In This Chapter

One of my early mentors in business once told me, “There are three things you need to do very well to be successfully self-employed. You need to be able to get the business, do the business, and run the business.” Most web-based business owners focus primarily on the first two activities. After all, getting orders and delivering the product or service is what makes you money.

However, running the business—all that administrative nitty-gritty stuff—is important, too. Sloppy bookkeeping, stacks of undone paperwork, and disorganized files can quickly turn into a mess that costs you time and money. To get and stay profitable, you need to run a smooth operation.

Before I started my online business, ForCopywritersOnly.com, I was primarily a self-employed marketing consultant. During those years, bookkeeping was relatively easy. I only had to manage two or three clients at any given time. I would do a project, send an invoice, and get paid. I kept copies of the invoices, checks, and bank statements in a file folder on my desk. That was my bookkeeping system!

Boy, was I in for a surprise when I began selling stuff on the Internet. When I opened the doors to my web-based business, selling how-to guides and home study courses, suddenly I was dealing with credit card transaction fees, shipping charges, hundreds of customer records, sales taxes, multiple product sales records, and much more. Bookkeeping suddenly became an administrative headache. Can someone please pass the Aspirin?

I can’t emphasize enough how important it is to keep an accurate set of books for your business. You need these records to understand how much things are costing you, how much money you’re making or losing, and what your cash flow needs are going to be in the weeks and months ahead. You can’t know that for sure just by glancing at the balance of your bank account.

You also need a good set of books to keep the tax man happy. If you’re ever audited and your bookkeeping is sloppy, then an auditor is going to expect that your tax returns are slipshod, too. An accurate set of books is also a requirement when applying for a bank loan—whether it’s for business or personal use.

So now that I’ve convinced you—hopefully—that bookkeeping is important, how do you get it done?

If you have little or no experience with bookkeeping for a small business, then I suggest you read a good book on the subject. The Complete Idiot’s Guide to Accounting (Alpha, 2006) is a great place to start. Mastering Bookkeeping by Dr. Peter Marshall (How To Books, 2007) is another excellent guide. I also suggest books that are specific to the bookkeeping software you select (more on that in just a moment), such as QuickBooks 2007: The Official Guide by Kathy Ivens (The McGraw-Hill Companies, 2006).

However, the basics you need to keep track of are the following:

Can you create all these records manually, perhaps by using a spreadsheet on your computer or bookkeeping forms purchased from an office supply store? You can. Especially if you’re just starting out in your web-based business and you’re not generating a lot of financial activity yet. However, as your business grows you’ll want to consider buying good bookkeeping software or hiring a freelance bookkeeper.

Let’s take a closer look at those two options.

Bookkeeping software can make the task of “doing the books” a lot faster and easier for you. Typically, all you need to do is type in the transactions as they occur and the program does the rest, automatically generating all the required bookkeeping reports.

Like most software solutions, there are basically two kinds: the kind you install on your computer, and the kind you access online by signing up and logging in. Personally, I prefer an installed program for my bookkeeping. There’s something about having my financial records on my own computer rather than on some other company’s database that makes me sleep better at night, even though most online services have robust data protection systems in place.

Here is a list of the most popular bookkeeping solutions available to small business owners.

Although you should review all your options carefully before making a decision, I personally recommend QuickBooks. It has been my bookkeeping software for years and I have always found it easy to learn and use. It generates all the reports I need. And QuickBooks has done a great job of providing lots of other helpful resources for small business owners like us.

As I said earlier, most of these software solutions require you to input your transactions. If you don’t do that, the software can’t do the books for you! However, you can make it a lot easier on yourself by taking advantage of the import feature.

The import feature allows you to pull in transaction information from your bank account, credit card statement, shopping cart system, and other accounts. It takes a little time to set things up but, once you do, importing can save you a lot of time. My QuickBooks software is set up to import my transactions directly from those three sources and put the data in the right places within my bookkeeping records. It takes me five minutes. If I were to try to do all that manually, it would take me five hours!

Whatever bookkeeping software you choose, find out if it has an import feature. In my opinion, it’s an absolute must.

Don’t want to handle bookkeeping on your own? I don’t blame you. Even with a good software system it’s a tedious chore. So another alternative is to hire a bookkeeper to handle this task for you.

