According to the SBA, small businesses make up 99.7 percent of companies in the United States, but most small business owners lack fundamental accounting knowledge. A recent survey revealed that fewer than half of small business owners understood basic terms used in accounting.
“Most people start small businesses because they have a passion for what they do, not because they’re accounting experts,” says Ben Richmond, U.S. Country Manager at Xero, a cloud-based accounting software company. “So, they’re keeping busy, moving lots of stock or doing lots of service, but they don’t know what their cash flow looks like. And that gives you this sense of not being in control.”
Control and confidence
The result of not being fully in control of the finances underpinning your business is stress and anxiety — and lost opportunity. “When businesses are feeling confident and feel in control, their confidence inspires growth,” notes Richmond.
Sam Alter, founder of Atlas Pet Company, agrees. “I did really well on my accounting courses in college,” he says. “But once I started a business, it was totally different than college — there’s a bit of a learning curve.”
Alter combined his desire to travel the country with his love for his faithful Black Lab Atlas and launched his company from a customized 4×4 Sprinter van. One reason he had the confidence to take a chance like that was his decision to use Xero’s cloud-based accounting platform. “We started with Xero pretty early on in the process because Shopify and Xero had an integration, which made it pretty easy to do everything kind of automatically,” he says. “The best part has been that Xero has been able to grow with us and every program that we’ve looked at has had a Xero integration by default.”
The right partner
Richmond believes that ease of use is the key consideration when small business owners are exploring accounting platforms. “We looked at a lot of accounting software,” he says, “and all this accounting jargon was in there. When we built the Xero platform, we asked ourselves, how do we make it speak the language small business owners speak? So instead of using jargon, the Xero dashboard says, ‘total cash in and out, invoices owed to you, bills you need to pay.’ So, we’re using the terms that they use, as opposed to them having to have an accounting degree to run the software.”
Being based in the cloud is another key feature of the platform. At one point, Alter spilled a beverage on his laptop while traveling in the company van. “If I lost all my accounting because of a drink spill,” he says, “that would have really destroyed me.”
“The cloud shouldn’t even be a decision point,” Richmond notes. “We all use online banking — our personal lives have moved to the cloud. Xero was born in the cloud; we don’t have a legacy desktop application.” Being cloud-based also means the platform can offer a vast array of services, ranging from thousands of small business apps that serve the unique needs of each client to more than 100,000 bookkeepers and accountants who can act as business advisors for Xero’s customers.
“Accounting doesn’t have to be boring,” Richmond says with a laugh. “You see people like Sam and the common story of people turning their side hustle into their main hustle — with a platform like Xero behind them they can actually have fun, go on the road, travel, do things with their families, all while building sizeable businesses that are having an impact on the communities they are serving.”
Small business owners interested in learning more about Xero’s cloud-based accounting platform can sign up for free 30-day trial at xero.com/us/signup.