Building a successful startup is hard work – especially when you also have a young family to look after. Having the original business idea can be the easy part. Setting up and running a business to sell this idea is where things get more difficult. And finance can be one of the big stumbling blocks for fledgling small businesses.
A lot of young entrepreneurs are extremely passionate about their new venture – but they’re not experts in finance, bookkeeping and accounting. And being on top of your finances can really make or break a business in those first few years. Getting the right advice and choosing the right finance tools is vital.
Read what other mumpreneurs have to say about Xero:
- For the first time in months, I was starting to feel excited at the thought of having a professional yet idiot proof accounts system – Mum in a Nutshell
- It is fairly obvious that any accounts package that removes the most laborious of tasks will lead to an improved work life balance – Missing Sleep
- I already use my online banking app daily to keep up with my accounts but this makes everything easier – Munchies & Munchkins
- The main benefit is being organised and fully prepared when that dreaded time of year comes around, the tax return deadline – Mummy Whiskers
We talked to Esther Thompson, founder of TeaHuggers, a business which blends premium, herbal teas, to find out what it’s really like single-handedly running your own business & being a mummy to young children. And we asked her how moving to cloud accounting has helped to really get a handle on her sales, invoicing and bookkeeping.
Getting on top of your finances
Starting a small business is incredibly difficult. It takes an enormous amount of effort and motivation to get it going and to keep it going – it’s a tough learning curve when you’re running your first business venture. Picking the right strategy is important, as Esther explains:
“That’s the challenge of running your own business: if you’re part of a corporate machine then you’ve got a whole team of people to bounce ideas off and quite set ways of doing things – and that can work in some circumstances,” she said.
“But if you’re running your own business, you can rip up the rule book and do what you like. Sometimes that can be quite daunting, especially when the industry is changing so quickly with new digital opportunities.
“So it’s good to talk to people who are more experienced, whether that’s mentors or people in the industry, who can tell you what has worked well and the reasons why. That gives you the opportunity and the momentum to try out low-cost activities to get some momentum behind the business.”
Becoming an expert in your finances
When you’re employed by someone else, you’ll have one particular role, based on your own particular skills and experience. But when you’re a sole trader, running a startup, you have to be across or doing all the different elements of the business. You have to become an expert in accountancy, marketing and sales – in fact, all of the day-to-day elements of the company. If, like Esther, you’re not a finance expert this can be a challenging part of running the business.
“It can be daunting doing your own finances, making sure that you’re doing all your projections properly and, ultimately, making sure that the business is growing and is going to be viable. So any help with things like Xero TV’s online videos and eLearning like Xero U is enormously helpful and provides a bit of hand-holding when business owners are trying to look after every element of the business. If you can make accounting as simple and easy as possible then people are going to go for it.”
Getting more from your data and reporting
Cloud accounting gives you unparalleled access to your data alongside reporting functions that provide a clear view of your numbers. So instead of waiting for your accountant to tell you what’s going on with your business it gives you a really raw impression of what’s happening in the business right at that moment. For Esther, this is an incredible benefit when you’re trying to make sure your cash flow is fit and healthy:
“I can look at my reports and say ‘Actually, unless I make X amount of sales next month, I won’t spend the £400 I had planned to spend on marketing. It’s real-time financial data which is just brilliant for being able to manage your cashflow and your overall business,” she said
“It’s so important to have this kind of control over your finances. At the end of the day, that’s the critical side of business: if you’re not making money then the company’s not going to be viable. “Having that knowledge of the numbers day-by-day is brilliant. You’re not under any illusion of your business growing at a faster rate than it actually is. You can see every day what sales are coming in. It’s just a really good management tool.”
You can find out more about Esther on the TeaHuggers website.