What every entrepreneur should know about bookkeeping

Let me kick off this article by stating its conclusion: Bookkeeping is simply so important, that it must be done right. And doing the books a little wrong is still that: wrong. If you don’t know enough about bookkeeping, leave it to someone who does.

Basically bookkeeping is important for two reasons. Reason one is the taxman, banks, investors and the like. In short: other people. They want to know how you are doing by using objective quantifiable data. The second reason is you, as an entrepreneur. In Good to Great, author Jim Collins states that to survive, a business owner must confront the brutal facts. Good bookkeeping gives you exactly that: brutal facts. Entrepreneurship can be a costly hobby. It is really easy to make mistakes, and lose, instead of make, money. By knowing reality, you can make an informed decision where to take your business next.

Bookkeeping is a well-documented ancient discipline. And to no surprise, there is plenty of software that can help you. The problem is that vendors advertise their software as ‘easy to use’, so ‘you can do it yourself’. It is true that conceptually, bookkeeping is not that hard. It consist of two parts: first you record financial facts and then you create various financial reports. Don’t be fooled, the devil is in the details.

In a business, a lot of financial facts happen: stuff is purchased and sold, invoices are received and sent, wages and taxes are paid, loans are received and paid off. And in the end, you, as a business owner, take money out of the business to feed yourself (and your family). These are all examples of financial facts that need to be recorded meticulously. Recording financial facts is not something you want to do in a hurry, or when you are stressed. If there are not enough hours in the week, then you will not find the time to properly sit down and do what needs to be done diligently.

The financial facts form the basis for your reports. The most famous one is the Balance sheet, followed closely by the Profit and Loss Statement. The point of this article is not to explain what these are. I leave that to Wikipedia, or better: a formal training course. If these terms appear foreign to you, then this is a good indication that you should not do your own bookkeeping. Even if you know what they are, but have a hard time understanding them, then do yourself a favor and leave the books to someone who does. Reports can only produce accurate data if the financial facts are recorded correctly. And trust me, most bookkeeping software makes it is extremely easy to do it wrong. Especially if bookkeeping is not your strong point.

As a business owner it is hard to delegate work. But think about it. The financial facts are the foundation of your company, and reports allow you to confront your brutal facts. They are simply too important to screw up. Hence, the one thing that every entrepreneur must know about bookkeeping: if bookkeeping is not your forte: don’t hesitate and hand it over!

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Involved, Engaged, Enchanted

I am the owner of a small software business. And as any small business owner I have three priorities. My first priority is money. The second is money. And finally, there is money. Invoices need to be paid, salaries have to be transferred and the world needs to go round. Money, money, money is my mantra. This article is about getting money, but first I have to introduce my girlfriend, Lisette Sutherland, and her business. She works on some interesting stuff that puts the money worries in a very nice perspective.

Lisette works mostly with charities, nonprofits and NGOs. In other words: organizations that rely heavily on volunteers. To facilitate the great work that these volunteers do, organizations deploy private Facebook-like software where volunteers can meet, manage projects and work together. The big question when deploying these communities is always: How do we create a place where great things can happen? After working on this challenge for many years, Lisette has become somewhat of an authority on the subject. And for this article I am building on one of her ideas. Read her blog here.

During her research Lisette concluded that community members go through three distinct stages. In the first stage people sign up and browse around. In the second stage people start posting updates, upload documents and generally really use the software. The third stage is the most interesting one. This is the stage where people love the software so much that they evangelize and encourage others to sign up as well. These three stages are coined: Involved, Engaged, Enchanted. Written in capitals to signify their importance.

Although the idea of ‘Involved, Engaged, Enchanted’ initially transpired from working with online communities, we wondered if it could be applied broader. Could we map the stages to other types of software implementations? Or (even bolder) to any type of business? We conclude that this is indeed possible, and more importantly that ‘Involved, Engaged, Enchanted’ feeds directly into the company’s sales process. The small business owner in me got excited!

