meeting notes) and all other electronic distractions.

3.  After meeting with an associate who is helping you in some way,  send to that person a thank you email within 24-48 hours.  Especially if your meeting was with a client or prospect,  recount major points discussed and confirm any agreed-upon actions. 

4.  If a business meeting is held in a restaurant,  the person who initiates the meeting pays the check.  When meeting with a client or prospect,  offer to pay the check even if that individual requested the meeting.

5.  When meeting prospects and colleagues at a networking or similar event,  refrain from pushing your business card onto every person that you encounter.  Save the card exchange for those with whom you have a discussion that points to follow-up conversations.

6.  Treat assistants with respect.  If the assistant is someone you will speak with more than once,  ask his/her name,  remember the name and greet that individual by name  on subsequent visits to the office.  Be advised that the assistant may control access to the client.  If you are rude or dismissive,  word of such behavior will be passed along and it could cost you.  Besides,  assistants often have information that may help you to sell your services.  Be nice and make the assistant your ally.

7.  At Christmas,  send a card to all clients with whom you’ve worked over the last 3-4 years.  It’s good business to stay in touch.

8.  When an invoice is 45+ days old,  contact the accounts payable or finance department and confirm that the invoice was received.  Could it have been lost? Unless the invoice is 90+ days old,  avoid contacting the client about billing matters.

Thanks for reading,

Kim

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The Living is Easy…

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And so we are drifting through the summer doldrums.  As heat and humidity rise,  our focus and motivation fall.  Summer is the slowest period for Freelancers and most others,  with the exception of  landscapers, building contractors, wedding planners and those in the tourist industry.

For the majority,  summer means billable hours  that evaporate like the morning dew on roses.  But who can afford 10 weeks of idleness?  Savvy business owners know it is wise to make hay while the hot sun shines and use the summer months to position themselves to create business in the fourth quarter and beyond.  A business slowdown need not mean no business activity.  Summer is the perfect time to pick up the thread of what slipped off the radar screen earlier in the year.

You may start this productive cycle by reviewing your business model.  How efficient is your operation?  How much does it cost to make a sale?  Just how profitable is your business,  anyway? What processes could be streamlined?  What technology could make service delivery,  customer contact and/or administrative functions easier,  faster or less expensive?

By the way,  did you meet your sales projections for the first half of the year?  Might it be time to hire help,  so that productivity can increase,  customer service improved or administrative functions executed in a more timely fashion?

What emerging  priorities and concerns  are on the horizon that may excite or agitate your clients and how might that impact your business? You have the next few weeks to catch up on industry magazines,  websites,  white papers and blogs and find out what you need to know to stay competitive and understand  what may change in your marketing message or service options and delivery.

Summer is also a great time for professional development.  Look for certifications to pick up,  or courses and workshops to attend.  If you can budget it,  use this time to boost your skill set and  make yourself  appear more of an expert to clients and prospects.  Along the way,  you’ll meet a few people you should know.

Summer is a time of more flexible schedules and despite vacations,  it’s a good time to collar people and arrange those meetings that no one had time for between January and June.  So go back through your notes and remind yourself of whom you wanted to meet with and send out a few emails.  What intriguing and mutually beneficial proposal will you present?

Finally,  summer is an excellent time to do the prospecting that you’ve been putting off  for six months.  Ask colleagues for introductions and maybe do some selective cold calling.  Make it a point to make inroads on new business development.  I’ll bet that slippery someone whom you’ve been chasing since last year is more available in July and August.

By taking the initiative,  you will see that  summer is the best time to evaluate, investigate and create business opportunities that will give you a cushion of revenue that will get you through next year’s summer doldrums!

Thanks for reading,

Kim

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For a Few Dollars More: Up-selling and Second Helpings

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Business has been rather soft for the past several quarters,  thanks to the tanking you-know-what and alas,  the sales girls at Saks and Neiman’s have not seen me for a while. When cash was in hand,  I built up quite the wardrobe.   I shopped prodigiously and wisely and my outfits still look good (thank you Donna Karan!).

Now when I look for something to wear to a meeting or party,  I must shop in my closet.  Lately,  I’ve been thinking of ways to apply that practice to my business.  How can I wring more action out of what I already have in-house?

In terms of resources expended and conversion rates,  maximizing business opportunities within one’s client roster is easier and more cost-effective.  I pretty much know what my clients want from me.  Still,  I wonder if there are ways to up-sell or entice with additional services? I wonder if I might have opportunities within other departments in an organization?

To figure it out,  I did some low cost market research.  As usual,  the best way to learn what clients need is to directly ask them.  Inviting  a  client to lunch or coffee,  away from workplace distractions,  sets the stage for a productive  exchange of information.

