My Bookkeeping Business Vision –
Part 2: My Bookkeeping Business Mistakes
Hi, I'm Amy Hooke, the founder of The Savvy Bookkeeper, and Business Mentor who helps smart bookkeepers become “business savvy bookkeepers”.
In this podcast series, I'll be telling my ‘bookkeeping business story', and sharing my bookkeeping business vision, beginning with how I originally got started, what went wrong, how I fixed it, and how I transitioned away from being ‘on the tools' to having a profitable online business that runs without me.
During this episode, I'll be sharing my bookkeeping business mistakes and telling my story about some of the ‘band-aid' solutions I tried using to fix the problems I thought I had.
Series: My Bookkeeping Business Vision
Host: Amy Hooke
Guest speaker: N/A
Topic: My Bookkeeping Business Mistakes
My Bookkeeping Business Mistakes
After the excitement of starting my business started to wear off, even though I was earning really good money, I also started to experience challenges and frustrations with clients, and then to solve that problem I tried a few things, including hiring staff, changing my pricing model, and signing up for expensive software and mentoring programs to get help with my business, but nothing seemed to work. I'm going to share my top three mistakes; and the mistake was that I thought these things were problems, even though they weren't the real problems. This means the solutions I tried didn't work, they were just bandaids, where I actually needed some real healing in a number of areas.
My Bookkeeping Business Mistake #1 PITA clients
Clients were disrespectful and demanded a lot; they didn't value my services or the high standards that I practice for accurate bookkeeping. Often, clients would ask me for advice, but then ignore it, some did not provide paperwork on time (or at all!). Others insisted on doing their own bookkeeping to save money, but as you know, it's always quicker to do it correctly the first time than pay someone to fix mistakes.
After a few quarters of reviewing the accounts and reporting mistakes back to clients, I realised that most clients weren't learning from those mistakes, and their invoices continued to stay high or grow.
However, no matter how much I tried to convince them or explain it would cost less if they just let me do everything, they would insist they would get better and make fewer mistakes over time. Unfortunately, it was rare for this to happen and even though some said they didn't mind paying me to fix the mistakes, I felt really uncomfortable charging for unnecessary work. And others did really mind and would complain after receiving their bills, confused as to why the fees weren't getting lower.
My Bookkeeping Business Mistake #2 Invoicing day guilt and fear
Friday's were ways stressful because it was invoicing day, and I was sometimes so afraid to send invoices for the work I had done, that it would take me twice as long as it needed to. I often felt guilty for charging my fees and worried the client would complain, even though they didn't often complain, I still sensed some weren't happy with my high hourly rate.
Eventually, after a few clients requested it, I attempted to change from an hourly rate to fixed fees, and this opened a whole new can of worms. Figuring out how to calculate the fees left me confused, pouring over spreadsheets trying to figure it out. Even though there are a number of pricing experts helping bookkeepers with this, I thought to myself “I'm a bookkeeper, I'm good with numbers and spreadsheets. I don't need help, I can figure this out on my own.”
Unfortunately, I didn't do it well and ended up significantly underquoting clients. And the quoting process was also hard because I was afraid of underquoting and working for free, and I was afraid of overquoting and not winning the client.
After trying out a number of ways, including pricing software, I then also discovered the engagement letters I was using didn't protect me from a legal perspective, because they weren't proper contracts, so when they finally did complain about their fees and refused to pay, and I hired a debt collector, I was told my engagement letter didn't cover me and there wasn't much else I could do.
Then I purchased an expensive bookkeeping system that had a better engagement letter, some sales presentations and various checklists for bookkeeping procedures. But during initial consultations I continued to experience problems, I had potential clients laugh at the end of my presentation, commenting that it was “Business 101”. Other potential clients and existing clients baulked at my new engagement letter, making comments like “Wow this is a bit over the top, it's not like I'm signing a multi-million dollar contract” or complaining when they saw clauses about them having to provide tax invoices or pay via direct debit.
