Is Cold-Calling Dead?

In September, I got a voicemail; "Hi, this is Virginia. I just moved to SF from LA with my sister. I worked with CPA firm before. I did write-up, taxes -- personal, corporate, partnership and I also did training. Do you have a part-time job?"

She sounded like in her 50-ish. The specific of her skills was very helpful.

I thought: She sounded wonderful! But over qualified -- for me. She would be under-utilized. Plus I did not have extra work. But, I really appreciated her gut in cold calling!

I called her back, just to welcome her and to praise her for her gut!

She told me a bit more on what she could do and was VERY enthused.

I told her that I did not have the extra work. And she would be under-utilized.

She persisted, "Do you need someone a few hours a day, or a few days a week?"

I was impressed by her enthusiasm and easy-goingness.

After hanging up, I called Walter Louie CPA; my long-term strong allied. Walter owns a small CPA firm. I knew he has been trying to find a replacement for his former office manager who left for her hometown in Colorado for some months. He said she was his "left and right hands."

He said, "Wow! I would like to talk with her!"

I hung up and called Virginia right back.

I said, "Call Walter's office. Tell the person who picks up the phone "Terry said Walter would like to talk with me."

Virginia kept me posted on her contact with Walter. She affirmed my respect for him; "He is a nice guy!"

Later, she got food poisoning and was out for a week.

When she called again, she said "I am working at Walter's office. Today is my day 2. The system is different. I have a learning curve. Walter knew that. I called just to thank you."

It was just slightly more than a month from the day she called to the day she started working at a CPA firm, with a knowledgeable, respectable CPA. A good job and  a good place to be.

So, who says cold-calling is dead?

A Trouble-Free Accounting / Bookkeeping Department

Now and then I got requests from business owners to tech-support their staff or to clean up their QuickBooks files.

The problem is: bookkeeping needs to be done REGULARLY. Mistakes tend to involve tons of entries spanned months or years. It takes a HUGE effort to pull a derailed train back to the right track. Some mistakes were so curiously "creative" and I wondered "How in the world did one do that?" It took a lot of brainpower to uncover the problems and to make them right. Sometimes I have to stop when it was “good enough!”

Once I left, the problems started building up again.

It was a HUGE unnecessary pain. There was no way to run a business that way.

I normally declined the job. 

I wanted to fix the problems only ONCE. 

Then, my team and I should OWN the full accounting department!
It will be a smooth sail from then on. 

*   *   *

When we hire a builder / contractor, we hire one who is licensed. 

By passing the exam, the builder proved that he has certain level of skill.

Bookkeepers do not have licensing requirement. Hence, it is a Wild Wild West.

Why would you pick a bookkeeper who was a chef, an artist, or a photographer?
Because you LIKE them? They have DONE it for years? 

What if they do not even know that they have been screwing up for years?

Bookkeeping is about DEFINING the transactions and RECORDING them correctly based on Accounting Principles.

Try these. These were real situations I encountered:

1) The mother of a business owner repaid her son $100,000 for money advanced throughout the year in managing her apartment buildings. What was it? (The office manager recorded it as Income.)
Answer: It was a reduction of Loan Receivable from the mom.
If left as income as it was, the owner can be expected to pay 25% federal tax plus 10% California tax!

2) A business owner paid $10,000 personal Federal taxes with the company's money.
What was it if it was an S-Corp?
Answer: It was a personal expense. S-Corp shareholder was allowed to take distributions hence it was a Shareholder's Distribution.

What was it if it was a C-Corp?
Answer: No distribution for C-Corp shareholder. He must pay back. Hence, it was a LOAN.

The REAL value of bookkeepers is: we help you figure out the useful REPORTS you need; such as JOBS reports for contractors. We put in NUTS-and-BOLTS; i.e. SET-UP so that the daily tasks are easy TO DO. And at the end of the month, you get GOOD Reports.

To be trouble-free with accounting / bookkeeping, hire a bookkeeper with an ACCOUNTING degree, not the low-skilled office admins.

Online? No, Quickbooks DESKTOP instead!

Quote from Warren Buffett: "You have to think for yourself. It always amazes me how high IQ people mindlessly imitate. I never get good ideas talking to other people."

On investors' behavior, Buffett drew analogy from lemmings; the small rodents found in Arctic. Lemmings experienced frequent population booms and busts. Probably due to population boom, at certain times, the lemmings would get into massive migrations. They swam frantically en-mass in circles until they drown from exhaustion -- the behavior of investors in so many cycles of booms and busts over the past many decades.

Online Accounting software is red hot now.
Quickbooks Online. Xero. Cloud.

The users probably thought that data really lives on the cloud UP THERE.

The data actually lives on EARTH, on some remote servers situated somewhere on EARTH.
AND each and every single piece of data, made up of bytes of 1s and 0s, is transferred over the cable to the remote servers located somewhere on earth.

