Pillar 1: Operational Efficiency

Inefficiency strangles growth. If your business design has flaws, rapid growth will quickly identify them for you. The flaws usually appear as pain points—they quickly become the things that wake you up at night. In this Pillar, we will focus on the following:

• digitization of data

• project management

• work flow automation

• staffing alternatives

By first focusing on operational efficiency, we can build our businesses on a solid foundation.

Digitization of Data

As a bookkeeper, you can take a quantum leap in your efficiency if you embrace digitization of your data. First, I will discuss how a bookkeeping business can enter the digital age. Then I will finish this Pillar by demonstrating how you can help your clients go digital as well, realizing further gains in efficiency and creating a new product offering for you.

If yours is like most businesses, you are in one way or another struggling with your paper. Digitizing your data can improve operations significantly. I have worked with several firms as they transitioned to a paperless environment. The process can be daunting if you do not have the necessary skills or expertise to do this with your existing staff. I have also seen a few mistakes made in the process, due mainly to lack of experience with the process.

I personally recommend that my clients seek expert help with going paperless, as it can significantly improve results and expedite the process. I have worked with Tursa Group (www.tursagroup.com) with my current clients. They offer a five-step process and a project management team member to facilitate your paperless project. Their five-step process includes the following:

1. digitize your data

2. document systems and processes

3. implement cloud-based services

4. outsource tasks to improve efficiency and flexibility

5. embrace telecommuting as a strategic initiative

I will examine each of these in further detail.

1. Digitize Your Data

• Go paperless. The easiest way to eliminate paper is to do it at the source. I use a service called DocuSign in order to obtain legally binding documents that are digitally signed. This step eliminates the need to print documents, obtain signatures, and then scan them.

• Utilize PDF versions rather than printed documents where possible. My clients encourage the use of secure portals and PDF versions of data to streamline operations and enhance their client communication.

• Convert your fax line to a fax-to-e-mail service. You can reduce costs by eliminating a redundant phone line and printing only the documents that you absolutely have to print.

• Use existing staff to convert existing documents to digital by buying a good-quality scanner. If you do not have the resources to scan in-house, businesses exist that will help you scan documents at a very reasonable price.

• Capture and file receipts digitally with your smart phone's camera. Expensify is a great application for capturing data for you.

• Use www.shoeboxed.com. You (and your clients) can fill an envelope and send them directly to Shoeboxed. Shoeboxed will scan your data and store them in a secure online account, ready to be exported to your preferred accounting software.

2. Document Systems and Processes

Your ability to scale your business or grow is limited if you do not have effective documentation and training procedures in place for new staff.

• Tursa Group works with their clients to create short three- to five-minute videos on how to do almost every internal process in their company.

• The videos are shared with staff on a private YouTube channel.

• Staff access the videos by accessing links on an in-house intranet site.

• Complete documentation means that management is able to spend less time training employees.

• Training becomes on-demand and self-serve. Employees can find the information they need quickly without wasting time waiting for help.

• A variety of great software programs are available to capture video on your computer. Personally, I favor BB FlashBack (http://www.bbsoftware.co.uk). The Express version is free and has a lot of great features. Their paid versions are well worth the money if you are looking for additional features. The software captures the activity on your screen, and staff simply talk their way through their regular work. In this manner, your staff can document their daily duties without taking time away from productive work.

• The audio and video are saved in a video format and can be stored on a server, e-mailed, or uploaded to YouTube. For more confidential videos, I like the simplicity of Box.com for online collaboration and file storage.

3. Implement Cloud-Based Services

• Start planning now to implement cloud solutions over time. I do not recommend changing everything overnight; just make changes as you are able. If you have just spent money on server hardware, now is the time to plan so that you are ready for the cloud when your hardware is scheduled for replacement.

• Migrate your company to cloud-based solutions such as Google Apps, Office 365, Zoho CRM, Wave Accounting, Xero, etc. See appendix 4 for more examples of solutions that can help you as you grow your business.

