Some time ago there was a TV ad featuring BT and Gordon Ramsey (neither of which top my favourites list); which spelled out with fantastic accuracy the small-business dilemma. You might recall; it showed Gordon lying on the floor opening the back of his computer with a carving knife.
So, hands up – which business owners are guilty of doing something similar to this? I know I am.
In the ad, there is a great compounding of errors which includes ruining an essential business tool (the carving knife) and ruining another essential business tool (the computer) as well as the absurdity of the kitchen running out of control whilst Gordon messes up the computer.
It’s OTT, but it is also very real.
Most small-business owners, asked to put a value on their time, will come up with a reasonable figure – say £2 – 500 a day – yet most of us will happily spend half a day doing what a professional could do in an hour – without collateral risk. In the case of solicitors, the billable hour is rated at £111-500 or more in some cases. So why would a solicitor want to spend time on non-chargeable work?
To an extent this approach is encouraged in business literature; Duncan Bannatytne, for example states that the first thing he did was learn accounting ‘to save paying for an accountant’. Thinking this through, why do you pay an accountant – there are basically 3 reasons:
1. As bookkeeper. So Duncan values his time less highly than the cost of a bookkeeper? Unless you genuinely enjoy pumping in figures whist Songs of Praise is on telly (and some people do), then this cannot constitute good use of time.
2. As auditor. This is not optional and has to be undertaken by an unrelated party so is not relevant.
3. As advisor/consultant. The results from this should be quantifiable, so there is a clear business rationale to employ or not employ the services of an accountant.
Additionally, amateur accounting, like opening a computer with a carving knife, can produce misleading – or just plain wrong – results, which in turn can lead to bad business decisions.
Don’t get me wrong; it is an excellent idea for a business owner to understand accounts – they aren’t just for Companies House and the Tax Man – management information (MI) is invaluable for business; learning accountancy will help you to understand and interpret the information which is provided.
But to save money on accountants – sorry worst reason ever.
So, in summary, solicitors should restrict their activities to profitable fee earning work.
Non-profitable work should be outsourced to someone who can do it cost effectively. I would suggest costs falls into this category. Our work is generally costs-neutral in that it generally costs you nothing to employ us. We can do the work quicker and more profitably, in general, than solicitors can.
Non-fee earner work should be outsourced to experts, such as accountants, practice managers, business development managers etc. Being in the legal sector for a number of years, we can certainly help out also on the business development front.