One of life’s immutable facts is that, irrespective of how much you may love them, it’s nigh on impossible to agree with absolutely everything someone says or does. In this respect, people are a bit like books: you can be absorbed with an author’s theory, or go along with an idea or line of thought which might be engaging for long periods, but ultimately you may not agree with the resulting conclusion.
I’ve just surveyed the bookcase to my right and happened upon two perfect examples at opposite ends of the political spectrum: EJ Hobsbawm’s Industry & Empire and Milton Friedman’s Free To Choose. Both are great reads, though some of the theories in both are a tad threadbare.
I mention this as I’ve just finished reading (for the second time) a book I bought around eight years ago: The 4-Hour Workweek by Timothy Ferriss. Who wouldn’t want to work a few hours a week and, in the author’s words, “join the new rich”?
However, re-reading it confirmed my original opinion, namely that while it contained some very interesting ideas and a host of excellent suggestions, reaching a point where you could detach yourself from a profitable business for all but a handful of hours a week remains an impractical dream for most of us. Yet Ferriss comes up with some clever and original ideas; there are lots of them and usefully, business owners can cherry-pick the ones best suited to their enterprise.
For instance, he frequently advocates outsourcing time-consuming functions. He points out that while many companies continue to build their own marketing, accounting or other, in-house teams because they believe they can better control their employee’s time, activities and quality, there’s no guarantee this will happen, nor will it be less expensive. Indeed, if a company cannot recruit people with the appropriate skills or expertise to undertake these internal functions, it’s likely to end up costing more than outsourcing.
In fact, it could be argued that nowadays instead of building great teams of in-house marketing or social media teams, for example, it makes greater commercial sense – and is significantly more efficient – for almost all companies to outsource ‘back office’ functions. This is particularly true of a firm’s book-keeping and accounting functions.
There’s little doubt, for instance, that one immediate benefit of outsourcing your company’s book-keeping operations is to remove an operational distraction. Responsibility for the process, while remaining essential, is shifted outside of your organisation, so releasing directors and staff to concentrate on developing the business.
Many firms are deterred by the perceived cost of shifting such responsibilities outside of their operational remit, yet the likelihood is that by outsourcing accounting and book-keeping functions, most companies actually save money by removing the overhead associated with paying full-time or part-time salaries (and benefits) to employees. There are additional periodic savings in the form of productivity costs that are removed from the P&L account because companies no longer have a need to recruit employees to undertake work which is now outsourced. In other words, the benefit to companies of outsourcing is they pay for what they need—nothing more.
The ready availability of expertise at the disposal of your company cannot be discounted.
Outsourcing effectively offers companies the opportunity to have full-time knowledge on their team without having to pay for it around the clock. Delivering your books to skilled personnel who understand best accountancy and tax practices and are capable of tackling other accounting-related tasks, such as cash-flow projections, ensures that the business owner’s job becomes significantly easier, his or her use of time considerably more effective.
Perhaps one of the most valuable benefits outsourcing bookkeeping operations gives to a company is access to what might be called the accounting industry’s (often very expensive) ‘tools’.
There’s little merit in a business paying for expensive book-keeping programs or spending time ensuring that in-house personnel are kept up-to-date with changing tax laws and regulations. Outsourcing enables a company to effectively acquire accounting knowledge and related industry tools by proxy. Moreover, once a company’s books and records are maintained by a separate organisation, should tax authorities deem it necessary to undertake an audit of a firm’s books, everything is up-to-date and ready for inspection.
Timothy Ferriss’s book contains the sub-heading, “Escape 9-5, live anywhere and join the new rich”, a pipedream for most business owners, however efficient they may consider themselves.
Nevertheless, this does not mean the book should be discarded; in fact, most business owners I know would soon go crazy if they found themselves with so much spare time on their hands.
Anyone who runs a business should read The 4-Hour Workweek if only to pluck some useful ideas from it. Within the opening pages, it will become apparent that Ferriss is an ‘outsourcing evangelist’ a man who constantly discusses the process’s benefits, emphasising the advantages of effectively hiring experts to perform specific tasks for a defined period.
Included in this list is shifting responsibility for accounting and book-keeping functions. It may not propel the business owner towards a four-hour week, but it will definitely relieve him or her of the type of headache most entrepreneurs can do without.