Many bookkeepers work with clients on a freelance basis, typically setting aside a few hours each month to do your books. You can expect to pay $35 to $55 per hour for a qualified bookkeeper.

And speaking of qualified, make sure they are! Bookkeeping is one of those professions where anyone can hang a shingle. You want to make sure that the freelance bookkeeper you select has specialized training and experience. Review their credentials. Ask for references! Don’t trust your financial records to anyone who isn’t qualified and reputable.

Where do you find a freelance bookkeeper? There are many virtual assistants who offer bookkeeping services. (More on virtual assistants later in the chapter in “Taking Advantage of Online Tools.”) Also, let your fingers, or your computer mouse, do the walking through the online Yellow Pages (www.yellowpages.com).

In order for a bookkeeper to do her job, she needs to be able to see your business’s financial records on a regular basis. This typically means giving her online access to your business bank account, credit card account, and website shopping cart transaction reports. Otherwise, you’ll have to generate and provide these records to your bookkeeper manually, which takes a lot of time. (And aren’t you trying to save time by hiring a bookkeeper?)

Obviously, giving a bookkeeper this kind of access requires a lot of trust. It’s a little like giving the keys to your house to a maid. You want to make sure that whoever you select as a bookkeeper will keep access passwords in a secure place and maintain confidentiality. My advice? Get that assurance in writing.

Your business may be online, but you’ll be amazed by the amount of paperwork that can be created. Although I make every attempt to keep records in electronic format and to automate tasks—such as bill payments—my inbox of paper grows steadily throughout the week. There are bills to pay, forms to be filled out, and stuff to file. Sometimes the paper dragon grows so quickly I feel like I have to beat it back with a stick!

Of course, there are a lot of online administrative tasks that are similar to paperwork that you have to deal with, too. Sloppy online files can cause just as many problems as the paper versions.

I define “paperwork” in two ways:

Online or offline, it’s all “paperwork” to me.

Like bookkeeping, keeping up with paperwork is important. There is nothing more frustrating than slacking off for a couple of weeks only to discover that something important has been missed or forgotten that gets you into trouble, or that an important file can’t be found because it’s buried in a pile of paper.

When paperwork is done in a timely manner, and files are put in the right place so that they’re easy to find when you need them, you’ll feel less stressed. Your business will run more smoothly without you having to worry about administrative headaches.

When it comes to administrative tasks, such as paying bills or submitting tax forms, I suggest you set aside a few hours once or twice a month for this activity. Actually put that appointment in your schedule. In my business, I schedule two hours every other week, usually on Friday afternoons from 1 P.M. to 3 P.M. for paperwork. That way it gets done.

I admit it. A couple of years ago my computer files were a mess. If it wasn’t for the search feature in Windows, I wouldn’t have been able to find anything! Then I made one simple change that made my computer files more organized and easier to find and manage. I started to use descriptive folders.

Whether you’re on a Mac or a PC, you can create a folder that you can put similar computer files in. For example, as I’m writing this book all the files associated with the project are in a computer folder called CIG Book. Inside that folder I have other folders to further organize the information. I have a folder for completed chapters, chapters in progress, research on particular topics covered in this book, and so forth. When I open the master folder, I can easily find what I need and get started without delay. It sure beats hunting my computer for the right file!

For your web-based business you might have computer folders for the following administrative tasks:

When you receive an e-mail from your merchant account provider telling you about a change in transaction fees, you can drag and drop that e-mail into your “Shopping Cart Program” folder. Then you’ll always know where to find that information.

Computer folders, and folders within folders, will make your business life easier. Try it!

I wish all my files were in electronic format. However, I still have to deal with a significant amount of paper records and, chances are, you will too in your web-based business.

Before you decide how you will file paper, ask yourself, “Do I really need to?” Not every piece of paper that comes into your business or off your printer needs to be filed. I have a policy that if a similar record exists on my computer then I don’t keep a duplicate paper version. I toss it in the trash bin.

For those paper records that I do need to file—receipts, tax records, contracts, etc.—I store them in a filing cabinet in my office.

I use legal-size 14” file folders, rather than the standard 12” version, because the larger size makes it easier to store all kinds of paper records and find them later on.

The most important element of my filing system is the labeling.

