Inspired by tidying queen, Marie Kondo, in our last blog post, we looked at the basic benefits of spring cleaning your business . Now you’ve let go of what you don’t need, and created some order around what you’re keeping, let’s go deeper into organising the business-specific categories.
To recap, in her book, Kondo suggests a specific order to sorting your categories, from easy, low value items, through to rare or high value items that evoke an emotional response. Sorting your items this way makes it easier and less painful, so you’re more likely to commit to completing the task.
With that in mind, I’ve devised the following order to help simplify sorting your business categories:
- Human Resources
- Legal Documents and Insurance
Emails certainly aren’t rare nor high in value or emotional attachment, so this is the perfect place to start. The only criteria for managing emails is the importance of their content. To reduce overwhelm from the volume of emails you receive, aim for an empty inbox at the end of the day, so you know you’ve dealt with everything that needed your attention that day.
My tips for tidying and keeping on top of your inbox:
- Archive emails older than 30 days, so you can retrieve any important emails as needed, and start each day with a clear inbox. You will never get on top of your inbox if it contains thousands of emails and you attempt to sort through them. Best to get them out of sight and move on.
- Unsubscribe from any mailing lists where you haven’t opened the email then delete the email.
- Apply Kondo’s categories for managing paper to the remaining emails
– Currently in use: Move these to your task list and delete if they don’t fall within category c).
– Needed for a limited time: Move to a folder until dealt with, then delete.
– Must be kept indefinitely: Save to file (preferably electronic) and delete the email.
We sign up for software subscriptions on the promise of making our business more streamlined with easier access to information. But how many of these apps do you use at full functionality – or do they just slowly drain your bank account with a monthly direct debit? Audit all your subscriptions and identify those you use to capacity. You then have two options:
- Cancel the subscription if you don’t use all the functions.
- Reduce the subscription to the functionality you do use, if you can.
Then there are those subscriptions you don’t use efficiently. They may contain templates or features that still need some work to get the promised productivity gains. For example, if you use Xero, their products and services feature makes invoicing quick and easy once it’s set up. Also, when you add bank account details to your suppliers in contacts and use the bills function, batch payments are a breeze.
Spend the time tidying up the back end of these subscriptions once and for all. It’s worth the investment! What’s not to love about a business that uses automation efficiently?
If you cancel a subscription, or part of one, it’s easy to resubscribe later if needed.
There is a cross-over between processes and subscriptions, because so many business processes rely on software. To streamline your processes, audit them for each segment of your business. Ask why each one is being performed and eliminate those that aren’t necessary. Just because “that’s the way we’ve always done it” worked for a while, sometimes you no longer need a process as your business grows. Don’t be afraid to ditch old processes when there could be easier ways to perform a task.
Now you have progressed in your tidying, the job is going to get more difficult, I’m afraid. But well worth it. Finances are certainly in the high value category and they definitely tick all Kondo’s boxes of additional factors that add value:
- Function – something that serves a purpose, that you need
- Information – something important you need to know now or in future
- And, yes in particular emotional attachment. I’ve lost count of the times people have been in tears in my office or on the phone over their finances. So yes, it’s very emotional and difficult – but necessary for this reason!
The first step is to establish a good relationship with your accountant. Find a business accountant you feel comfortable with, who will answer your questions in a way you understand. Get their input on what accounting system to use, if you don’t already use one. Kondo is not big on having specialised storage systems, but this is where I see an exception. Once you have an accounting system in place:
- Get your bookkeeping up to date – and keep it up to date.
- Lodge any outstanding tax returns and BAS’s.
- Enter into payment arrangements for any tax debts you can’t paid off immediately.
- Invest in quarterly meetings with your accountant to improve your financial literacy and discuss your progress and strategy.
- Work with your accountant to prepare a budget and integrate it into the management of your business.
- Use your accounting software as the central tool for your business management. Your accountant can help you with this, too.
5. Products and services
With your accounting in order, you are now perfectly positioned to make some decisions around the products and services you offer. Working on your finances can reveal which are your most profitable offerings. Then, armed with the cold hard facts (your numbers) you can decide which products or services should stay or go.
I love this quote from Kondo’s book where she likens clothes to people: “Every object has a different role to play. Not all clothes have come to you to be worn threadbare. It is the same with people. Not every person you meet in life will become a close friend or lover. Some you will find hard to get along with or impossible to like. But these people too, teach you the precious lesson of who you do like, so that you will appreciate those special people even more.”
There will be those clients or customers who you get along with and who bring joy to your business day. Then there are those who are just plain hard work, who suck your energy and put pressure on profit. Review your clients, then gently move on the 5% who cause you the most pain and get into the practice of doing this every year.
7. Human resources
This is closely linked with processes and finances. Processes are either performed by machine or person – and while it may sound harsh, people are often the biggest cost in any business. With the work you have done on processes and finances, now take the time to review the job description and cost of each person in your organisation. Make adjustments as required. You may find that someone is being underpaid rather than not being a cultural fit or a drain on your organisation.
8. Legal documents and insurance
These items are high monetary value and high in function and emotional attachment, which is why I’ve left them until last.
Getting your legal documents sorted is vital to keeping your business in order. You can rest easy knowing you’ve dotted your ‘i’s and crossed your ‘t’s. On a personal level, I recommend you have an up-to-date Will and speak to your legal advisor about the benefits of appointing an enduring power of attorney. This is important if you wish your business to continue, even in the short-term, should you become incapacitated.
If you have business partners, I recommend you put a partnership, shareholders or unitholders agreement (depending upon the business structure) in place. This covers important things like rights and responsibilities of each business owner, how to resolve disputes and what happens should an owner die.
Finally, review your need for life, income protection, trauma and total and/or permanent disability insurance. If you already have insurance, review your need for that particular type of insurance and whether to increase or decrease your amount of cover. As your personal and business situations change so do your insurance needs, and it’s good to review them regularly.
I hope you’ve found this 2-part blog series helpful. Accounting Heart is all about helping you get better at business, to live the life you love.
So, if you want to learn more about creating a strong foundation for greater business growth, download our eGuide, The 4 pillars you need to build a rock-solid, future-proof business you love.
It’s your step-by-step guide to creating streamlined, sustainable business growth.
Missed part one of this blog series? Read it here