“The Acuity Way” is a blog and video series we’ve developed, focused on providing entrepreneurs with simple startup bookkeeping and accounting tips to start off (or get back on) the right track.
Follow along with Matthew May in the video and transcript below for the first of the series – Simple Tools For A Successful Startup.
Hi, I’m Matthew May, @TheTechCPA. We get asked all the time, just break it down for us simply, how do we get started? What are some simple things we can do for setting up our accounting records? Just not messing stuff up in our business. So, we put this series together to answer a few of those questions. Hopefully this is helpful!
Let’s start with a big question. Why should you care about financials? It’s all about your business surviving. So, one of the major things that we work with entrepreneurs with is having a methodology and a framework for doing that monthly or quarterly review to make their business have a bigger chance of surviving.
You have a 36% survival rate if you only look at your financials annually. Now, that improves to over 70% chance of success if you review things quarterly, and almost 80% survival rate if you look at things monthly.
We’ve developed The Acuity Way of doing things around a monthly cadence, and that monthly cadence ensures the highest level of success for the folks that work with us. The other thing we do is give you simple rules so that you can manage in your life and not be all-consumed by your finances. This structure, this framework, is going to help you improve your odds as much as possible so that you can focus on what you do best, which is operating and running your business.
Let’s talk a little about the financial journey you’re on. You know, when we start talking about journeys, everybody has to go to Gartner Charts.
So your financial literacy in your business – you’re on this journey from moving from hindsight to insight to foresight. And you’re like, “Translate that please, Matthew.” Okay, so what that means and how we see that manifest with entrepreneurs is people that are managing their business from their bank balance are making decisions just because they see the bank balance, and they think they have enough money.
We try to push them through this journey to understanding their financials, and then we culminate the journey by helping them make data-based decisions in their business. So, wherever you are on the continuum, we’re trying to help you improve and progress through this financial journey with your business. How can we get all those things up and to the right? Because everybody knows that’s where you want to be on the Gartner Chart.
There are three levers to pull to make any process in your business more efficient, and finance is no exception: people, process, and technology. We will help you lower the people time as much as possible in your finance and accounting function. We will also focus the time you do spend on the most important parts of it, which is really getting to the next level that we talked about before – really understanding your business and making database decisions.
When we’re talking about process, what we’re going to do is create simple rules, and I’ll give you an example. So, the biggest mistake we see people make is the separation of church and state: business and personal. There’s two main areas we focus on in separating that.
We have a separate bank account that we use for our personal, and a separate bank account that we use for our business. One of the things this allows us to do is it forces you mentally to transfer money from your personal account into your business account to track how much you’ve invested in your business over time.
The other thing we do – I keep a personal card and a business card in my wallet. At the point of sale, I make the decision: is this a personal expense or a business expense? When it’s a business expense, I have it set up where that auto feeds to the technology that I’m using.
So I don’t have to talk to my accountant at the end of the year about, “Oh, here’s my credit card. This was business. This was personal.” None of that. It really simplifies capturing that information and data on the backend with the technologies we’re going to pick.
When we’re starting out with technology, every business owner needs a simple accounting tool, and we recommend two: QuickBooks Online and Xero. The only feature that matters, or the base feature you need, is automated bank feeds because that’s going to pull all the information from the banks and the credit cards that we talked about for our business account into our financial records.
We hope this video was helpful in creating some simple rules. We’ve got more in store for you. We’ve got stuff on our YouTube channel about understanding your books, reading financial reports, KPIs, tax issues that you’re going to hit – and if we don’t have something on our YouTube channel, hit us up on social media and ask the question. We love building content for entrepreneurs. Luckily, we’ve helped over 2,000 entrepreneurs over the last 20 years, and we’re looking forward to helping more.