• Cloud-based solutions allow you to eliminate your internal information technology infrastructure, significantly reducing information technology costs and improving reliability.

• With planning and forethought, you can implement hosted or custom solutions that will take your business completely into the cloud.

• Cost savings can be substantial, but the greater flexibility is probably the best feature of cloud-based solutions. You can work from any web-enabled device anywhere, anytime. One of my clients was able to access her client records from a beach in Cuba, solving a significant problem and allowing my client to return to her vacation.

• If you are reluctant to fully embrace cloud solutions, there is an intermediate step. You can use www.CloudLinx.ca as virtual computers. Your data are safe in the cloud, but you have your traditional programs installed on a computer that you can access from anywhere.

4. Outsource Tasks to Improve Efficiency and Flexibility

• Outsourcing is not a dirty word, nor is it the immoral act of taking jobs away from the North American economy. Using external computer support and having an external bookkeeper are common examples of local outsourcing. As a business owner, you owe it to your clients and your staff to build your business in a sustainable and efficient manner.

• Start by outsourcing mundane and repetitive commodity work. This practice frees up you and your staff to focus on value added services that require more client interaction.

• Segregate tasks that can be performed more efficiently by another person or organization.

• Outsourcing gives you the flexibility to scale up or down as demand for your services fluctuates.

• In-house staff can be freed up in order to do more meaningful tasks and enhance customer relationships by offering new services.

• You will see the most benefit from outsourcing if you integrate your outsourced staff into your company's culture and communication system. I have a virtual assistant in Mexico whom I communicate with on a daily basis, and she assists me with client interaction. The impact on freeing up my time has been amazing.

• Outsourcing fixes most of your file-related costs to an hourly rate—you know exactly how much you are paying and typically pay for only the time that you need.

5. Embrace Telecommuting as a Strategic Initiative

• If you embrace the previous steps, you can also implement telecommuting for your in-house staff. Telecommuting simply gives you the ability to work from anywhere. It is very similar to outsourcing, but staff still come in to the office as needed.

• Telecommuting will help you reduce office costs, and it can be used as a tool to recruit staff outside your local geographic area. This is especially important if you are in a small or remote community and need assistance with your workload. Local staff may simply be impossible to find.

• Telecommuting will work only if your organization has the right communication platform in place, such as a VoIP system and an internal chat system.

• Encourage members of your team to use the internal chat system to build relationships, whether they are physically in the office, are telecommuting, or are outsourced resources. This practice will provide a social outlet and give employees a place where they can seek help in order to complete tasks.

• Leverage online tools such as Box.com or Asana.com to facilitate integration and collaboration.

I have personally implemented all of these steps in my current business model, and I work with my clients to help them do so as well. My personal experience has been exceptional. There are many benefits, usually in relation to cost savings, but the most significant benefit for me is the freedom to work from anywhere at any time. I can now address issues as they arise and forget them, rather than wait to return to the office to resolve something.

Once you are paperless, you can realize even greater gains in your business by helping clients go paperless. Paperless clients means that you can share data easily and quickly. The back and forth to chase missing paperwork is eliminated. My motivation for going paperless was to completely eliminate the random boxes and bags of records that would sit in my office for months on end.

We will discuss consulting with your clients to take them paperless in more detail in Pillar 7, Value Added Services. You will find that the transition to a paperless office is actually a fairly simple process once you have been through it. You can integrate the paperless transition process into your bookkeeping practice as a new service to clients in order to build deeper relationships with your clients and charge higher fees.

Recap

In this section, we discussed how to improve operational efficiency in order to provide better service to clients and reduce operating costs. Digitizing your data, implementing project management, automating your work flow, and introducing alternative staffing arrangements are critical first steps. Increasing efficiency is a first step in making your bookkeeping business scalable and ready for exponential growth.

Project Management

Wikipedia defines the project management process as "the management process of planning and controlling in the performance or execution of a project." How is that definition relevant to a bookkeeping business? Once your data have been digitized, you can easily begin to manage your workload as a series of projects. Project Management Institute, Inc. (PMI), defines project management as "the application of knowledge, skills, tools and techniques to a broad range of activities in order to meet the requirements of a particular project."