Each piece of DATA that forms the REPORTS you see, are retrieved from the remote servers somewhere, and reassembled back to your screen by browser. Some of the data were stored in cache for faster retrieval. They resulted from earlier computing. You have to clear the cache to get updated reports. And the reports load -- ONE webpage at A time. And the webpages don't print right, unless they are "printer-friendly". i.e. formatted for print. If you want to see multiple reports, you have to open a new tab for each report.

Well. If you have gig business, Online probably will do.

But, if you have a REAL business, and you have 3 major functions to cover (operations, marketing and finance), I would advise you to stay with Quickbooks DESKTOP, for it is ROBUST.
(b.t.w. what does it mean ROBUST?)

Adam Sterling in his recent seminar on Startup Laws at Nasdaq Entrepreneurial Center said; "INNOVATE! When it come to products or services. Stay BORING, when it comes to LAWS (for you don't want to break laws)."

I can add Accounting / Finance to the "stay boring" category, too, for you want your financial reports done right according to the accounting standards. And the reports are understandable by bankers or investors who will give you MONEY. 

Your CPA or Your Bookkeeper ?

I am taking a 10-Saturday Small Business program at Golden Gate University. It is FREE thanks to the generosity of Chevron (Yeah!). And comes with free breakfast!

The first half of the class is a break-out session. We get in a group of 5. Each of us has some times to talk over our stuff and listen to feedback. 5 weeks into that, I got 2 good ideas: use "boomerang for Gmail" to schedule outgoing emails, and connect with Construction Lawyers since I do bookkeeping for contractors.

The Richest Man in Babylon states that one should entrust wealth (i.e. loan) to only people who are skilled in their work. A man who acquired a sudden fortune tends to draw requests for help or investing ideas from friends / families. The book cautions us against both temptations because money is hard to come by. Only when the borrower was skilled in what he did and the preservation of principal was guaranteed should you lend.

I told my recent scare of misreading a team member's email. I thought he was quitting. I realized how important he was compared to my client(s). (Who said clients are always right?)

A team member of mine is a CPA who has been with IRS for 18 years and now working with a CPA firm for 15 years. She could not understand. I told her we work closely with business owners. We go to their site weekly, bi-weekly or monthly. We BOND with the owners. I even drew an analogy of a babysitting business where the babysitters stay with the babies whole day long. Hence she bonds with the baby and the families. If she quit, it is hard to replace her.

The CPA said that I needed to let my clients know that I was the boss. And I can send newsletters to touch base with the clients.

… I was SHOCK that I could not make a CPA understand how the bookkeepers work and our relationship with the clients.

I decided to tell the business owners direct:

1) The CPA saw only the FINANCIAL STATEMENTS a few times a year. They made a few period-end adjustments which made the reports look good at the end-of-the-year. The adjustments do not fix monthly numbers. So, if you try to do a month-to-month or this-month-vs.-this-month-last-year comparison, the numbers are not right.

2) The CPA does not deal with nut-and-bolt (i.e. set-up issues) and daily processing stuff such as invoices and vendors’ bills. The bookkeepers do. The bookkeepers are EXPERTS on those. Your CPAs are NOT.

3) You do OPERATIONS every day. Bookkeeping is the 3rd leg of your business (besides Operations and Marketing) which also needs to be done REGULARLY. If you care to bill and collect money for your sweat, and pay your employees and vendors on-time to keep them happy, then, please DEFER the bookkeeping stuff to your BOOKKEEPER.

Steve Jobs said; "Hire the BEST person you can, and get out of their ways (so that they can do the works.) You want to do that.

My Improvised CRM (Customer Relation Management) Database

For years, I have been compiling lists of potential clients from various sources on excel spreadsheets.
Since I focus on contractors and architects, some lists are easy to get. Many small contractors and architects are Certified LBE (Local Business Enterprise) with the City of San Francisco. I can quickly download a long list from the city website. But for the other, I have to think up of the sources, and painstakingly compile one lead at a time. --Talking about time and cost, I wonder for a small local service provider like me, if it is cost effective to just buy lists from lists brokers.

With all these lists floating around, and with many mailers got returned, I was challenged on how to eliminate duplicates, inactivate invalid leads, and have better control over who to touch and when.

For a month I tested out a web based CRM software. Since my marketing department was only I and I did not have to share list or updates with a team, even at $49/month, the CRM was too pricey and had many features that I did not need.

A CRM I was looking for need to do just a few simple tasks:
- allow me to quickly import all the lists I have
- allow me to inactive leads that are no longer valid
- allow me to categorize where the leads come from; say LBE-architect, LBE-contractor, Google, etc.
- allow me to write some notes about this lead
- allow me to find a particular lead quickly and its related info
- allow me to sort the list by source, and show only active leads
- allow me to export the leads to excel and generate mailing labels quickly.