A good conversation opener is to inquire about new initiatives and/or challenges  in the client’s organization.  Ask next what you might adjust re: delivery of services,  service offerings and business practices that will make things easier for your client.  From there,  review the full list of your services.  Clients often will not remember all that you do.  This information alone may inspire your client to envision new roles for you,  perhaps even in those coveted other departments in the organization.

Guide the conversation to become  a  brainstorming session that will reveal where,  when and by whom value-added up-sells would be appreciated.  Arrange introductions to decision makers and obtain important endorsements of your work.  Learn the names and titles of gatekeepers and key influencers.

Client needs fall into two buckets:  anticipated and unanticipated.  The former needs are what you and your client will discuss over lunch.  You may be able to propose how your services can address some of these needs.  They are organizational goals and objectives and have a budget and timetable attached.

The latter needs require good  luck and timing on your part.  Maintaining communication will improve your odds of hitting the jackpot.  These client needs are ad hoc and often spring up suddenly.  They may constitute  a headache,  if not an emergency,  and they sometimes must be quickly addressed.

Position yourself to be at top-of-mind and viewed as the go-to problem solver by:

1). Meeting or exceeding client expectations every time.

2). Creating follow-up opportunities that are not perceived as either desperate or  annoying.

Some Freelancers like to keep a calendar,  so that they will remember to contact clients at regularly scheduled intervals,  sometimes with a newsletter.  The receipt of relevant information is usually welcome,  but my advice is to tread lightly.  Many vendors may be competing for your client’s attention in various ways and saturation point will eventually be reached.  Respect boundaries at all times.

My standard approach is to announce a new workshop to clients,  whether or not I expect them to buy.  Someone could surprise me! Client needs evolve in response to changes in the business environment,  as do yours and mine.  What was brushed off last year may be important now.

Sending news of a workshop is a  “safe” way to contact clients.  It violates no boundaries;  it demonstrates my expertise;  and it will get my name into their prefrontal cortex,  so that if an unanticipated need arises or unexpected money is dropped into their budget,  I”ll be more likely to receive an email.

A clever and indirect method of client contact is to make a referral.  You will receive  significant validation when that third party contacts your client and lets them know that you made the recommendation.

Maintaining contact with clients post-assignment is an effective strategy to mine additional revenue from your client list.  For $20.00 or less,  you can  invite your client  to update you on anticipated needs and learn about  new organization  priorities,  concerns,  fresh business opportunities for you and the decision makers and influencers who control access,  plus get advice on how to improve your business practices and hone your competitive edge.  Additionally,  you will learn how to craft a sales pitch based on selling points that you will emphasize when promoting those same services to similar clients,  new or current.

To attract revenue from unanticipated client needs,  devise unobtrusive ways to maintain the contact by offering value to the client.  Announce  new services,  speaking engagements or classes;  send a newsletter if you dare;  make strategic referrals;  maybe send links to articles that you know will be of special interest.  Make it a point to extract more sweet water from the well.

Thanks for reading,

Kim

Marketing , Leave a comment

Keep Your Customers Close

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Adopting customer-centric business practices is now  THE  survival mechanism of necessity for Freelancers,  as well as businesses large and small.  Particularly for service providers,  the battle to escape the dreaded label  “commodity”  is on.  No one can afford to be just another replaceable face in the crowd.  The “me, too”  era  is over.

In order to keep customers coming back for more,  Freelancers are compelled to demonstrate unique value to those with whom we do business.  It’s the best way to stay ahead of the competition and make your name come to mind when a project needs to be done or a referral made.

While providing top quality products and services that meet or exceed customer expectations is our number one mission,  another important mission is to take  a  look at our business practices from the sight lines of our customers—from the outside,  looking in.  Assess the experience that customers have when doing business with you.

To make that happen,  find out all that you can about what really brings them to your door,  or to the door of competitors.  What assumed but unspoken set of objectives and expectations do they have? What alternatives exist that might possibly allow them to achieve those objectives without you? How easy, or cumbersome,  is it to do business with you?

Your website plays a role in this process,  especially if yours is an online business,  or customers typically search the web for your category of business.  List with GoogleMaps and Yahoo Local to help customers and prospects find you.  SEO friendly algorithms and key words will also give your website presence  a boost.

Furthermore,  your website should promote and reflect your brand very well.  Display core products and services prominently,  along with information that will answer frequently asked questions and get customers on the road to doing business with you.

If anything on your site is time sensitive,  e.g. your list of speaking engagements,  keep that updated.  Present  a website that is easy to read,  conveys relevant information in clear and simple language,  is not overly text heavy,  contains an appealing  “call to action”  and is easy to navigate.

