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How this business went from dark days to being almost debt-free

Posted 6 months ago in Small business by Iris Yau
Posted by Iris Yau

After spending the entirety of their professional lives working with kids, Barbra and Gordon Bryan were ready to try something new. They knew they wanted to continue their work with children, but they also wanted to build something meaningful that they could retire on.

When Barbra read an article about The Goddard School, a national network of early childhood schools, she thought this would be the perfect opportunity to really make a difference by influencing a generation.

For several years, Barbra and Gordon toyed with the idea of joining — and when a franchise became available in their North Carolina town of Mooresville, they jumped on the chance. They sank their retirement savings into the purchase and set out full of hope.

After underestimating some costs, Barbra and Gordon found themselves quickly underwater in the early days of their entrepreneurship — coming scarily close to losing their life savings.

Here’s how they turned things around and are now on the road to profitability.

A new hope

Although franchising doesn’t come with as many risks as building a business from the ground up – given that it’s about replicating and selling a proven business model – that doesn’t mean it’s easy.

Barbra and Gordon purchased the franchise when it was six months old and came across many challenges early-on. Barbra describes the transition “like drinking out of a firehouse.”

“There were already employees and policies in place,” Barbra says.

“I had to get the right directors and teachers in place. Going through turnover while trying to get the right people in the right positions was a huge challenge.”

Barbra says, although the business’s numbers looked great in the beginning, “they weren’t realistic.” Unexpected costs of running a business like wholesales and marketing put them into financial decline. She says a lot of new entrepreneurs, herself included, don’t realize the magnitude of running a business.

In her 40 years working for corporate America, Barbra was accustomed to having specialized in-house Payroll, HR and IT departments, she now did all of those functions herself. She says being an entrepreneur is not for the faint of heart.   

“Being a business owner is not for wimps,” Barbra advises.

“This is why most small businesses fail — people aren’t prepared to take on all the roles necessary, or they don’t have the skill set to do so. It’s a real transition for people.”  

The unexpected costs started adding up as time went by. Without a contingency plan, Barbra and Gordon had to borrow finance to cover the shortfalls. Before long, the business was being crippled by repayments — reaching the point where they were unable to pay themselves from month to month.

In the middle of it all, their accountant retired and they had to look for a replacement.

Enter Joe Serrone from Polaris Tax & Accounting. Barbra and Gordon previously only engaged Joe’s services for their tax accounting, but after hiring him as their business accountant he got to work — identifying a number of issues that he believed he could resolve and turn the situation around quickly.

Joe’s secret weapon? Xero.

Joe immediately switched Barbra and Gordon from their desktop accounting software to Xero — finally giving them access to good financial data. Joe facilitated the transition to Xero, walking them through everything. The switch was easy and didn’t take more than two days.

Where their previous accounting package was on-premise and infrequently updated, Xero now gave them a real-time overview of what was really happening in their business. Thanks to the live data in Xero, Joe was able to identify that the problem with the business was not profit so much as a cash flow issue.  

Barbra says the Xero Dashboard gives her access to the financial data she needs, when she needs it.

“With Xero my banking information is there at all times,” Barbra says.

“The entries in my previous desktop accounting software were cumbersome — not being able to get the data that I needed was problematic.”

Through it all, Barbra has learned that cash flow is the “blood of a business.”

Using the Xero ecosystem in order to thrive

Another crucial element in the road to recovery for Barbra and Gordon’s Goddard franchise has been Xero’s ecosystem. Xero’s App Marketplace features more than 500 apps that integrate seamlessly with Xero’s core accounting engine.  

Barbra emphasizes how the Float integration in particular has been really helpful. With the ability to pinpoint precisely how cash was moving through their business – when it was coming in, when it was going out and where it was going – Joe was able to help them see how their finances worked without getting technical.

“Float shows cashflow overtime and gives the ability to switch between scenarios,” Joe says.

“It allows you to overlay a budget so that a client like Barbra can see how she is comparing to her budget in real time so that she can make adjustments.”

The Float cash flow dashboard

The Float cash flow dashboard

Joe was able to show them how they could improve the way they manage their finances without using complicated jargon and help them adopt best practice financial management. Barbra says it’s been a learning curve but she’s developing a better understanding of her business’s position.

“I’m learning more and more and it’s been a real asset,” Barbra says. “I’m using Xero and Float to build my budget for 2017.”

In the end, Joe provided Barbra and Gordon with the right combination of financial best practices, hand-holding and great software in order for their business to thrive. Now they’re able to pay themselves a good wage and the business is anticipating being debt-free within the next two years.

Today, Barbra and Gordon have lofty aspirations for the future of their business — goals that probably wouldn’t have been possible if not for Xero and Joe, their trusted business advisor.

Barbra and Gordon’s dream, which at one point was beginning to become a nightmare, looks like it will have a happy ending after all.

One comment

McManus Williams
December 26, 2016 at 11.44 pm

It’s amazing how you can turn things around when you really want to. No One should truly give up on their business unless there really is nothing left

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