Practical business accounting tips you didn’t know you needed
Sure, we know 1+1 is 2 and pi is 3 point something, but one lesson (or several) we missed in school was business accounting. Instead of calculating the diameter of a circle, we could have learned how to calculate tax. But alas, we were left to learn these lessons in the school of life, or as we like to call them, Business Chicks Masterclasses.
We recently partnered with our good friends at Xero to help elevate your understanding of numbers and tech by learning the tricks of the trade from a small business accounting expert. Whether you run a side-hustle or full-time operation, Founder and Chief Dreamer of Hot Toast, Sarah Lawrance has the expert tips you need to run a business seamlessly.
We’ve loved the masterclass session so much, we thought we’d take our notes and share them with you all so you can learn how to implement savvy accounting into your business, too!
Sarah starts off by recommending you and your team set aside time for offsite planning and strategy sessions where you’ll focus on answering the following:
Define your purpose, mission, and values
Determine your strengths and opportunities
Understand your target audience and how to build a client profile
But this isn’t a one and done activity (no chance!)Sarah stresses ‘discipline, discipline, discipline’ and having some accountability to follow through with what you established above is key to following a clear and purposeful trajectory.
One question that took us by surprise was Sarah’s ‘what is your exit strategy?’ Thinking about how to exit a business when you’re only just starting out isn’t something we thought to consider. However, if you look at it very early, you tend to create a roadmap of where you want your business to go- she's clever!
One slide we quickly scribbled down from Sarah’s presentation was her pillar approach. We were able to decipher our handwriting and can share with you what Sarah takes her clients through when they embark on their CFO journey.
Business plan: What makes you different from everyone else?
Resource plan: What resources do you need to execute your strategy?
Focus on costing: How much is this going to cost you?
Target liquidity aspects: How do I finance this to ensure I made my targets?
So, you’ve done your planning and strategy session, you’ve filled out your pillar approach. Now what?
Here are Sarah’s top tips to getting started.
Use the tools you already have: Sarah recommends using tools, such as Xero, which enables you to get a full financial picture of your business
You don’t know what you don’t know: Here, Sarah speaks to the idea of busting down perceptions of how your business is performing and go digging. Is an area of your business losing money? Do you need to restructure? You don’t know until you know!
Be realistic and build out contingency: One of the key takeaways many new businessowners realise is sometimes things take longer and cost more than what was anticipated. Tip #3 ensures you’re prepared for delays in time and going over budget.
Use the numbers you have to help evolve conversations with your key stakeholders and your team: As a CFO, you need to have robust and honest conversations about the performance of your business. The proof is in the pudding, and Sarah says using the numbers helps ground these conversations in truth.
Get your costing and pricing right, and measure it: Have you costed your products effectively and in line with your business’ needs?
Be ruthless with your margins and knowthe details: Understand your profit and loss margins so when new business presents itself, you’re not fooled by topline revenue.
Ask WHY: It’s always important to ask why you are doing something. What is your responsibility and what can you outsource? Does this deal make sense to your business? Don't forget to ask why!
Remember your levers: In every business, there are levers that create and relieve pressure. Understanding these different levers ensures you can recognise when you need to pull back or push ahead.
Keep OKRS (objectives and key results) front of mind: Sarah uses OKRS as a collaborative way to engage her business and keep it on track. Communicate the goals of the business to your whole team and be sure to track them and seek buy-in. KPIs can be considered as business metrics, whereas OKRs is the goal setting of the business.
Looking for some of Sarah’s recommended apps? Here’s what she uses:
Accounting and reporting system: Xero
CRM: HubSpot
Expenses: Hubdoc
Engagement and invoicing: Practice Ignition and Qwilr
Cyber security: LastPass
Communication: Slack and Zoom
Training: Loom
Document management: Dropbox
Project management: Karbon, Streamtime, Monday.com
Want more from Xero? (We do too!) Check out our Business Chicks x Xero content hub to continue your business accounting journey.
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