I have been a Quickbooks Proadvisor for years. I revisited the idea of using Quickbooks for lead database. It turned out to fully satisfied all the criteria.

I use "Customer Type" to define sources; i.e. LBE-Architect, LBE-Contractor, Google map, Castro-merchant, etc.

Each customer record allows me to add  up to 7 user defined fields. I use them to filter the lists. I have these fields setup:
- sales (annual sale figure) - show how big the lead is
- year established - show how matured the company is.
-  number of employees - denote size of the company. 2 to 16 is my ideal size.
- legal entity - sole prop tends to be small / loose. Corporate and LLC are more formal/ established.
- worker comp - Yes or No. Any established contractors should have worker comp coverage
- remarks - such as specialty, owner info.

And "note" button is another place where I can date-stamp info, and type very long note. I can keep adding new note above the old notes.

To import the list onto Quickbooks, I go to List | Add/Edit Multiple List.
Select: Customer
Click "Customize Column" button where I can add/remove columns, and move up or down columns to correspond to columns setup on Excel.
There is a link to a video tutorial here. The video is 6 minutes long, which shows how it is done. Very useful.

I even added "Inactive" column to the Add/Edit Mulitple List while importing various lists. Then I  copied and pasted all the info from excel to this window. I manually checked the "inactive" field to put a check mark there.

Next blog, I will write how to filter results and create mailing lists.
Everything takes time. But, with this database, I finally feel like in control.

Quickbooks Keyboard Short-Cuts

I love keyboard short-cuts. They are so useful and are easy on hands.

+ to increase date by 1.
- to reduce date by 1.
t for today.
y for beginning of the year (Normally 01/01/yy, though it doesn't bring up the right date sometimes.)
mmdd followed by tab will put in the date in mm/dd/yy format.

Ctrl+Delete to delete a line (useful on creating invoice or splitting expenses)
Ctrl+Insert to insert a line (ditto)
Ctrl+D to delete the whole entry.

Ctrl+C to copy (good for copying and pasting long text)
Ctrl+V to paste (ditto)

Edit and then select duplicate (useful to duplicate a similar invoice or estimate to bill to various parties or create several versions with mostly same info.)

Ctrl+M to memorize entry I enter regularly.
Ctrl+T to bring up memorized transactions.

I like to memorize reports I pull regularly.
I normally create a group of reports named "01 Monthly Review" where I save Balance Sheet, Profit and Loss, and General Ledger and other useful reports.
Each month when I change the period, I re-memorize them hence overriding the old dates.

The Costs and Benefits of Hiring a Bookkeeper

Many small business owners think that it is cheaper to hire part-time clerical staff than a professional-bookkeeper. Is it so? Let's work the math.

To hire and retain a part-time staff, you probably have to pay $20/hour and offer 20 hours/week, which provides the worker some sort of living wage. That is $400/week. Times 4 weeks per month, that is $1600. What kind of quality you get? Clerical? And do you need all those hours? Will there be a lot of idle time?

Compared this to hiring a professional bookkeeper with an accounting degree who has solid knowledge of accounting principles and years of working experience. Add in the skill, hence speed in commanding a software such as Quickbooks which allow them to work efficiently. The bookkeeper works much fewer hours and on as-needed basis. For a small company with up to 10 employees, one day/week is probably suffice. For a smaller company, sometimes twice a month will work. At $45/hour, 8 hours/day, you pay $360/week. Times 2 days/month, that is $720/month. If 4 times a month, that is $1440. Isn't it still cheaper? And you can count on the quality of work.

What you don't know can cost you.

I have seen a high-end real estate broker who managed multi-unit apartment buildings for his mother advanced a lot of money to pay her bills. When she repaid the loan of $100,000, the office manager posted it to income. If this mistake was not caught, what would the taxes be? If Federal and State income taxes combined are 30% -- which is low for a high income earner, that simple mistake will cost him $30,000. If the bookkeeper is paid $1500/month, her whole year of compensation is only $18,000.

I have seen an architecture firm made the project manager do the monthly invoicing. Since the project manager is an architect and his expertise was on architecture/design, he was not accustomed to bookkeeping tasks which are numbers and detail-oriented, he mistyped one of the items lesser by $25,000 and  another lesser by $50,000. There were $75,000 loss of income. Compare this to compensation paid to a bookkeeper who works one day a week at $45/hour. The monthly bookkeeping fee was only $1440.

Professional bookkeepers are more than cost factor. They provide benefits. Hence deserved adequate compensation. They cover one of the three legs of a business; i.e. operation, marketing and finance. They get regular tasks done. And provide timely and accurate reports. Not all reports are made the same. Erroneous reports not only are not useful, they are misleading. Timely and accurate reports show the business owners where they stand, how they performed. Good reports allow them to make informed strategic decisions.