As a software company, our business model is simple: develop software, sell it and send a monthly invoice. This may sound like easy money, but let me assure you: we experience spectacular, as well as point-blank depressing weeks. Our reality is as harsh as any business. And, as in any business, our clients are situated in varying states of happiness. Our client’s delight ranges from absolutely exhilarated to ‘not even using the software (yet).’ This latter state that is downright dangerous. We, as well as organizations deploying an online community, face the same questions: How do we motivate people to start using our software? How do we help people get up-and-running? How do we excite people so much that they tell others? Or: How do we get people Involved, Engaged, Enchanted?

We use the following definitions for ‘Involved, Engaged, Enchanted’. Organizations are involved when they commit to the software, that is when they sign up for a subscription. Engaged means the customer is happily using our software and OK with paying our invoices. Note that I don’t assume that customers are paying happily. That would be silly. Paying bills makes no one happy. The point is, that there are no objections to prolonging subscriptions. Enchantment is more fuzzy, but crucial to any business. For a conclusive definition I turned to Guy Kawasaki, who wrote a whole book on the topic. He states that enchantment leads to a ‘voluntary and long-lasting support that is mutually beneficial.’ Fuzzy stuff indeed. For now I am OK with not over analyzing love.

I like the way the concept concisely expresses the three challenges that a company faces: How to sell? How to deliver? How to sell again? I particularly like the strong customer focus. It helps define the customer journey, and where customers stagnate on their journey. To me the concept presents a treasure trove of questions and opportunities. Ultimately ‘Involved, Engaged, Enchanted’ guides to better relationships with customers and therefore help grow new business.

Analyzing how time is spent in the company

Most, if not all, companies track the hours that employees work. The principal reason for this, is to calculate wages. Worked hours translate to a pay slip. The second obvious reason lies on the other end of the financial process: invoicing. A worked hour converts to an invoiced hour which generates income. Further, most companies register project related hours, to see if costs are on par with budgets. In this article I dive into reason number four: business analysis. With the turn of the new year, this is a good moment to reflect on your business. And if you registered all worked hours, you are sitting on a dataset which will provide some nice insights into last year’s busy activities.

The analysis of worked hours has two main purposes. The first purpose is to gain understanding of how time is spent, and to see if the proportion of time spent can or should be changed. The second purpose is to answer the question of how to divide work amongst staff, and if it is feasible to hire new personnel, especially specialists. But let’s lay some ground work first.

Most importantly, it is good to look at which hours should be recorded. I propose registering all business related hours. And I mean this in a liberal way. Literally: register all the hours that affect business. Some examples to illustrate. Did you contemplate a new product idea on a raining Sunday afternoon? Register the hours! Travelling to a client? Register the hours! Went on vacation? Register the hours. Been sick? Register the hours! Went to a networking event? Register the hours.

Although the ‘registering all hours’ rule seems simple, the devil is in the detail. There are three exceptions that need some discussion: commuting, learning and partying. Let’s say a normal commute from home to work takes thirty minutes. No business regards these hours as work time, and nor do I. But consider a sales person who leaves home in the morning to visit a client. Where (and when) does his work day start? Does it start when he leaves home, or when he arrives at his client? This is not at all clear cut. And it gets worse. The same problem presents itself learning and partying. When taking a course with formal classes, would that be a business or private matter? It depends. Does the business insist on the course, or is the person expected to keep learning as part of his career? How about reading a book? Or reading this article while sitting in the smallest room in the house. That’s a good way to work while minding your own business. The same argument can be made for partying, as in: social events, networking events and formal business dinners. I have been to a few too many of these, and I know from experience that the entertainment and business value go hand in hand.

The arguments for tracking hours for commuting, learning and partying has two sides. The main argument in favor of tracking is for the sake of statistics and analysis. If you want to analyze data, it needs to be there, so all hours must be registered. It is good practice to split time, and consider one portion as private and track the other as work. The portion size should be representative, so that the statistics are meaningful. On the other hand, the argument against tracking these hours is compelling. They essentially come down to employee benefits. Regarding time as work leads naturally to the expectation that those hours will also be paid. Wages will go up and that is not be the intention of the employer. Especially when the ‘registering all hours’ rule is applied literally and lavishly. When making decisions about the split between private and work it is good to balance the arguments of the analyst and the employer.

