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The Numbers Game

For Katrina Harrell, helping small-business owners manage their books is adding up to a successful business of her own

KATRINA HARRELL has always had a head for business. Growing up in Washington, D.C., she spent summers at her paternal grandfather’s home in Winterville, North Carolina, helping him run the store he owned. “I was fascinated with how he engaged customers, handled money, stocked shelves, everything,” Harrell (above), now 32, says. “I loved knowing how things work — that was my spark to let me know that entrepreneurship was for me.”

Though she’s always been restlessly creative — as a child, she wanted to become a songwriter — she soon discovered that she also possessed major arithmetical aptitude. “I’ve always been really good at math,” she says, having learned in her grandfather’s store that “the numbers mean everything.”

She majored in accounting at Saint Peter’s College in Jersey City, after which she branched out in two career directions: for-profit (corporate bookkeeping in the Fortune 500 world) and nonprofit (among other gigs, she worked for financier George Soros for two years, an experience she calls “the best I ever had”).

In 2007, in search of more space (she and her husband had a 4-year-old son, and Harrell was pregnant with the couple’s daughter), Harrell’s growing family moved from New Jersey to Clayton, North Carolina, a small town just southeast of Raleigh. Having decided to pursue self-employment full-time (“I’m a much better entrepreneur than employee,” she jokes), she soon founded Your Simple Bookkeeper, an accounting firm that focuses on small and “micro” businesses (broadly speaking, those with no more than $100,000 in annual revenue). In 2010, YSB became one of the first businesses brought into the funding-and-mentoring program of 100 Urban Entrepreneurs, which offers $10,000 startup grants and eight weeks of mentoring.

Harrell now employs a staff of three; YSB currently makes the figures add up for roughly 40 clients, who cover 10 states and an array of industries: retail, wealth management, trucking, construction and more. Whatever the company, she says, pretty much all entrepreneurs can use the help, and not just around April 15. “I’ve noticed that the theme for most is ‘I don’t hire a bookkeeper until I need to get my taxes done,’ ” she says. “Almost all of my clients are micro, minority- or women-owned businesses. I’m all three — so that was alarming.”

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How does an aspiring songwriter end up an accountant? That’s a serious left brain/right brain shift.
I’ve always had a creative mind and really enjoy the arts and music, but growing up it was always instilled in me to get a great-paying job. I knew accounting was a practical field I could find a job in right after graduation. I knew I didn’t want to be an CPA, so I never worked for [one of the Big Four accounting firms] or even took the CPA exam. After college, I stuck with accounting and continued my corporate career. I’ve held titles from staff accountant to senior accountant, accounting supervisor and budget analyst.

What was your eureka moment when you knew you wanted to go into business for yourself?
When I was laid off in 2008 from a controller position. I’d had enough of leaving my professional destiny in the hands of someone else. That day, walking out to my car frustrated and in tears, I vowed that I would never work for someone else again. I was always well-received by my employers and peers, but my attention span was short. I had a very restless energy and realized that I knew just as much as, if not more than, those I worked for, and I needed to do work that was in alignment with my values.

Just about everyone hates dealing with their books, even — maybe especially — small-business owners. How do you get them involved in the process?
I give my clients credit: The fact that they realize their books are “challenged” and that they can no longer manage them on their own is commendable. There are more than 26 million small businesses in the U.S., and statistically, one in four of those will fail within three years — so getting to help at any stage makes me happy. YSB’s approach is mostly teacher-student: We like not just to do the work, but to educate our clients. I keep them focused by sending them a summary to complement their financial-statement package. In the corporate world, all monthly financial-statement packages came with a “narrative” or executive summary in which the figures are explained. I carry this to the small- and even micro-business world, providing the same thing in real words a client can understand. That’s something unique to YSB, and it makes me very proud.

What are the most common things entrepreneurs overlook about their company’s finances?
No. 1, deadlines and requirements. The IRS is doing a great job trying to be more transparent, using social media and holding local workshops. Spending one hour learning from the IRS can really save you time and money. No. 2, cash management! I see so often that businesses know how to make money but they struggle at how to keep it. No. 3, understanding and reading financial statements. If you ask me “What’s a balance sheet?”, I immediately go into teacher mode. Our Web site, for example, is still evolving, but we started a micro-business resource center to share information and videos.

How important is the Internet to your business model? Does personal interaction in your line of work even matter anymore?
The Internet is probably single-handedly responsible for the success for my business thus far. I’m a stay-at-home mom, so I don’t get out much to network or meet clients. When I first started YSB, we had a pretty even ratio of clients in North Carolina and in other states. I actually had to purposefully start focusing on local marketing, because I was nervous about growing too fast nationally without having established a solid local front. Face to face is very important in accounting, but I think the tides are slowly shifting. The majority of our clients are quite happy being in Texas, say, while we’re here in North Carolina. It just doesn’t matter as much as it used to. •