Most people use a descriptive label to categorize files. For example, you might label a file about Product X as simply “Product X” and then file it alphabetically. That works okay when you have only a few files to worry about. But as your business grows, and the amount of file folders stuffed in your cabinet grows along with it, finding files quickly is going to become more difficult. (“Did I file that under N for New Product or P for Product? Or M for Merchandise!?”)

A much better way is to file numerically. Here’s how that works.

Here’s an example:

Say you’re looking for your business tax records for 2007. You simply open your computer file of “Files,” scan it to find the file (or use the “Find” feature in Microsoft Word), notice it’s file number 22, then go to your filing cabinet and pull out that file. It takes just a few seconds. Much faster than sifting through the file drawers looking for a file label that matches the description.

Recently I had to figure out how to use the document security features in my PDF publishing software so the e-books I create couldn’t easily be copied or changed. I spent about 45 minutes on that task.

Now, next month, when I have to create a similar PDF file, will I remember how I did it weeks earlier? Maybe. Maybe not. That’s why I always write down the procedures so I can do it again.

I call this “creating systems.” In fact, I have a computer folder called “Systems” where I store all the instructions and procedures on how I do things in my business.

Creating a system out of an activity in your business has two benefits: first, it allows you to do that activity a lot faster the next time, without having to think about it. And second, it gives you the means to outsource that task to someone else.

In fact, a lot of administrative activities that I used to do in my web-based business are now done by others. I simply give them the step-by-step instructions for that task, which I already had stored on my computer.

If you want your business to grow, you can’t be busy reinventing the wheel. You need to learn the best way to do something once, and then create a system that makes it easier for you to do again next time, or to be able to give that task to someone else to do.

Another way to make your business a well-oiled machine, and therefore save yourself a lot of time, is to leverage technology. There are myriad tools available on the Internet that allow you to accomplish all sorts of tasks faster and easier.

Many of these online tools are listed in Appendix B. But here are a couple of examples of two tools that work for me.

Google has a tool available for creating and sharing spreadsheets. When website visitors enroll in one of my online courses, my virtual assistant creates a Google spreadsheet containing their names and contact information. This spreadsheet exists on a secure web page in my Google account. Whenever either of us needs to view or update the spreadsheet, we simply access it online. It sure beats e-mailing the thing back and forth!

Another tool I use is TaDaList.com, a “to-do” list manager. This tool allows me to create multiple to-do lists for all my projects and other business activities in a convenient checkbox format.

These online tools are free. Check them out!

As your business grows, you’re going to eventually need to get some help in managing all the administrative details. Otherwise, you’ll drown in paperwork no matter how efficiently you’ve set things up to get it done.

Getting help is going to be an added expense to your business. And a lot of business owners are squeamish about making this commitment. I admit I was, too, for far more years than I care to admit. I just thought I could do it all myself. However, once I did get some administrative help, my business grew rapidly because I was able to focus more time on marketing, product development, teaching, consulting, and all the other things that more directly make me money.

When is a good time in your business growth to hire someone to handle administrative tasks?

The rule of thumb is that if you are spending more than two hours per day on activities that someone else can do cheaper, and perhaps even better, than you, then you need to take the leap. Hire the help. Your business, and your life in general, will be better as a result.

When looking for administrative help for your business, the first question you have to answer is: virtual assistant or employee?

A virtual assistant is someone who works for you on a freelance basis. They may have several other clients as well.

Typically, a virtual assistant (VA) charges by the hour, usually $25 to $50. However, there may be some tasks that a VA charges on a project or piecework basis. For example, my VA charges by the hour for most tasks but applies a per page rate for proofreading.

In my opinion, a virtual assistant is ideal because you don’t have to worry about the expense and obligations of having a traditional employee. You only pay for the work you hire the VA to do for you. And if things don’t work out you can easily cancel the arrangement.

Here are some great organizations that will help you find a virtual assistant:

There are many virtual assistants who specialize in working with web-based business owners and understand online payment systems, e-mail marketing, and so forth.

As your business grows and requires more substantial administrative help, hiring an employee, either part-time or even full-time, might make sense. You’ll have more obligations as that person’s employer—rather than as a VA’s client—but your hourly costs will be less.

My advice? Start with a virtual assistant. Then, as your administrative needs increase, explore the possibility of hiring an employee.

The Least You Need to Know