One thing that I see over and over as a food business consultant is most food entrepreneurs hate doing their finances. Most would love to delegate financial management of their business that deal with money and spreadsheets to someone else, so they can simply focus on creating.
But I have some news for you: As a food business owner, you cannot delegate the entire management of your money or financial reports.
I know what you might be thinking — “Mary, aren’t I supposed to be delegating!? Didn’t you tell me that I need to outsource?”
In my video series for food business owners Habits of Highly Profitable Food Businesses, the answer is yes, but there is a huge difference between outsourcing support with your financials and outsourcing the entire thing.
Here’s why: no one knows your money like you do.
No one knows the food business like you do. No one but you can look at your P&L reports and know when something is missing, categorized incorrectly, or duplicated.
Even the very best bookkeeper can get it wrong sometimes, and not because they’re bad at their jobs, but because they don’t work in and around your business the way you do. They’re not bad at their jobs; they’re simply not in your brain.
Your P&L Report is the heartbeat of your business, and if you delegate the examination of that report, you’re delegating away the most important piece that only you can do properly.
And I have a little secret for you. Once you have a great system, going over your monthly financials can actually be fun. You can look at your money, understand what’s happening in your business and feel in control of your financial management.
Let me give you an example. I was working with a client the other day that had an extremely complicated chart of accounts in her P&L. It had been set up by her bookkeeper, and my client never thought to question it because the bookkeeper was “a numbers person,” and “an expert.”
But the reports didn’t make sense to my client, and didn’t allow her to see the numbers the way she thought about them. Her P&L report segmented each of her monthly subscriptions into business departments (marketing, operations, finances, etc).
But in my client’s mind, she thought about these vendors as her “monthly subscriptions,” or services that added to her overall monthly overhead.
So we re-configured her chart of accounts. We moved all of those monthly fees into one account called “Monthly subscriptions.” And let me tell you — the look on her face when she realized exactly how much money was going into paying her various online systems — no wonder she wasn’t paying herself as much as she wanted! Now she has a P&L report that reflects her thinking, and she can manage which subscriptions are vital to her business and which ones aren’t worth keeping around.
This also illustrates one of my mantras “the fewer numbers the better”. All of those small categories with all the small dollar amounts for the individual subscriptions did not give my client the big picture. Only when I put them all in one large category, did she see the impact those subscription payments were making to her bottom line.
In case you’re wondering which parts of your financial management you should be keeping and which ones you should be delegating, I’ve boiled it down to a simple list (see I know you food people are busy and just want the answers):
You can delegate:
- Inputting your invoices into your financial software
- Coding your expenses
- Preparing checks to pay your vendors
- Day-to-day cash management
- Generating sales reports
You absolutely cannot delegate:
- Setting up your chart of accounts
- Approving payments to vendors (who gets paid, how much and when)
- Reviewing your P&L report with your bookkeeper every month (for errors, missing info, miscategorized info, etc.)
- Checking your online bank transactions, credit cards, checking account, Quickbooks for fraudulent charges or funny transactions (you should aim to do this at least twice a week)
This is all about establishing healthy routines for your financial management that get you looking at your financials more regularly and empowering those around you to make the routine mirror your thinking. And you know what? Once you get these routines in order, I promise you will begin enjoying it! You will discover how to make more profits drop to your bottom line and you will feel empowered.
Remember you’re the boss — make the systems work for you. And keep the high level management in your control on your way to increasing profits.