Finally a remark for business owners: you should also track all your worked hours. All of them. Consider yourself, at least in this regard, as a normal worker. The reason for doing so is most eminent when valuating the company. The questions here will be: what happens when the owner disappears? Who takes over the role? And how many hours do they put in? Or to put it bluntly, the business owner is not a mythical person who stands outside the organization. The hours they put in the business matter as much as the hours that regular employees put in. It is paramount to not treat owner-hours in any special way.

At this point we are tracking as many hours as possible so we know how much time is spent on work. That means, that we can calculate the revenue and profit per hour and a few more things. But in all honesty, the total number of hours on its own is rather useless. It gets interesting when we not only know how much total time is spent, but also when we know how we spent it. We need to divide hours into categories.

The first useful and pretty obvious category is sick leave: hours spent at home due to health issues. We calculate this against the total of all business hours. That last addition is crucial since we do not seek absolute, but relative numbers: percentages. And let’s complete the quest for preciseness: we want to compare. Comparisons can be: previous periods (“Sick leave has gone up!”), other companies (“We are doing better than others!”) or targets (“We are doing as expected.”). Making comparisons is not always possible. Maybe you just started tracking so no previous periods are available, maybe data from peers is not available or too expensive, or maybe you just have no idea what a realistic target could be. In that case, keep tracking until you accumulated historic data. Practice patience.

In total there are four semi-private categories: short-term sick leave, long-term sick leave, vacation days and special days off. Notice that I split sick leave in the categories short-term and long-term. The reason for doing this is two-fold. First, short-term sick leave is typically a precursor to long-term sick leave. Secondly, solving short and long-term sick leave requires a different approach. The cutoff point is typically two weeks. Absence also comes in two varieties. Both are pretty much beyond the control of the employer. The reason for tracking them separately is to keep count of the vacation days, which have a yearly fixed limit.

All further hours are categorized by their activity. Examples include: Administration, Sales, Manufacturing and Support. The breakdown of categories really depends on the business. But whatever your categories are, you will inevitably make a subdivision between activities in the primary processes and activities in the secondary or supporting processes.

Your breakdown of categories may therefore look like the following:

  • Semi-private hours
    • Sick leave
      • Short-term
      • Long-term
    • Vacation leave
      • Normal
      • Special
  • Work hours
    • Primary
      • Sales & Marketing
      • Manufacturing
      • Distribution
      • Support
    • Supporting
      • General Management
      • Finance & Administration

We have now come to a crucial point. A point that is admittedly hard to spot at first sight, and relates to those deviously hard to register hours: commuting, learning and partying. One may wonder if they deserve their own categories. The answer is a clear and decisive ‘No’. They are registered under the categories that they contribute to. Commuting to a client to fix a machine: Support. Learning about the new tax laws coming into effect: Finance & Administration. Visiting a networking event: Sales. It’s as simple as that. Notice also that the categories have no relation to individual projects. As said, that is useful for mapping reality to budgets, but is not needed for the sake of analysis.

When analyzing business hours the first big questions we want to answer is: what is it that we spent time on? With the category breakdown in mind, it is interesting to see what kind of ratios we can calculate. This is useful for challenging the status quo: we spend 25% of our time on Finance & Administration. Can this be less? Spending a quarter of the time on finances may seem way too much, but if the business at hand is banking, it may not even be enough. Perhaps more time should be spent in Manufacturing, to prevent time spent on Support? The verdict depends highly on the context. Further examples include:

  • Sick leave compared to all work hours
  • Hours spent in the supporting processes compared to the primary processes
  • Sales hours compared to primary
  • General Management compared to work hours

For small businesses or teams within larger organizations it is crucial to understand what work is actually done, and what expertise is required. The main task here is to determine whether there is enough work to hire extra people for a given activity (e.g. hiring a new sales person), or if it is possible to redistribute work amongst the current staff. Could we hire a full time sales person, instead of spreading sales related tasks between multiple team members? If we hire a sales person, do we have enough work for them?

