Find out what we talked about during this week’s call and how it can help you improve your business.
Administration and finances are fascinating topics. I started the call with a question to Alan Reeves; your business is the backbone: you have the marketing, the sales, operations, and the service delivery. And then you have Administration in the finances of a company.
His answer was: Well, if we go to all areas with all verticals, I think it is, without a doubt, administration and finance. I mean, that’s not something that you’re thinking about when you’re awake at three in the morning, thinking about starting your own business. You’re thinking about the dollars you’re going to bring in; you’re thinking that maybe you’ve been working for someone else for a long time, and you can do better. But man, once you hang that tile, the world changes tremendously.
Administration and finance
This area is the least of the areas; it’s the last thing to deal with. But, once you’ve been through this with a couple of different businesses, you realize that it’s a critical area of the company. And if you can start with that in mind, it becomes less of a headache down the road. Because ultimately, it will come down to what occupies your time as a small business owner. Where are you wasting your time? Where are you spending time that you shouldn’t be spending typically, most small business owners don’t deal with this area of their business until they hire their employees, and then they are forced to deal with this side of your business.
Now I have a client who came to me, and he says, you know what? I’ve been fantastic at marketing. Impressive at sales, excellent at service delivery and operations, you have a stellar company that generates close to $5 million a year in revenue, those 29 people. But the administrative and financial side of the business is killing me.
He told me: I have $785,000 in outstanding accounts receivable. I have to collect this money because I have a $300,000 payroll due next week.
So my call is about how to start wherever you are and get back on track with that. Whether you’re in startup mode or a seasoned business owner, we’ll cover both because they’re two different approaches.
I shared it with the attendees. And the administrative side of the business is the number one hire. If you’re in startup mode, I want you to continue your marketing sales. I want you to grow and create a tremendous income, profit, and profit.
Marks, for example, 120 hours. And you just go down, fill in how many minutes per week or hours per week or how you want to do it. But many people say, I don’t want to do any of that. It’s not great. I don’t want to do it. And when I’m going to say, okay, can I automate it, delegate it, or outsource it? And this becomes my master list of who and when I need to hire a skill.
Now what I need is a process in the system. How do I do it? So when you’re a new business owner, thank you for someone who talks to you two ways. You are a new business owner, just starting. Have no employees. You own a business. You have employees. So there are two different strategies here. The first one is your business owner. You have new employees starting to implement zoom. There’s an app called otter that will transfer the text. It will begin recording yourself doing these tasks when you create training modules. So when you hire someone to take on these tasks, like the operations representative here, the existence of the operations representative, my wife’s company, and helping to do it simply because there are many of these things that we, as business owners, do not want to do. And maybe it’s five hours a week; it’s perhaps 10 hours a week, whatever.
I will tell you that it is much easier to hire an employee or hire a subcontractor to do these things. So the person who comes can look at it and say: Well, that’s how it’s being done. When you want to delegate, automate, or outsource, your time frame is from the time you start working with the person to the time you’re efficient. If you don’t do these things right initially, that time frame becomes expensive.
I’m trying to save you headaches and time by doing it from the beginning. Now there’s a good book. Michael Gerber revisits an excellent book called The E Myth. I highly recommend that you get that book, the Bible, in this area of your business. Like all of us as small business owners, we are the technicians when we start. We are the ones who do everything. We are the Holy Grail, we are everything that the business is focused on, but at some point, if you want to scale, you will have to hire people.
So if you don’t take advantage of the tools to do this, you become a very inefficiently run business with the cost of hiring multiple employees to do things that one person can do, which ultimately costs you a lot of money. That is the first advice.
App you need
We are not very familiar with programming, but you can define your schedules. You make your dues. So my day is more or less planned for me. From the beginning, from the moment I woke up in the morning, as it is the next few weeks. So this has been a godsend for me. We are talking about administration and operations. This is very useful. Does it replace a human being helping? Absolutely not.
That means you can have personal tasks or private tasks. And if you’re sharing your Google Calendar with your staff, they can’t see the subject or theme of those items. They can see whether it’s a busy time, meaning not scheduling too much, or whether it’s free time. It’s very, very cool and very efficient.
Now, I’ll tell you, I’m not endorsing or advertising any of these solutions, but use motion does have a competitor in the space called Reclaim AI that I haven’t delved into. I think he currently has that ability. So that might be something you’d like to see.
So this is what I’m going to delegar.com. I support them a lot. Not only because my wife is the owner, but because there is a vast gap in space, and COVID has allowed many people not to go back into the workforce.
Do you want to work from home? They have a skill, and you should hire their talent. And once you get enough of that skill, you can hire an employee. But Gone are the days where you had to hire an employee to do all these things and find out, you know, be the chameleon where they can accommodate all these things that need to be done.
For example, I need someone to do a specific task and get answers to work for 2, 3, 4, or 5 hours a week. A couple more things that because we’re talking about the Ministry of Finance, and I don’t want to miss, this is most likely 9998 99% of the small business owners in this country. About 30 million of them do not have a degree in finance and accounting.
I did not understand my financial statements. Like the first multi-million dollar businesses I built. I handled the sales and marketing side of the business because I was a minority partner. It wasn’t until 2006. I started my own 100% owned company and built a million dollars in three years. I knew it the day I started. I don’t understand the operations. I don’t understand accounting. I don’t understand the county, and I don’t understand finances.
I’ll never forget hiring Mike Sasha and saying, Hey, I have no idea. I told him, I’ll pay you whatever you want me to charge to run that side of the business and show me how to do that couple of resources he gave me. One of them is a book called Fundamentals of Accounting and Finance for Non-Financial Executives.
I highly recommend that book and download it right now. So I get to the author here in just a second. The other is that this is going to be an essential book. For every small business owner, at some point, you will face this challenge, I promise you, and it’s called Economic Crisis Business Cash Flow Management, Economic Crisis Business Cash Flow Management. He doesn’t have to be a finance bookkeeper, but he needs to know how to read his finances. You leave that to your tax person or bookkeeper to explain your finances.
That’s where you’re going to lose, but you need to understand how to read a profit and loss statement. Understand your balance sheet and a notice of cash flow. Those are the three statements you must know if you are profitable.
You can go to your financial statement and say, my God, we made $385,000. That was rich, you know. But when you look at your balance sheet, you’re broke. And then you say, are you looking at your balance sheet-like, oh my gosh, we’ve got all this money in the bank, man’s life was great? Then you look at your statement of cash flows and think, holy cow, man! All this money is there, but it is preparing to disappear.