Generally speaking, projects can be divided into five basic phases:

1. Project conception and initiation—identify projects that benefit the organization and determine whether or not a project is feasible and realistic.

2. Project definition and planning—this is usually the phase that is most likely to cause problems. If you do not properly define the project scope, you can end up with scope creep and unrealistic results. In this phase, project timelines and budgets are started.

3. Project launch or execution—official launch of the project, including distributing resources and determining team responsibilities.

4. Project performance and control—actual status for the project is monitored in comparison to expected timelines and budgets. Project managers are responsible for ensuring that resources are properly allocated and monitored in order to keep the project on track.

5. Project close—once all tasks are completed and the client has approved the outcome, the team should evaluate the project to determine lessons that can be carried forward to subsequent projects.

Projects and project management processes vary by industry. These five basic phases are relevant in that they ensure that a project is properly conducted in order to solve a problem and provide future benefits to the organization. Too often, I see bookkeepers treating each client as a unique transaction. However, you can group certain aspects into common elements and manage the overall process as a project.

I personally use a project management approach for my internal projects and for my client work. Where possible, we break projects down into their component steps and work with our clients to ensure completion. Each project has an internal champion who is responsible for ensuring that tasks are completed on time and for pushing the projects forward.

I am currently using a virtual assistant whose sole responsibility is to manage projects. She updates me on the status of projects and keeps me up-to-date on areas that need my attention. We can identify bottlenecks and potential delays much faster because we have a deliberate focus on the big picture. We can avoid the client delays with a proactive approach.

We have adopted a fish bowl approach—our clients can see everything and know exactly what we are working on in their files. Perhaps more importantly, our clients know in advance if we will need something from them and they know if they are delaying the project. I don't normally like to point fingers or place blame, but a deliberate approach helps our clients keep things in perspective if they are the ones causing delays. Generally, this approach alone helps us avoid a lot of potential conflict.

There are a lot of great resources for project management. We use online project management courses to develop our team. I encourage internal training for more in-depth learning, so I have staff teach other team members about project management. The overall result is a stronger team with a greater breadth of knowledge.

The project management process can also be a valuable service that you can offer to your clients. For instance, if they are implementing a new software product, you can offer your project manager to facilitate the project and keep things on track. Not surprisingly, once our team had training in project management, we were able to identify opportunities and provide greater services to our clients.

We use two project management products. First, we use ProWorkflow to manage external projects. We chose ProWorkflow for its security and ability to grant secure access to our clients for their specific projects. ProWorkflow allows us to see all outstanding tasks internally and to share the client-specific tasks individually with our clients.

We use Zoho CRM to track our customer interactions and internal projects. Zoho CRM has a free version that requires you have a bit of knowledge to set it up properly. Their paid versions come with support and additional training. We use the free version because it was something we felt that we should learn ourselves. Zoho CRM allows us to track internal projects and tasks.

Asana receives honorable mention as a project management tool. They offer a free solution that can be integrated with your team and your clients. Asana has a paid version as well, which allows you to add a larger team.

Whether you implement the project management process internally, externally, or both, you will see great benefits in your business and for your clients.

Work Flow Automation

Work flow is simply how client work moves through your business. I am a strong advocate for documented internal systems and processes. Of course, systems and processes have to be monitored and enforced in order to ensure compliance and consistency.

The most common argument I hear from clients is that bookkeeping is client specific and cannot be standardized. I disagree but acknowledge that it comes down to how you define what you are standardizing.

Standardization should be applied to the process that guides work through your business at a high level. Work flow should have the same stages for all files, and everyone in the firm must follow the procedures. Be as specific as possible when creating and documenting systems and processes. The following are among the critical questions that your documentation must address:

• What is your marketing strategy?

• What is your sales cycle? Do you have guidelines for client acceptance?

• How do you initially receive work from the client? Who receives it? In what form do client records arrive?