Which questions are important and how to interpret the statistics depends really on your business. It is not always clear what you will learn when tracking and analyzing worked hours. In that way, diving into the data is a bit of an adventure and exploration to see what insights you may get. In conclusion, it is therefore good to recognize that it may be hard to motivate team members to be diligent. And let’s be realistic, no one likes entering time sheets. I advise to leverage any existing time registration practices that you currently have. As said at the start of this article, most businesses already have time tracking systems in place. If it is not for generating pay slips, it will be for invoicing or budgeting projects. Leverage these efforts and use this data as a starting point for analysis.

Partners in Marketing Communication

This posting is part of the partners@work series.

It is better to have someone else promote you than promoting yourself! When you have partners, they can talk about you, promote you and tell everyone how great you are. Visa versa, you can do the same for your partners. Telling others about your partners will also increase the level of trust that people have in you. Partner logos are a great way of filling PowerPoint presentations and having a long list of partners available on your website docs wonders to your image.

That you are associated with your partner is a good thing. That is, if your partner is well regarded of course. If you doubt your partner’s reputation, it is wise to deny or revoke the partnership, although this may come across as being blunt. Be careful with whom you choose to partner.

Apart from name dropping, partnership are extremely helpful when organizing events & seminars, developing white papers or when exhibiting on a trade show. Often it is possible to work more cost effective and get more exposure by for instance sharing mailing lists.

When attending an event, your offering must be tailored to the attendees. You need to exhibit what your product can do for that specific target audience. This means you have to tailor your pitch or perhaps customize your product. This is where your partners come in. They have the required in-depth domain
knowledge that you may lack. Ideas for target specific markets and audiences may come from your peers in the marketing department or from your partners themselves.

When organizing a marketing initiative, it is advisable to let one party be responsible for planning and operations. This prevents the foreseeable communication problems and evenly plausible sliding deadlines. Create a formal project a have senior management commit to it. The advice has been given on many occasions, but is truer than ever in this case. Working across the boards on a project that does not immediately generate revenue requires an
elevated level of commitment and steering.

Koken doet men zo… 5 heerlijk simpele gerechten

Ik ben fan van lekker eten, maar heb een hekel aan uitgebreid koken. En elke dag úit-eten-gaan is kostbaar. Je moet toch wat. Vandaar dat ik kook, en vaak is dat lekker. Naast dat het lekker is, zijn de gerechten die ik kook eenvoudig. Maximaal 4 ingrediënten, maximaal 5 minuten werk en binnen 20 minuten aan tafel. Hier zijn mijn recepten.

In het algemeen:

  • Water kookt het snelst in een waterkoker. Gebruik deze om water aan de kook te brengen en zodra het water kookt, gooi je het in een pan op het vuur.
  • Het koken van aardappels, pasta en rijst duurt altijd het langst van alles. Begin hier mee en reken op 20 minuten.
  • Als je aardappelen schilt dan snij je ze altijd 1 keer doormidden. Ook de hele kleine aardappeltjes. Hierdoor koken ze lekkerder door. Is nou eenmaal zo.
  • Het eten dat je koopt is over het algemeen al dood genoeg. Heel hard en lang martelen hoeft dus niet! Lekker rustig pruttelen is prima. En groente niet te lang, want anders krijg je slappe prut zonder bite en vitamines.
  • Appelmoes is altijd lekker bij aardappels, maar minder lekker bij rijst en pasta. Selectief toevoegen dus.
  • Vlees vind ik over rated, maar feel free om een worstje te kopen. Of zo.
  • Rijst kookt men zo: http://pengwin.tumblr.com/post/902215113/how-to-fucking-make-rice
  • Ik ben niet bang voor vet eten, vandaar dat ik spekjes prima vind. Ook kun je het vet van de spekjes gebruiken in plaats van boter of olie.
  • Uitslovers proberen hier-en-daar een ui of een teentje knoflook in het gerecht te sneaken. Dat mag.

