- ACE Team
Numbers that Business Owners Must Know
There is the matter of how to account for it, present it, and raise it. Having worked with plenty of startups over the years. Some don’t prioritize accounting and financial transparency, while others inflate the importance of fundraising to a disproportionate degree.
These days, where accounting has been made a lot easier and financial information more transparent, how should business owners approach their numbers?
Here are some of the things you can find out:
Numbers should tell a story
It’s an opportunity to have a plan of your business, where its strength and opportunities show, as well as its risks and challenges.
More SMEs are leveraging accounting solutions like Xero to get yesterday’s data. Back in the day, it would take them up to three days to collect information from the client and the bank before they could present the numbers.
Xero does all this already, accountants get to take a more strategic role as an advisor, reading and interpreting the numbers into actionable advice.
One business in particular didn’t realize 82 to 83 percent of their revenue was coming from one client.
They knew it in their heads, but didn’t have a concrete number for it.
When their relationship with that client soured, they had to scramble to get back on their feet.
Many accountants saw themselves solely as the people who could help business owners pay less tax and comply with the law.
But now they have new solutions and emerging technologies, they get to be so much more than that.
Financial transparency is important to investors
It is important to get the right number—whether it’s net profit, sales, margins when pitching a business to investors.
The data you present depends a lot on the stage of your startup and the kind of investor you’re looking at.
Investor Sam had an advice and he said If he is talking about funding, he will be investing more in the team, personality, vision, and market—depending on the stage.
He also advised SMEs that “annual finances are useless in the beginning because business is changing so frequently. Investors will want to see on a month-on-month basis what’s happening.”
Investors usually want financial transparency to understand the health of the business.
Investors will ask for a monthly update using consistent growth metrics.
It is a bonus if the investors are aware of what’s happening in the business’ bank accounts.
Xero is extremely useful in this case because it provides real-time insight into a business’ cash flow. Especially since cash flow management is one of the top issues for Singapore SMEs, this sort of transparency is essential to grow and scale.
Fundraising isn’t the end-goal
Some believe that once they’ve raised enough money, everything’s going to be okay. But while raising capital definitely helps, it shouldn’t be the end goal of a business.
Graham, the host of Xero On Air, has built a business bootstrapping. Even though he’s had some success with it, he still struggles to spend two dollars on a coffee.
it isn’t just about raising the funds because a business isn’t about going from fundraising to fundraising.
It’s about being able to achieve a goal, such as acquiring new markets or launching proprietary products, with that cash.
Xero empowers businesses
Xero has enough experience to know what SMEs need to grow and scale. Before Xero, Graham worked as an accountant for many years and learned about all the stresses that business owners go through.
It can get lonely and mentally fatiguing. And that’s why they developed solutions like Xero, so that business owners can have an easier experience with accounting and make better decisions based on their financial data.
By making accounting easy, Xero empowers business owners to focus on scaling and doing beautiful business.
Xero was developed for SMEs to grow and scale, it is also an opportunity to have a plan of your business. With Xero, you do not need to take up to three days to collect information from the client and the bank before they could present the numbers. Xero empowers business owners to focus on scaling and doing beautiful business.
Want to know more about Xero?
Call us at +65 6262 0402 or email us at firstname.lastname@example.org to get the information details on your needs.
Credit:How business owners should approach their numbers - Xero Blog