Audio | Transcript

Sally

Good morning. Welcome to local business focus. I’m Sally Barker. Joining us this morning is Sonia Pilkington from Asset Financial Accounting proud station sponsor. Good morning, Sonia.

Sonja Pilkington

Good morning, Sally.

Sally

Now you’re going to share with us some advice about some of the most common pitfalls business owners make.

Sonja Pilkington

I am. One of the most important things people get wrong is that they always think they have to do everything and be everything to all people. So they’re trying to do everything.

So they do the accounting, they do the bookkeeping, they do the marketing, they are even the IT person. They just try to do everything and just don’t get all of it right.

Sally

Okay, so if we are a business owner, and we are doing everything, what would you say to this person? You know, don’t do it all or train yourself? What would you say?

Sonja Pilkington

I would say, don’t be afraid to ask for help? Get help from the right people?

You don’t go to your doctor and tell them oh my car’s not running smoothly, and expect them to help you. You don’t go to your mechanic and say I’m filling with fluey, what do you think I should take?

Get the advice from the right people.

So many times people have visited with friends, and they’re sitting and chatting casually over wine or beer and they take that person’s advice as gospel. Saying this is what I should be doing. When they’re not trained. They’re not professional. They don’t have the skills and they’re not going to the right person to ask, and yet they are going to that person for the bookkeeping, tax, IT advice,

I’d say get the right person. If you do get stuck, maybe consider outsourcing some of it. By doing all of it yourself, you are actually wasting so much time. You’re working in the business instead of on the business. 

Most people think that I can’t afford to pay my IT guy, I can’t afford to pay somebody to do my advertising, I can’t afford to pay somebody to do my bookkeeping. They think that all of that is just so far away, they can’t do it. And yet, when they spend all their time doing all that work, they could have been making so much more money working on the business and doing what they do best, instead of wasting time doing all these other things.

Sally

So is there a way that we can explain to people about how much their time working on the business is worth compared to working in business?

Sonja Pilkington

I would say to them, how long does it take you to do your advertising, IT, bookkeeping, any of those, all of them? And then say okay, and how much money could you have earned, if you didn’t do that. And that is the money that you could have spent employing or engaging a good bookkeeper, a good advertising and marketing person and a good IT person.

They will do it in far less time and they would do it right the first time. And they will probably do it good, better and different to what you would have done it and will make far less mistakes. But making all those mistakes, you have to pay someone to come fix it. So you know what, you’re spending double the amount of time doing it.

Sally

Well, some areas of the business, when we do make a mistake, they are a little bit more damaging to the business than others, you know, in terms of financial mistakes, that can be far worse than you know, advertising, I suppose.

Sonja Pilkington

It can be. Advertising can damage your brand. So that could be as bad as making wrong financial decisions.

The wrong financial decisions would come about when you have registered your business in the wrong manner. So either used a wrong setup, or a wrong entity. So you decide that you want to trade as a sole trader or partnership or company, when maybe it wasn’t the right decision. And doing those can be quite expensive, and can be quite painful and stressful and you don’t want to have that kind of stress.

Sally

So if you are at that point, you really need help.

Sonja Pilkington

Yes, but you probably could have avoided all of that. Had you just had a conversation with somebody right in the beginning and saying, I want to do X, Y and Z.

What do you suggest?

What are the pitfalls?

What are the pros and cons of each entity, or the way that I want to set it up.

Making sure that you set up the ABN in the right entity. And doing that, or getting it to be fixed.

Can can take a lot of time.

Sally

And you know we’re at the mercy of the tax office aren’t we?

Sonja Pilkington

In some ways we are, but at the same time if you call the tax office, they are very understanding people as well there and they can help you.

They’re not going to say to you what you should be doing?

They’re just going to tell you what you should have done.

And they’re not going to say to you who you go speak to, they will say contact your accountant. Maybe you should have contacted an accountant in the first place.

Sally

Now there are different types of accountants and there are different types of bookkeepers?

How do you know what’s right for your business?

Sonja Pilkington

I would say have an interview with the accountant or the bookkeeper. Make sure that you have a really good understanding and relationship with them. I look at accountants and bookkeepers and say, you know, it’s a very intimate relationship, it’s more intimate than going to the doctor. Because your accountant will know exactly what you’re spending your money on or not.

There is no fluffing about and saying, I’m doing some wonderfully. When they look at your accounts, going actually you’re not.

By the way you’ve overspent on this, or your cash flow is just crap.

So it’s a very intimate relationship. You have to be feeling comfortable with that person. So unless you feel comfortable, it’s not right person.

Make sure that they have a knowledge and understanding of what your business is about. Make sure that they have knowledge of all accounting, all the relevant accounting things to you.

So have a chat, have an interview with them. Ask them for references from the client, so you can contact the client. Any good bookkeeper, accountant would not hesitate to give you access to their clients and say, well, go for it, ask my clients what they think of me. That’s probably the best referral they can get.

Sally

Really? And I guess I mean, it’s like all doctors, you know, you go to a specialist for certain areas.

Can we find accountants who specialise in certain areas in your industry?

Sonja Pilkington

Yes, you can. There’s obviously people that would say specialise in self managed Superfund.

I’m not one of those people. But yeah, ask them if you have specific areas of whatever your business is, ask for advice? Ask them what they are specialising in. Ask them or make sure they do know what your business is about?

Ask others in the same industry who they are using, that will probably help you.

Sally

And you’d get a good feel to start off with, even if they have no previous experience in your industry, if they’re willing to go out and learn.

Sonja Pilkington

And some industries are all very similar. And even if you think your industry is very different, if it’s a service industry, so whether you were a doctor, or a plumber, or a lawyer, it’s still a service that you want delivering, it might not be exactly the same.

But in the accounting world it’s all the same.

Sally

And this is the same sort of advice that you would offer, you know, like you did say for IT and for your marketing, advertising?

Sonja Pilkington

Definitely. If you have IT, you want to make sure that somebody understands your needs.

You may be a small business person that’s starting up. You might not need to have the server and 50 million backups and all the bells and whistles of everything. You might just need basic computer software, you might be able to do the backup be able to access all your files, know how to back it up. That’s about all you need, you don’t need much more.

As you grow clearly all your needs will change. And that’s when you want your IT person to also suggest you, you are growing, you need to consider doing a little bit more or change the way you’re doing things.

Sally

Yeah, and I guess that’s the same, you know, with with your marketing, advertising, make sure they understand you.

Sonja Pilkington

Exactly and understand who your target audience is. So you’re targeting the right people to buy your product.

Sally

Wait, when do we get to a point in our business where we think I’ve done it all myself up to this point.

Is there a guideline to say this is when you need to really get help?

Sonja Pilkington

I think when you’re getting overwhelmed, and you’re going this is just too hard. Or just going, why am I spending so much time doing this stuff? I’m no longer enjoying what I’m doing. And I’m no longer doing what I started off doing?

And you have to come back to the question of why did you start your business? What was the initial passion? And I think when you start getting to that point, and you’re just doing all the other stuff and just become busyness and no longer business. I think you’ve probably reached beyond the point.

Sally

So the busyness is no longer business.

Sonja Pilkington

Yes, your busyness is not on your business.

Sally

Wonderful. Thank you so much for joining us this morning on local business focus. Sonja Pilkington from Asset Financial Accounting proud station sponsor