Spruitjes

Aardappelen, spruitjes en spekjes

  • Kook de aardappelen
  • Mik de spekjes in een pan
  • Snij de spruitjes doormidden en gooi die óp de spekjes, zodat de spruitjes de bodem van de pan niet raken

Zalmpasta

Pasta, courgette, pastasaus en gerookte zalmsnippers

  • Kook de pasta
  • Leeg een potje saus in een pan
  • Gooi de courgette (in stukjes!) bij de saus
  • Idem met de zalm (dit mag op het allerlaatste moment, net voor het opdienen)

Geroerbakte andijvie

Aardappelen, andijvie, spekjes

  • Aardappelen koken
  • Spekjes in een groooote wok aanbakken
  • Zak andijvie erbij (no worries over de hoeveelheid, het spult krimpt als een idioot)
  • De andijvie flink husselen door het vet van de spekjes

Bananen-zuurkool

Aardappelen, zuurkool met spekjes, peper, banaan en geraspte kaas

  • Kook de aardappelen
  • Warm de zuurkool in de magnetron op
  • Hussel de aardappelen met de zuurkool
  • Mik dit in een ovenschaal
  • Snij de banaan in plakjes en leg deze over de zuurkool/aardappelen
  • Strooi hier kaas overheen
  • Laat de kaas smelten in de oven (samen met de rest van de ingredienten)
  • Naar gelieve peper toevoegen

Pompoen

Rijst, pompoen, broccoli, tonijnsteak/zalm

  • Kook de rijst in lekker veel water (en don’t touch the fucking rice!)
  • Schil de pompoen en mik deze samen met wat olie in stukjes in een wok
  • Idem met de broccoli (ongeschild)
  • Strooi royaal zout op de tonijnsteak/zalm en bak hem tot hij bijna uit elkaar valt

Wat ik begrijp van voeding

Het menselijk lichaam is geen leren zak die voedsel van de eettafel naar het toilet brengt. Het beeld what goes in must go out klopt wel, maar is te simpel. Het lichaam heeft energie en bouwstoffen nodig. Daarvoor is voeding. Teveel aan voeding wordt opgeslagen in het lichaam en zo wordt je dik. Dus door minder te eten wordt je slanker. Stop minder hamburgers in je hoofd en je valt af. Deze logica is voor velen te begrijpen, maar moeilijker om daardwerkelijk te doen.

Lichaamsgewicht is een essentiele eigenschap van wie je als persoon bent. Als je je lichaamsgewicht verandert, dan verandert ook je persoon. Je kunt dit omdraaien en stellen dat je je persoon moet veranderen om af te kunnen vallen, en om op gewicht te blijven. Met deze realisering is het makkelijker te begrijpen waarom afvallen zo lastig kan zijn.

Laten we uit gaan van de behoeften van het lichaam: overleven en voortplanten. Charles Darwin schreef dit in het boek over de evolutietheorie. We laten het voortplanten buiten beschouwing (het internet biedt daarvoor al genoeg websites). Overleven gaat het best in een stabiele omgeving. Wil het lichaam overleven, dan is het belangrijk dat de hele zaak in evenwicht blijft – oftewel: het lichaam wil homeostase bewaren. Val je plots 5 kilo af, dan denkt het lichaam “Verhip wat doe je nu? Stress! Snel vet opslaan en terug naar het evenwicht dat ik ken.”

Je lichaamsgewicht veranderen is een proces dat lang kan  en wellicht juist lang moet duren. Het gaat er niet om, om snel een paar kilos af te vallen, maar om ze er structureel af te houden. Snel afvallen is niet moeilijk: niet eten, weinig drinken, sporten, en daarna in de kroeg met een fles whiskey doorzakken. De volgende dag met je zo kilo’s kwijt. Nog een dag later zitten ze er weer aan. Die mooie truc werkt dus niet.

Om af te vallen moet je snappen wat het proces van voeding doet. Je moet er als een buitenstaander naar kunnen kijken. Zo van: als ik dit doe… dan gebeurt er dat… Dit kun je heel simpel door je gewicht te meten terwijl je bewuster je voeding gaat kiezen. Omdat het over de lange termijn gaat, zegt een enkele weging niet veel. Je moet een langere termijn blijven wegen.

