Bookkeeping for Profit
EOFY, XERO, GOING FOR LOANS + FINANCIAL CONFIDENCE IN SMALL BUSINESS
APPLE PODCASTS | SPOTIFY | GOOGLE PODCASTS
AS small business owners and creatives, bookkeeping and taxes can be one of our biggest anxieties – but with the right tool-kit, it can become your business' superpower.
In the third episode for Season 2, we were joined by financial professional and Founder of HenneyCFO, Sarah Henney.
Sarah is a small business Chief Financial Officer (CFO) based in Longreach QLD. She is super passionate about supporting small businesses across rural and regional Australia through all stages of their finance journey. If you struggle with your books and understanding your numbers, you need Sarah on your team. She takes business owners from feeling stressed and overwhelmed, to clear, confident CEO’s having a crack!
In March this year, HenneyCFO launched their flagship program, Bookkeeong for Profit: an online DIY course which takes you from ‘Xero who?’ to a guru of numbers. It includes weekly live support to help you know your numbers and grow your business. (More on that later!)
If you’re a small business owner or creative who wants to take control of their finances, generate profit, and reach that next level with their revenue – read on!
In this episode, we covered the following:
> What is a ‘CFO’ for small businesses?
> All things Xero and why you need it for your business!
> How great bookkeeping can lead to profit
> Going for big loans as a small business owner (buying a house or car)
> Ways to improve your bookkeeping today (how to set your business up for success ahead of the next financial year; plus the scoop on Bookkeeping for Profit!)
What is a ‘CFO’ for small businesses?
With a background in banking, accounting and government, Sarah recognised a need for small businesses and creatives to have better support when it comes to their finances.
“I have come and basically created my own version of a ‘CFO’ for small businesses,” Sarah explained.
“You often (only) find them in really big businesses, so I wanted to create this consulting business that was part of helping the ‘CEO’ of small businesses really understand what’s going on.”
Whether it’s implementing systems, understanding finances, or having someone to bounce ideas off – Sarah said she wants to be able to support other businesses.
Often small business owners and sole traders can be hesitant to ask questions, because they feel as though they should inherently know the answers. But with a business like HenneyCFO as a middle-point, Sarah hopes to empower people with a toolkit of knowledge, so they can better understand their finances and know the right questions to ask their accountant or bookkeeper.
“A lot of people have no one to ask, no business support, and they’re just winging it,” Sarah said. “So that’s where the whole concept of my ‘CFO’ business came from.”
Coming from a banking background, Sarah said she had seen first-hand how hard it could be for people in small business to understand the financial jargon – which can become a barrier when going for loans, or dealing with other large expenses.
“I’ve seen a lot of small business owners come into the banks, and want to borrow money … and it’s not until you get to that point, that you understand how bloody hard it can be. But it’s not too late (to learn),” she said.
“So I wanted to (reach) them sooner rather than later, and help them break (it) down, and have the information and support to ultimately help grow their businesses.”
What is Xero?
For anyone new to small business, or looking to move beyond outdated Excel spreadsheets – Xero is a game-changer.
“Xero is my no. 1 tool for businesses,” Sarah revealed.
One of the biggest barriers that steers people away from Xero, is they often think it’s expensive (starting from $27 per month) but with some perspective, Sarah said it’s a $27 investment that will save you time and money in the long run.
Where you would manually enter data into a spreadsheet, Xero feeds information from your VISA Debit or business bank account through.
“It is automatically there, waiting for you to allocate,” Sarah explained. “So you won’t have to find the transactions, and you won’t miss anything because it’s already there. So rather than your bookkeeping taking 4 hours a month, it’s 10 or 12 minutes a week to keep that information up to date.”
Having all of this important information collated and accessible is hugely beneficial – especially if you need to generate Profit and Loss Statements.
“It makes it really easy to track how your business is performing,” Sarah said.
In her course, Bookkeeping for Profit, Sarah helps her students implement systems so receipts are automatically there too.
“One of the things you need to know for EOFY, is you have to keep all of your receipts for your business. If you’ve got over $300 in business expenses in that financial year, and if you’re registered with GST – you need to keep every receipt for any expense over $82.50 for compliance,” she shared.
“Having that information already there (with Xero) is so much easier for the small business owner, knowing you’re compliant, knowing you’ll access your Profit and Loss and that everything is up to date.”
