A business is a system. The sooner you master the system, the sooner you'll make a profit.
There's a lot that goes into running a successful business and getting a grip on your finances should be priority #1.
I would argue that your first employee should be a great bookkeeper. I'm not alone in this. If you read Michael Gerber's The E-Myth Revisited, he suggests the same thing. Why is that? Let's dig in and discover why.
You Can't Afford to Be Lazy with Your Finances
When you hire a bookkeeper, several things will change. The obvious benefits are that you'll have more time to work with your clients, and you'll have less stress. The real reason, however, for getting a bookkeeper as your first employee, is that you can't afford not to. That person will be focused 100% on the money position of the company. He or she will become dedicated to cash inflow and outflow, and that's a beautiful thing.
WARNING: this doesn't mean that you can walk away from the finances and blame your bookkeeper if the company runs out of cash. What it does mean is that you have a dedicated person looking out for the financial interest of your business and will keep you updated so that you can make better decisions. Just knowing that you have someone that will invoice the customers, pay the bills and watch the bank balance while you go out and get more clients is going to feel great.
Create a Budget Before You Hire a Bookkeeper
So you know that you need a bookkeeper, but you have no idea how you're going to afford one, right? Most people opt for the cheapest version of a bookkeeper possible which is usually a very qualified accountant that looks at the books once a year. Don't do this to your company. You'll shoot yourself in the foot with a false sense of security. No accountant can add value to your business doing that. Even if they look at the books once a quarter, that will do very little for you. Your business moves fast, daily as a matter of fact, and you need a right-hand-man to help keep the finances above water. Do yourself a favor and get a qualified bookkeeper. In today's market, you can plan on spending anywhere between $10 and $20 an hour for someone like this. To check the salary figures for a bookkeeper in your area, go to salary.com and search for bookkeeping salaries in your city.
Once you know how much someone costs on a monthly basis, multiply that figure by 1.1 to allow for the employer taxes you'll need to pay.
Consider an Online Bookkeeper
If an in-house bookkeeper is too expensive, you might want to think about hiring an online bookkeeper like Ignite Spot. This option has become very popular over the past few years due to advances in technology. It's a great way to hire an accountant without breaking the bank. In fact, many larger companies are turning to this solution by default for the cost and efficiency savings.
If you decide to go this route, check out our post titled: What You Need to Know Before Using a Bookkeeping Service.
Once You Know the Cost - Take the Leap
It's not easy hiring your first employee. Trust me, I know. It takes a lot of courage and belief in your company to begin investing in systems, but if you don't, you'll never grow.
So many businesses close their doors within the first five years. I believe it's because they put the accounting on the back burner. For them, the finances are an afterthought with the idea that if they could just sell more, they would dig out of the pit. With a good accountant, you can navigate around that pit and invest in a growing business. What would you rather do?