My mind has been working overtime lately on the difficulties many entrepreneurs have with using various types of technology in their businesses, from implementing (and using) bookkeeping software to figuring out what types of databases or other applications to use such as project management software, customer relationship management (CRM) software, or point of sale (POS) systems. I thought it would be a swell idea to talk with my friend and fellow entrepreneur Leila Johnson, who with her husband Brett Johnson owns DataScribe, a Web technology and communications firm. Even more swell, we recorded our chat on video (thanks Turtle!) and Part 1 is available up above (I’ll post Part 2 in a couple days).
One reason I’ve had technology on the brain is that I have a coaching client who has been struggling mightily for many months with a fundamental task every business owner needs to tackle: implementing a bookkeeping system, which generally means installing bookkeeping software, setting it up (creating accounts and expense categories, e.g.), and entering income and expenses into the system. (Check out a piece on financial management I wrote for Entrepreneur.com last fall.)
My client’s main problem, in my view, is that s/he has too-high, unrealistic expectations regarding how integrated her/his bookkeeping system should be with other business systems such as a database of detailed client information. Because my client quickly discovered how tricky and expensive it can be to integrate other business technology systems (like databases or CRM software) with bookkeeping software, s/he has dragged her/his feet for months on getting the bookkeeping software installed (I recommended QuickBooks) and getting income/expenses entered into that system.
As I have told my client for months, this is a huge mistake. But despite my increasingly urgent advice, cajoling, warnings and arm-twisting, s/he has continued to operate without a bookkeeping system in place, leaving her/him unable to generate basic financial reports like a profit & loss (P&L) report or a cash flow projection. Aaaargh! Danger danger Will Robinson!
Here’s the deal: Every business would love to have integrated, streamlined systems, but the reality is that it is usually no small undertaking, and often quite expensive to do so. Unless a start-up has considerable resources and a compelling reason why integrated systems are important from the start, it almost always makes more sense to focus on the critical task of getting a bookkeeping system up and running right away. My advice is to worry about integrating systems later, after databases and other business systems have matured and the business develops the resources (both time, money and knowledge) to integrate those systems with the bookkeeping system.
Failing to implement a bookkeeping system because it won’t be integrated off the bat is like sitting starving in front of a plate of vegetables, and not eating them because they’re not organic or locally grown. Sure, locally grown, organic vegetables are great — but don’t let yourself starve if they’re not available. Similarly, don’t run your business off a cliff by ignoring financial basics while you’re fixated on a fantasy of sophisticated system integration.