Fire your accountant. He's ruining your business.

  • Fire your accountant - hire him back as a mentor
    Fire your accountant - hire him back as a mentor

When I first started out in business we wrote our invoices out in Word, we focused only on our bank balance, we had no real idea where the business was going and once a year we paid an accountant to make sense of the year just past.

Today I know exactly what's going on with the business - to the penny. Notwithstanding new customers appearing I know exactly how much money we'll have at the end of this month and next month and the month after... to the penny. We're so up-together that we submit our formal accounts about a week after our year end (that's 51 weeks early here in the UK).

What's far more important to me is that I know exactly what we need to achieve each month to meet our goals for the business, I know clearly what those goals are, what our trajectory is and I'm able to clearly articulate all of this to my team.

And the only real difference today from five years ago; I'm now our accountant. I have taken responsibility for the accounts. It was so easy to do and it has made all the difference. Here's how:

Turn your forecast upside down.

Most financial forecasts I see are nonsense. They're a guess in a party dress. They predict one possible future and frankly they're usually pretty pointless. Our friends at Seedrs - the crowd funding platform - don't even require them for startups.

But - turn your forecast upside down and it becomes your best friend. A source of clarity, focus and drive.

First decide what your goal is for your business; in my case I'd like to send my kids to the school I went to.. that gives me a salary to aspire to and the business will have to support that... and now I have a number in my head for the net profit I need to be seeing in five year's time.

Now work backwards.. plot a sane trajectory from now to then... and reverse your forecast so it is now telling you: to achieve your goal, given your estimations of overheads, this is how much revenue you need to bring in this month and next and the month after that.

Clear targets, sensibly derived and simple to update. Direction for your business not a pointless guessing exercise.

Run your own accounts, weekly at least.

There is no doubt you need a professional on your side to help you with the setup, the complicated bits and the occasional audit but seriously... do your own accounts!

You're too busy? You don't know how? Bad excuses.

I cannot express enough how moving ourselves to a decent online platform like Xero and taking responsibility for the mundanity of managing our accounts - pre-payments, "work-in-progress", tax liability, VAT returns and bank reconciliation - has changed the direction of our business. Xero is quick, simple and friendly and honestly does 90% of the work for you. All you need to do is provide a little oversight.

By leaving someone else to do all of this in the past I was blindfolding myself of the realities and complexities of the business' metabolism. It's probably the biggest regret I have of my first years in business.

Fire your accountant.

OK - so don't do this one but do find the right accountant. What you need is someone who can be on hand to set an online platform like Xero up for you, do everything to start with and drip feed you responsibility as the months go by.

You'd be a fool to prepare your own end of year accounts without professional help but you're just as much of a fool to allow someone else to do it if you don't understand them with enough clarity that you could have done it yourself.

Fire your accountant - and re-hire him as a mentor.

Jim Morrison Rumsfeld's Law is written by Jim Morrison; founder of twiDAQ and owner of Deep Blue Sky Digital, a full service digital agency in Bath, UK.
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