Money Talk

What it actually costs you to DIY

Posted by Michael Youssef on Dec 12, 2019 12:00:00 PM
Michael Youssef

We live in a truly exciting age! With so much information at our fingertips, we're almost instant professionals. If you don't know something google it, or go to YouTube. With that much information available to us it makes sense to Do it Yourself right?

Wrong!

Have you stopped to consider the time investment of the DIY approach? DIY is the latest craze. Why pay a professional their ridiculous fees when I can do it myself? Well for a few reasons:

  1. The professional knows what they're doing (or at least they should, which is why you should always get a few quotes)
  2. The professional can get it done much faster
  3. The professional is qualified and trained in their area of expertise
  4. You help build the economy by creating work for the professional
  5. You free up your time to do more of the things you want to do.

Time is the single most precious commodity. So is it really worth saving a penny just so you don't have to pay somebody to do a job?

Look, I'm all for empowerment and doing things yourself, but there must be a limit. For example, I definitely don't condone DIY medical procedures or advice. Imagine conducting an operation on yourself?

I was speaking with somebody and they were quoted a few thousand dollars to repair their car. Needless to say this person decided against getting the mechanic to do it and went about sourcing their own parts and completing the repair themselves. Three months later and almost the same price that the mechanic quoted at this point in parts, the car still isn't on the road. So what did that person truly save? They were without a car for 3 months, they spent hours upon hours finding the parts and conducting the repairs and there is no guarantee that they have done a job at the same standard of the mechanic.

I wasn't blessed with the ability to work with my hands, and I really admire those who have the vision to build something from nothing and the ability to realise that vision. I was however, blessed with the ability to use my mind, which is why I don't do any building or construction of the sort because I am useless at it. I look at it from this perspective.

  • I don't know what I'm doing
  • It would take me more considerable time to learn it
  • I still wouldn't do a job as good as the professional
  • I'd rather help the professional out by promoting their business
  • The time it would take me to do it, I could make more in my area of expertise in the same time. Or I could have more time back for myself to do what I want to do

I recently had a conversation with an electrician who was doing work around my home and as I do, I asked them about his business and his accounting and bookkeeping. To which he responded that he does it all himself. Honestly, goodluck to you, I suppose if you did do it yourself you could plead ignorance if the ATO ever investigated, but it's still somewhat disturbing to hear.

We did some math together to show him the true cost of his DIY accounting approach.

  • We came up with an hourly rate of $100.
  • He said to me it takes him 1 hour per day in accounting and bookkeeping related tasks

That equates to at least 5 hours per week spent doing something that is not typically within his skill-set. From a dollar perspective that is $500 per week spent on tasks that DO NOT DIRECTLY DRIVE REVENUE! Also, this particular electrician didn't use an accounting system, meaning an additional amount of time manually creating invoices and chasing outstanding payments. What else could he be doing with his time?

  • chasing new opportunities?
  • delivering on existing jobs?
  • spending more time with family and friends?
  • relaxing and doing things that he wants to do?

This is the true opportunity cost of the DIY approach.

The next time you think about taking the DIY approach, stop and consider, how much will my time really cost me?

Notebook and pen against tools on desk

 

Topics: bookkeeping, accountant, accounting, cloud accounting, accounting software, processes, bookkeeper, systems, Success