Wherever appropriate,  leverage social media tools to provide additional communication channels for your customers.  2.0 is not only for communicating your brand and  message,  but also for letting people holler back.  Another method to get the heads up on customer priorities is through the online service,  Survey Monkey.  A brief  survey that contains well designed questions will elicit useful information and may shatter a few illusions.

A thriving business is built on the customer:  retention,  satisfaction and growth.  The products and services  we sell,  the way these are delivered and the prices  we charge are all based on what our customers need and accept.  To keep the cash flowing,  stay current with customer priorities and learn their thoughts about what your business does well,  what your competitors do poorly,  what you could offer that will make their lives easier  and what they are willing to pay to have it all.  If you can solve those mysteries  Freelancer friend, you will have yourself a nice little business!

Thanks for reading.  To those who are keeping score,  Freelance:  The Consultant’s Diary reached the one year milestone on June 16, 2010.

Kim

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When to Hire a Bookkeeper

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Occasionally,  I am asked to refer a bookkeeper.  The one time I was able to make such a referral,  the whole thing blew up in my face.  I introduced a former  student in the business plan course that I sometimes teach to a restaurant owner friend.  Unfortunately,  Ms. bookkeeper  flaked out and never came through.  The restaurant owner and I are still pals, thank goodness.  The bookkeeper’s contact info has been deleted from my files.

A couple of months ago,  a member of one of the CEO forums that I lead hired a bookkeeper whom I’ve known for 20 years (the referral was not mine).  Because my colleague is a smart cookie,  she decided to review the financial statements that were generated by her new bookkeeper.  Right away,  there was a problem.  A significant data entry error was made— yet somehow the bookkeeper managed to make the numbers balance.  Fortunately,  my colleague  was able to recognize the problem and call  it to the bookkeeper’s attention.

The interesting thing is,  her now former bookkeeper is highly regarded by many.  She has a sub-specialty in forensic  bookkeeping and regularly testifies in court proceedings.  So I guess that’s where she learned all the tricks! My colleague was mortified.  Thank God that was not my referral.

I deduce from these incidents that a  reliable bookkeeper may be difficult to find.  A sharp and trustworthy bookkeeper is a hugely valuable  asset for your business.  They can spot and resolve  money drains  and alert you to money saving practices  that you never knew existed.  A good bookkeeper is worth their weight in gold.

Like many Freelancers,  I keep my own books.  I  invoice,  make  deposits,  pay bills,  record transactions in Excel,  receive the 1099s and pay the taxes.  June 15 is fast approaching, quarterly tax time folks!  I manage to stay on top of things.

Nevertheless,  at some point it may become too expensive to perform certain administrative tasks.  Working and looking for work are the primary focus of the self-employed.  Our time and energy are best applied to making sales calls,  networking,  prospecting,  staying visible and generating income through our projects.  When administrative tasks encroach upon the time available to make money,  it then becomes  cost  effective to outsource those functions.

It is the responsibility of every business owner to develop a basic understanding of the  financial statements.  Our ability to make sound business decisions depends upon it.  A good bookkeeper (and accountant) will further analyze the data and provide more sophisticated advice for you.

Because they possess intimate knowledge of your financial history and flow of business capital,  bookkeepers know where you are most vulnerable and know  where the bodies are buried.  A dishonest or sloppy bookkeeper can really hurt you.  The best way to protect yourself  is to know what’s  going on,  so that like my colleague,  you can read  financial  statements and periodically review your bookkeeper’s  work.  You’ll  have a fairly good idea of what the numbers  should  look  like and know what questions to ask  if  things don’t quite add up.

To get started on the path to understanding financial docs,  I recommend  that  you  first examine the Pro Forma Cash Flow statement.  It’s like  a  household budget and is easy to read.  Pro Forma Cash Flow gives  reasonable  estimates of expected business income and expenses  for  a given month.  Go next to the Cash Flow Statement,  which might be generated either monthly or quarterly.  This document shows what was actually spent on business expenses and how much money was actually paid to you.

From those statements,  move on  to the Profit and Loss.  It’s  not much different from the Cash Flow Statement.  Notice that several categories on the P & L are also found on the  Schedule C tax form,  Profit or Loss  From a Business.  Lastly,  take a look at the Balance Sheet and notice it’s resemblance to a bank statement.  The Balance Sheet records your net worth at a given time,  the tally of business assets and liabilities,  and is usually generated quarterly.

Next week,  learn what you can do to make sure that the bookkeeper you hire is both a top drawer professional and appropriate for your business needs.

Have a good week,

Kim