Let’s say you just gave an estimate to a client. In fact, let’s say you’re a bookkeeper or an accountant, and you quoted to your client that you can do their bookkeeping (full service) for $1,500/month. That’s $18,000/year, which is about half of what a really good full-charge bookkeeper would cost full-time. In theory you will be doing everything this full charge bookkeeper would do, so at $18,000/year that’s a really good value.
So what is it going to cost you to produce that $18,000 in annual revenue?
We’ll assume that your labor cost on that will be 30% for the bookkeeper and 10% for a manager to review the bookkeeper’s work.
Now there are some apps you’re going to use to service the client. Let’s say you’re going to work with BQE Core (of course) and you want to take advantage of its integration with QuickBooks Online. You’re going to use Bill.com for bill pay. This is great because you can generate bills based on expenses logged in Core. Those will sync over to QuickBooks Online, which will sync over to Bill.com. Then with Bill.com you can pay them and everything syncs back again.
So your cost for these apps for the year may come to $1,674. The video shows you how I arrive at this.
Now you have a budget.
- We have projected revenues of $18,000.00
- Projected total costs are $8,874.00
- Projected profit is $9,126.00
This is amazing! But how do we know that in a year from now you’ll have actually made this profit?
If you’re paying the bookkeeper and manager by the hour, then you need to watch their time closely to make sure their cost does not exceed the 30% and 10% that you’re budgeting.
Hint: pay your staff based on these percentages. I know, I know. That’s crazy talk! No one does that! Guess what. That’s what I do in my own firm and it’s working really well! It motivates the staff to be more efficient so they can take on more work and it has a way of weeding out the clock punchers!
I’m sure you can create a gorgeous budget in a spreadsheet, but that won’t be all that useful except for planning purposes. How can you compare the actual costs to what is in your budget? You can’t. Not without doing a whole lot more work on the spreadsheet, and then you still need to find a way to feed the “actual” results into that spreadsheet.
That’s a lot of work!
Using the spreadsheet to plan makes it really easy to see what you need. But you’ll find that putting the budget in Core gives you a lot more power.
Let’s see what this looks like. Watch the video!