Ik weeg mijzelf iedere dag. Sommigen zeggen dat dit fout is. Nou… het verschil tussen de weegbeurt van vandaag en gisteren kan wel 1,5 kilo zijn. Je zal maar net op de verkeerde dag wegen! Weeg daarom elke dag en pak het gemiddelde van de afgelopen dagen. Een 10-punts gewogen gemiddelde wordt aangeraden. Weeg wel altijd op het zelfde tijdstip. Ik heb de volgende ochtendroutine: opstaan, toiletgang, wegen en onder de douche. Mijn weegschaal stuurt de meting automatisch naar het internet (ik ben een automatiseerder, maar iedereen kan zo’n schaal gewoon kopen). Piece of cake.

Over cake gesproken. De vorige dag taart? Hup, zo een halve kilo erbij. De vorige dag netjes gegeten betekent afvallen. Suiker (fructose) blijkt een killer te zijn. Ik ben tegenwoordig fan van vet, zoals spek op brood. Dit geeft een vol gevoel, zodat ik niet halverwege de middag of net voor het slapen gaan honger krijg. Hieruit blijkt ook dat calorieën tellen niet voldoende is. Het gaat niet alleen om hoeveel je eet, maar vooral ook om wát je eet.

Conclusie: Het lichaam wil op het huidige gewicht blijven, ook als je overgewicht hebt. Afvallen  doe je door minder te eten, maar kijk ook naar wát je eet. Weeg je iedere dag en pak het gemiddelde van je weegbeurten. Het gaat om de lange termijn.

Internet-App of Smartphone-App

Wie tien jaar geleden investeerde in desktop-software werd voor gek verklaard. Alles moest online. In de browser. De pendule van de software-industrie is tegenwoordig weer terug. Desktop is hot, of beter gezegd: Apps op een smartphone zijn hot. Het lijkt wel of iedereen een iPhone-App wil, en ook één voor Android natuurlijk. Maar heeft een smartphone dan geen browser? Ja! En kun je met die browser niet hetzelfde als met een App? Misschien! Ik zie vier voordelen van een App boven een internetapplicatie.

Icoon op desktop          

Apps worden geïnstalleerd op de telefoon en hebben een icoon waar de telefoonbezitter regelmatig mee geconfronteerd wordt. Dit is pure reclame voor de App. Reclame die met een internetapplicatie niet kan worden gemaakt. Daar kun je het internetadres van een website hooguit in de bookmarks plaatsen. Dikke plus voor Apps hier.

Niet opnieuw inloggen

Apps kunnen onthouden wie je bent. Hierdoor hoeft de gebruiker niet telkens opnieuw in te loggen. In combinatie met het eerstgenoemde voordeel wordt de plus heel groot. Stel je voor dat je iedere keer dat je een App gebruikt opnieuw je e-mailadres en wachtwoord moet intypen. Dat ben je snel beu.

Local storage

Apps kunnen gebruik maken van de harde schijf van de smartphone. Internetapplicaties kunnen dit niet. Dit betekent dat Apps informatie kunnen onthouden en informatie niet telkens opnieuw hoeven op te vragen via het internet. Dit maakt Apps sneller en zorgt er bovendien voor dat er minder gedownload hoeft te worden wat scheelt in het dataverkeer, en dus lagere kosten voor de hosting.

User experience

Apps maken gebruik van mooiere controls dan internetapplicaties. Daarom zien Apps er beter uit, en voelen ze beter aan. Ze lijken robuster, ook al bieden ze dezelfde functionaliteit. Soms kun je met Apps dingen die internetapplicaties (lees: websites) gewoon überhaupt niet kunnen. De camera-functie is daar een goed voorbeeld van.

De gemakkelijke toegankelijkheid, het niet hoeven in te loggen, de snelheid en vloeiende user interface bieden veel voordelen. Dat gezegd hebben zal een App in de achtergrond altijd communiceren met een internetapplicatie. In mijn ogen is de App een mooi toevoeging, maar zeker geen vervanging.