Going for big loans (like buying a house, or a car)
There’s often a misconception that you have to have a ‘full-time job’ with a company, in order to get a mortgage for a house, loan for a car, or whatever expense that might be – but creatives and small business owners shouldn’t be discouraged.
“The thing is, when you’re self-employed, usually the bank will want you to be able to demonstrate that you are a worthy person of them investing in,” Sarah explained.
“So what does that look like? Usually you’ll need two years of financials from your ABN – so that would be your creative business – and what they’re looking for is a profit. They want that profit to be able to demonstrate that you’re able to pay back the loan.”
If you can’t demonstrate the profit, Sarah said it’s going to be really hard.
“And that’s where that conception comes from; ‘I can’t get a loan because I’m self-employed’,” she revealed.
A platform like Xero can also help along the process, because it’s easy to access your financials and generate a Profit and Loss Statement.
“It’s going to give the bank even more information to go to the big credit hierarchy and demonstrate that you are a really good customer, and they should invest in you,” Sarah said.
“Even if you’ve only been running for 2 years, and your first year was a $20,000 profit, and the second year might have been a $40,000 profit, and the third year you’ve demonstrated that you’ve got $60,000-65,000, that’s absolutely profit you can use to demonstrate that you can pay back a loan,” Sarah explained. “And even better, it’s showing that you’re growing your business.”
Sarah noted the other thing they might ask for is a budget, which can be used to demonstrate what the next year in business will look like as well. This is why it’s essential to get yourself organised as soon as possible – before the point of applying for a loan or mortgage.
Ways to improve your bookkeeping TODAY!
#1 GET ORGANISED
“The first thing is – the sooner you take action, the better,” Sarah said.
“I’m a big believer in, don’t wait until your business is making $100k a year before you start to (implement better systems), because the sooner you learn it, it’ll grow with your business. Ultimately, being organised is number one.”
#2 BE PROACTIVE, RATHER THAN REACTIVE
“If you are out there, thinking ‘oh my god I haven’t done anything’, it’s actually not too late – you can set Xero up, and we’ll feed all your transactions through, and reconcile them,” Sarah said.
“It’s not a hard job. I had a lady in our Bookkeeping for Profit course, who came along, and she had 800 transactions for this financial year, and she’s now up to date. So never fear – it’s not too late, you can make changes (for) the next financial year.”
#3 EDUCATE YOURSELF + UP-SKILL!
Don’t waste time trawling the internet and YouTube for answers – there is no better investment than learning from an expert!
HenneyCFO’s course, ‘Bookkeeping for Profit’ is a four-module, self-paced course that helps you better understand your business and your books.
“Module 1 helps you set your business up, with everything you need to know from registering for GST, registering for an ABN, how to set your business up with a designated email and bank account,” Sarah explained.
“Then we work through record keeping; what you need to keep for compliance, (and) accounting for business owners.”
By breaking down the whole process and terminology – like a ‘Profit and Loss’ Statement – and guiding students with what to do, and what not to do, Sarah said the aim is to alleviate stress around money, and empower people with the right knowledge.
“People who have done the course have said ‘you have made it so simple’ – and I really wanted to offer that,” she said.
As well as this, there is a full module on how to set up XERO from the start, and live sessions every Friday so students have the opportunity to ask questions and learn from each other.
“Ultimately, I designed Bookkeeping for Profit because I was really passionate about sharing this information with everyone,” Sarah said. “I want to bring this wholistic approach (to making) your business finance-ready, so if you’re looking at a big expense, like buying a house, buying a car in 2-3 years, that you can actually do so.”
To jump onto this fantastic course, sign up here.
(*Side-note, this plug is not sponsored at all – Courageous Creatives is all about putting the right resources in your hands!)
About the show:
Courageous Creatives Podcast was launched as a place for creatives to feel inspired, supported and empowered. I truly hope, whichever phase you are at in your creative career, that you find something here. This beautiful community is growing day-by-day, and I’m so excited about the emerging opportunities to network with other creative trailblazers and grow as small business owners. I am the biggest believer that when we help each other along the way, the whole creative community succeeds. Let’s kick the ‘starving artist’ stigma back into the 20th century where it belongs, and build some amazing modern careers – on your terms!