After all these experiences I felt crushed because I was a highly experienced bookkeeper, but I just didn't seem to be able to articulate my value to clients in a way they could understand the benefits of paying a more experienced bookkeeper like myself, over getting a family member to do it for free, letting their accountant do it inhouse, or hiring an overseas VA for $8 per hour.
My Bookkeeping Business Mistake #3 Struggle to find good staff
When I finally hired staff they didn't complete the work to the standard I expected. This led to clients complaining about their fees or not having the accounts done on time. I tried hiring a junior person first, but they took up more of my time because they didn't know what they were doing, made lots of mistakes and left me doing double the amount of bookkeeping work. I tried hiring mid-level bookkeepers who often left things half done for me to finish. I hired senior-level bookkeepers but they had their own clients and didn't seem to have the time to prioritise my small business. So I decided to go back to doing the bookkeeping myself and hired an admin person to help with data entry, scanning receipts and posting on social media.
But after hiring staff, I just couldn't get the business to be profitable, in fact, I'd not only spent the whole $100K I made that year, but I'd also spent an additional $30K of my husband's wages, putting the business into a loss. I was literally working my ass off and getting nowhere and I was exhausted, and I couldn't see how to make anything change because I felt I'd tried everything to fix my client, income and staff problems, but nothing seemed to work.
All of these things were getting me down, and making me question myself and whether I'd made the right decision to get back into bookkeeping. I was so stressed all the time, working seven days a week, and missing out on the one thing I started my business for in the first place; working from home so I could be around my son. He was either being babysat by our nanny or at daycare for 11 hours a day and then spending most weekends doing activities with my husband because I was working.
Even when I did drag myself away from bookkeeping work, I was consumed with unreasonable clients, recurring deadlines and incompetent staff, so most of my conversations with my husband were about these topics. And when there was no client drama going on, I was just worried about money, and at the thought of losing any of the clients.
My rock bottom came when I made a mistake and missed the due date for one of her supplier invoices, which I fixed as soon as I realised. After sending me a series of aggressive text messages, she then wouldn't answer my calls replying “I am so angry with you I can't even speak to you right now”.
A week later she called me, and I tried explaining what happened, at in the future I would prefer if she called me instead of texting. And I also asked her not to swear at me when she was upset, to which she responded:
“I shouldn't have to think about how I'm going to speak to my bookkeeper.”
As I heard those words come out, it was as though somehow I'd known ever since our first consultation that something wasn't right. I'd ignored all the red flags but could never put my finger on what the problem was in the way she spoke to me and her other staff. In that one sentence, I finally understood what the problem was, not just between her and me, but between her and all my clients.
My clients saw themselves as being above me, and I was ‘just their bookkeeper'. I was not a professional in their eyes, or a business owner in my own right, or someone worthy of respect, I was just an underling for them to order around or a nameless nobody behind a computer screen who was to pump out the information they wanted at the click of a button.
That's when I knew I was done.
“There it is!” I replied, as though I'd discovered the missing piece of a very confusing puzzle, “I would like to cancel our engagement because I'm not willing to work for anyone who speaks down to me.” And I hung up.
The following day I emailed her and all my other clients to let them know that I'd decided to cease offering bookkeeping services, that I'd finish the current quarter and help them with whatever they needed to find a replacement and do a handover. Some were angry but I knew I was making the best decision for my family and my own integrity, at least for that season of my life.
For about a year prior to closing my business, I'd been working with other bookkeepers helping them design their websites, and setting up their engagement letters. It wasn't much income at the time, but I loved working with bookkeepers, and never seemed to have these kinds of bad experiences.
Bookkeepers appreciated the work I did for them, treated me with respect, valued my opinions and recommendations, we're happy to pay and I never once felt bad for having my child at home in the background during a phone call. And the best thing was that when I worked with bookkeepers, they got great results from the things I helped them with.
Over the next few years, my web design and mentoring evolved into what is now The Savvy Bookkeeper, which I'll share in episode four. And in the next episode, I'm going to share all the things I realised and learned in that time off from the bookkeeping business, and what made me decide to start again from scratch. I wanted a second chance to pursue my vision because I knew I had it in me to do it, and I'd grown so much as a person and a business owner, that this time I knew it would be different.