A question I get asked a lot is when is the time to invest in accounting software?
In this day in age, there’s not really an excuse for a business owner not to have a system in place because there’s a lot of affordable options, from free to fancier paid options. I am a firm believer in when you’re starting a business, cash flow is limited and so any time you want to spend money it’s important to make sure that you’re getting a return on investment, right?
Either the money you’re spending is going to help you grow, get more sales, or streamline your processes. This is the theory I like to apply to the question in answer. When you’re running a business you need to keep business records to track your income and track your expenses. How else will you know how much profit you’ve made without a system in place?
How else will you know what you’ve spent money on to grow your business? How else will you know if you’re charging enough for your products and services? These are all answers that can easily be obtained if you have accounting software that allows you to run reports to see the inflows and outflows of cash in your business. So first I want to talk about a free option.
There’s one called Wave. Wave is a great software if you’re just starting out and don’t really have the money to invest in a more robust paid option. It will connect to your bank feeds and does a lot of the same things as the paid options except for once you get to the point that you need to register for GST in Australia, it won’t be able to help you. This is because it’s an American program, and GST is an Australian thing. But eventually, as your business grows you’re going to get to the point where you’re going to have to register for GST and you’re going to hit that $75,000 in sales threshold. At this point, it’s definitely worth considering spending the monthly subscription fee in order to get on a paid software program. There’s a lot of choices out there. The one I am the biggest fan of is Xero. I am a Xero advisor and Balance Tax Accountants is a silver status partner; what this means is that we do a lot with Xero!
Xero is great because it keeps your business finances organized and it gives you the ability over time to run reports to track the status of your business so you can actually see trends. You know the question, “How’s business?” and the default yet truthful answer of “it’s busy”. How great would it be if instead of the run of the mill reply, you can actually say, “hey, you know what? Last month I have had my best month in sales”, or, “I’ve cut my overhead expenses by 10%”. Isn’t that amazing?
That means I’m making more profit by putting in the same amount of effort into my business. It’s invaluable when it comes to growing your small business. It’s imperative that you keep on top of your number, and a cloud accounting software can help you do just that.
Another great feature that Xero has is it can connect to apps. There’s a huge movement in the cloud accounting space to connect to apps that are industry specific.
Some apps that Xero supports are Stripe, PayPal, Receipt Bank, Spotlight Reporting, Workflow Max, Harvest, and a lot more.
When do I know that it’s time to get help? The amount of work has gotten to the point that you can’t handle it on your own, and you’re not able to deliver the level of customer service that you are happy with for your business.
Now, I am a big fan of outsourcing. It’s one of the very first things that I did. As an accountant, I did something that’s a bit different from traditional accounting firms, and that is the first thing that I outsourced was marketing.
I knew that I could be the best accountant in the world, but if my marketing did not tell people that I was the best accountant and that I was available to accept new work, nobody would know. Nobody would get to experience the awesome skills I have, that I can share with them to make their businesses and their lives better, right?
So the first thing I did is I outsourced marketing. I outsourced marketing before I could even afford to do it. Now, I’m not saying that you should spend money that you don’t have, but what I am saying is that, if your goal is to grow and scale your business, it will have to be bigger than you.
When you have gotten to the point that you’ve decided that you need to get help, what should you outsource? There’s a lot of ways to go about doing this, but a couple of tips I can give you is: Number one, know your strengths and your weaknesses.
The first thing I would do is sit down and write a list. What are the things that you enjoy most about your business and what are the things that you enjoy the least? What you’ll probably find is that the things that you enjoy the most are what you’re good at because they’re easy for you. So when you’re deciding what to outsource first, it might be worth considering outsourcing those things that take you a long time to do or that you don’t necessarily enjoy.
Another tip when it comes to deciding what to outsource is to write it down and make a list of all the activities of your business. List everything from getting new customers to servicing existing customers to completing admin, marketing, maybe appointment scheduling tasks, and assign a dollar value to each of them.
Things like getting new customers, those would definitely be worth the highest dollar value. Things like admin, answering e-mails, scheduling appointments, organizing onboarding paperwork, those are tasks that would be less dollar value.
As a business owner, your time is best spent doing the high dollar value tasks. Why is this? Because nobody is going to be able to draw new customers to your business like you will be able to. You have a passion, you have a fire inside of you for your business, and people are going to be able to see that and identify that when they hear you speak about what it is that you do, right?
So those are the types of things that I would prioritize your time for. I would look at outsourcing those that are either on your weaknesses list or that are low dollar value tasks.
Remember, if your plan is to grow and scale your business, then it must become bigger than you. This means your vision must be bigger than yourself. Also, you have to have systems and processes in place that will allow the workflows to occur and be assigned to different people and to allow different roles to be completed within your business.