My senior year I began a bookkeeping company with one of my friends. Though I am in the process of selling my interest in the company, I look back on my experience as some of the best business lessons I have learned. Below is an article about what I think we did correctly that allowed us to have a lot of initial success.
In our junior year, my friend had noticed that, in the Utah County market, small businesses only had two options if they wanted to outsource their accounting function.
Option 1: Small businesses could hire a free lance clerk who would often have years of experience using Quickbooks, but not an accounting degree. Without this foundational knowledge, it was more likely they would make costly errors. These freelance workers would charge $15 to $30 an hour, closely clustered around the $20 an hour mark.
Option 2: Small businesses could hire a CPA Firm. A CPA would offer exceptional service, one stop shopping, experience, and very few errors. These firms can also be very expensive, charging $50-$120 an hour for bookkeeping work. We also knew, that it was very rare for the CPA to actually do the bookkeeping work themselves, as they would usually hire an accounting student to do the grunt work.
We believed that there could be a better third option. We would hire only Brigham Young University Master of Accountancy students and provide bookkeeping for a mid range of $20 an hour. With our service, customers could gain from the experience and education offered by BYU, but pay what a free lance clerk would charge. The economics worked very well, charge $20 an hour and pay accounting student $10 an hour. Finally, the students we hired were excited to be gaining real world experience and had a real passion for making these little companies better. Even without knowing it, we were living the hedge hog theory from Jim Collins, "Good to Great."
Our activities supported each other in such a way that made marketing, recruiting and fulfillment fairly easy. Our customers were excited about getting inexpensive accounting services, and would give us referrals. Our employees were really excited about helping "real" companies, and would refer their friends when we needed new employees. They would often go the extra mile without being asked because they felt personally invested with these small companies. We worked out of my friend's apartment and as students had a knack of finding cheap or free office equipment. During our first year of business we averaged 32% month over month revenue growth, topping out at just under $7,000 in revenue and $3,000 in net income.
For more information, feel free to contact me or visit the company website www.exceptionalaccounting.com
Thursday, January 27, 2011
Friday, January 21, 2011
United Auto Workers Tough Position
The UAW, once the bane of management and the superhero of the assembly line, is now in a fascinating position. An article this week in the Wall Street Journal, link at bottom of page, detailed the new pay pressures on the UAW. Below I summarize the article, share my feelings on unions, and then state my opinion of what strategy unions should take.
The big three auto workers would like to tie employee compensation to productivity, quality and the general well being of the company. UAW President, Bob King, (yes that is his real name) has declined to publicly state his opinion of the proposed pay structure, but the union has been historically been against accepting such deals usually pushing for higher base salaries.
I believe this makes sense for the Unions on a few fronts. Productivity and quality gains usually translates to fewer workers and layoffs. Also, I would assume that a variable income would be harder for factory workers to budget and such a payment system would encourage such workers to take on excessive debt.
The interesting twist with this round of contract talks is that now a union controlled trust owns significant stakes in both Chrysler and General Motors. Now, more than ever, what is good for the company will be good for the union. According to the Wall Street Journal, UAW has already compromised a little with the recession. They have allowed the auto makers to hire new employees at $14 an hour, which is half of what current employees were receiving. With Detroit's Big Three profitable, but still struggling, it will be interesting to see what further comprimises will be made. It will also be interesting to see if UAW gives more favorable contracts to Chrysler and GM, than to Ford, a company it does not own stake in.
My own feelings on unions are torn. I realize that they played a significant role in reducing poverty during the industrial revolution. I also realize that in Zion society, the workers would reap the full benefit of their labor as ownership of all companies will be shared in a Christlike manner. That being said, my experience at John Deere taught me that unions can make companies very inefficient. For example, the Waterloo, Iowa factory has a rule that employees can not be flexed. This means that if one factory line is under-producing, and the workers have nothing to do, they can not go help on a line that is running near capacity. It is my understanding that this inefficiency has made it difficult for unions to compete with non-unionized factories.
I believe that in a competitive free market world, unions need to realize that the personal success of their employees is inseparably tied to the success of the company, and that they should organize to help, not hinder, productivity gains.
http://online.wsj.com/article/SB10001424052748704803604576078224262665108.html?KEYWORDS=New+Pay+pressure+on+UAW
The big three auto workers would like to tie employee compensation to productivity, quality and the general well being of the company. UAW President, Bob King, (yes that is his real name) has declined to publicly state his opinion of the proposed pay structure, but the union has been historically been against accepting such deals usually pushing for higher base salaries.
I believe this makes sense for the Unions on a few fronts. Productivity and quality gains usually translates to fewer workers and layoffs. Also, I would assume that a variable income would be harder for factory workers to budget and such a payment system would encourage such workers to take on excessive debt.
The interesting twist with this round of contract talks is that now a union controlled trust owns significant stakes in both Chrysler and General Motors. Now, more than ever, what is good for the company will be good for the union. According to the Wall Street Journal, UAW has already compromised a little with the recession. They have allowed the auto makers to hire new employees at $14 an hour, which is half of what current employees were receiving. With Detroit's Big Three profitable, but still struggling, it will be interesting to see what further comprimises will be made. It will also be interesting to see if UAW gives more favorable contracts to Chrysler and GM, than to Ford, a company it does not own stake in.
My own feelings on unions are torn. I realize that they played a significant role in reducing poverty during the industrial revolution. I also realize that in Zion society, the workers would reap the full benefit of their labor as ownership of all companies will be shared in a Christlike manner. That being said, my experience at John Deere taught me that unions can make companies very inefficient. For example, the Waterloo, Iowa factory has a rule that employees can not be flexed. This means that if one factory line is under-producing, and the workers have nothing to do, they can not go help on a line that is running near capacity. It is my understanding that this inefficiency has made it difficult for unions to compete with non-unionized factories.
I believe that in a competitive free market world, unions need to realize that the personal success of their employees is inseparably tied to the success of the company, and that they should organize to help, not hinder, productivity gains.
http://online.wsj.com/article/SB10001424052748704803604576078224262665108.html?KEYWORDS=New+Pay+pressure+on+UAW
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