Entrepreneurs sometimes are their own worst enemies. This is a lesson I had to learn more than once until it clicked in. I was running this small business and I used Paychex as my payroll company, a checkbook, credit cards and handwritten faxed or mailed invoices. My financial life was co-mingled between business and personal. To me as long as I had enough in the checkbook life was good. We had just left a short partnership and making payroll was almost impossible. Although I heard of QuickBooks, I have not at the point of valuing what it could do for me.
After a few months, it became clear I needed to grow if I was going to sustain the business. I was making a good enough living, and I was already on track to get myself out of the hole my partnership left me in. My fear wasn’t in my business (I was providing a service to magazine publishers); my fear was that some of my clients were on shaky ground.
So I came up with my marketing plan, which seemed simple enough to me at the time to send out 20 letters a week to possible customers and sign and address them myself. The plan started to produce results in a month; within three months I had landed the biggest account anyone could have hoped for, and I quadrupled the size of the company in six months. This was so effective I outgrew my companies ability to handle to work in less than a year.
The trouble was my infrastructure was not moving as fast. I had a moment almost any entrepreneur has probably had. I was facedown on my desk in virtual tears. At this point, I was working half of the 168 hours in a week. Back in those days, we had Nextel phones, the push-to-talk phones. If I was not at work or sleeping, my phone was going off constantly. I was missing my kids and my family events, and I could see no way out. Worst of all, despite this growth, I was basically making the same amount of money personally that I had been …
My tax guy came in to visit me, and we were going to file yet another extension. He was a young guy, a lot like me, trying to grow his business, and he had been doing my taxes for several years. It is safe to say at this time we were friends. He was concerned and asked me what was going on.
I told him I couldn’t understand how I was bringing in all this business and not making any more profit.
He asked to look at my books. So I gave him my checkbook. He looked at me with a blank stare and said he was serious. So I proceeded to tell him I was running the business out of my checkbook and credit cards (all personal), and still handwriting the invoices, using a notebook for ARs, and a drawer in my desk for APs I looked at once a month. I then walked over to my file cabinet — you know the kind, 5 feet high, 4 drawers, 4 feet deep — and proceeded to open two drawers full of receipts and another half drawer full of various bills or unaddressed items.
Charlie said to me, “I can change your life.” I said, “tell me how.” He told me about a program called QuickBooks. He said he could put my entire business looking back from the beginning to current day. I would be able to see my entire APs, ARs, what jobs actually cost me, and what clients owed, and at that point, I would understand my business better than ever before.
If there is one thing entrepreneurs have issues with, it’s trust. I didn’t 100% believe him. But … at that point, I probably had worked four straight 16-hour days, so I told him to give me a plan.
He planted a bookkeeper in my office, three days a week for six weeks. They installed Quickbooks, I think it cost $175 and that seemed expensive at the time. She did just what he told me she would do: She booked every expense we had. She started invoicing off the program and paying my ARs off the program.
At the end of the sixth week, she was done, and Charlie gave me an overview of my business. I could now see everything. You see, what they did was categorize everything we were doing as a company. Not to get too techie – but I was running the business in five states and all income and costs got charged directly to a specific state. So I got to see each operation individually. Every route, every expense item, gas receipt, toll charge, phone charge, there was not a thing unaccounted for.
The moment of clarity emerged and suddenly everything started to make sense. I was able to use QuickBooks to truly see what was happening in my business.
Quickbooks allowed me to make sweeping changes within three months, the company never ran better, and the profitability went up significantly.
When it came time to sell the business, Quickbooks was true to until the end was a life saver. No matter what question the potential buyer(s) had, I was able to answer it in minutes when it came to financials. I have started and sold several more businesses since then, and I have always found Quickbooks has been able to provide clean financial records, and that is one of the main reasons my companies sold.
My tip of the day: If your business is in a shoebox, make the small investment of getting a good financial business software program such as Quickbooks. Take the time to hire an accountant or bookkeeper who can help you make sense of the business. The power you will have is information and it can be life-changing.