INTRODUCTION xv1 GETTING STARTED 1Assess Your Skills and Goals 1Why Bookkeeping? 4Approaches to Starting Your Business 5Building a business from scratch 5Buying an existing business 6Setting Up Your Own Books 7Choosing Your Accounting Software 8Level of support provided by the local firm 9Developer's track record of performance 9Software's ability to fit the business 9You'll Need a Business Plan 10Consider Your Exit Strategy 12CONTENTSvSelecting External Advisers 15Questions to Ask Advisers 18Finding a Board of Directors 18Know Your Competitors 192 FINANCING YOUR BUSINESS 21How Much Money Do You Need? 21Start-Up Costs 22Cash to Provide Liquidity 23Get Your Personal Finances in Order 27Credit History 27Debt Management 28Retirement Goals 29Insurance 29Sources of Financing 31Internal Resources 31External Resources 31Your Relationship with Your Banker 333 PRICING YOUR SERVICES 35Provide a Menu of Services 35Clients' Fear of the Clock 38Pricing Strategies 38Cost-based pricing 39Pricing based on your competition 39Pricing based on the market 40Pricing based on value 40""Productize"" Your Services 414 CLIENT MANAGEMENT 49Tracking the Work 49Work In and Work Out 50Handling Client Records 51Tracking Turnover Time 52Managing Peaks and Valleys 54vi Start & run a bookkeeping businessContents viiPlanning for Time Off 54A Word about Client Confidentiality 55Tracking Your Clients 56Add Up Your Clients 57Compute Frequency of Visits 57Calculate Average Billing per Client 58Assess Client Quality 595 BUSINESS TOOLS AND EQUIPMENT 63Communication Options 63Telephone system 63Fax machine 64Cellular telephone 65Personal digital assistant (PDA) 66Computer System 66Computer 66Software 67Printer 68Scanner 68Photocopier 68Filing System 68Office Furniture 69Vehicle 70Resource Library 716 WORKING FROM HOME 73Financial Considerations 73Nonfinancial Considerations 74The neighbors 75The on-call syndrome 75The convenience 76Willpower 77Tracking Your Home-Office Expenses 77Step 1: Calculate business use 78Step 2: Apportion your expenses 79Repair and Maintenance Expenses 807 ORGANIZING YOUR OPERATIONS 83Setting Hours of Operation 83Booking Appointments 84Quoting Jobs 86Managing Work-in-Progress 88Invoicing Clients 89Establishing Credit Policies 90Terms of sale 91Credit decisions 91Payment methods 92Handling Collections 938 MARKETING AND PROMOTION 95Finding Your Niche 95Pricing Is Key 97Competing on price 97Competing on value 98Presenting Your Best Self 98How you dress 99How you answer the telephone 99How you decorate your office 100Advertising with a Purpose 101Should You Have a Website? 103Keeping Your Current Clients Happy 1049 HAVING EMPLOYEES 107Hiring 101 108Building a job description 108The laws of the land 109Attracting quality employees 111Interviewing potential candidates 112Employee Compensation 114viii Start & run a bookkeeping businessContents ixDetermining market rates 114The importance of benefits 115Performance-based compensation 116Firing Employees 11810 FINANCIAL MANAGEMENT 125Budgeting 101 125Projecting revenue 125Projecting expenses 126Fixed and Variable Costs 128Fixed expenses 128Variable expenses 128Why Is Cost Behavior Important to My Business? 128Break-even point 129Capacity 130Basic Ratio Analysis 131Solvency or liquidity ratios 131Asset and debt management ratios 133Profitability ratios 135Key Performance Indicators 136Receivables Management 139Payables Management 140Tracking due dates 142What to do if you fall behind 14211 GROWING YOUR BUSINESS 145The Three Methods of Business Growth 146The Concept of Leverage 147Tracking Your Business Growth 148How to attract new clients 148Ways to sell more to clients 149Sell to clients more often 14912 PLANNING FOR SUCCESS 151The Planning Cycle 151Step 1: Make a plan 152Step 2: Get control 153Step 3: Focus on growth 155Step 4: Fine-tune your business 155Step 5: Plan some more 157GLOSSARY 161SAMPLES1 Business Plan Outline 132 Cash-Flow Report 253 Cash Inflows 264 List of Services 445 Client Termination Letter 616 Fixed Price Agreement 877 Client Satisfaction Survey 1068 Process Documentation 1109 Employment Advertisement 11310 Employee Evaluation Form 12011 Weekly Flash Report 15412 Monthly Planning Meeting Notes 15613 Performance Highlights 15714 Management Discussion and Analysis 158WORKSHEETS1 Skills Assessment 32 Evaluating Accounting Software 113 Planning Your Exit Strategy 164 Vehicle Expenses 725 Home-Office Expenses 816 Budgeted Income Statement 127x Start & run a bookkeeping business
