Accountfully’s managing partner, Brad Ebenhoeh just laid out a seriously informative interview with Elliot Begoun of TIG Brands. In the episode, they discussed how being on top of your accounting can make or break your growth as a business. They touched on quite a few common scenarios with ideas and solutions for each. This was a great conversation between two CPG business growth professionals. We break it down for you to digest the gems shared below.
What Is TIG Brands?
TIG Brands is led by Elliot Begoun, the Founder and Brand Champion of the company. He is a self proclaimed natural product brand nerd, and focuses on growing emerging brands in that space. Elliot pulls from his passion and lifelong learning of the industry to “position them to raise capital, prove their growth hypothesis, build community, and scale.” TIG works with both US and international companies, helping them grow and expand in more regional and (for overseas companies) US markets. Elliot is no stranger to understanding the importance of having a strong financial understanding when it comes to small businesses, and brings a wealth of real life examples to the table in the discussion; from raising capital, to managing inventory properly.
The Ideas and Concepts Discussed
Here is your high level run down of what was discussed in the talk, with some great links for more review and learning opportunities included.
Best Financial Practices For Early Stage Brands
At a minimum, getting on a consistent schedule and creating workflows to check in to your financials is critical. Set aside days and times to focus on basic tasks like reviewing reports, reviewing sales in Shopify, checking A/R, etc. The difference between businesses serious about making it work and the hobbyists, is their rigor and drive to engage in the health of their numbers. There are ways to create efficiencies so you are not focusing all of your time in the wrong places.
Partner with people that can help you. Join communities and folks that can offer advice and resources to help in running your business. A lot of help is out there, especially online.
www.accountfully.com/resources: This is your one stop for links to blog articles, podcasts, white paper, downloads and more.
www.accountfully.com/podcast: The direct line to our CPG-focused podcast episodes
Biggest Misses Accountfully Sees For Most Entrepreneurs
Most business owners run their business like they are checking a bank account balance. This is a huge mistake, especially when you need to plan ahead to make your cash flow work for things like buying inventory. Getting in the habit of forecasting and looking ahead will help a huge amount in this area. Get out of reactive mode, and into proactive mode.
Brad says, “One of our big deliverables for our clients is a four-week looking forward/ short-term cash management tool that we send to them every week.”
How Founders Can Maximize the Benefit of Accountfully’s Services
Be an active participant. The best clients are the ones that review the numbers and take advantage of the monthly review meetings to execute goals and make decisions based on their business goals. Brad says, “the best clients are the most engaged are the ones that are like, ‘I reviewed the financials. Here are my four questions that I want to talk about’.”
The next great part of maximizing the knowledge and guidance at-hand is by sharing goals and asking for assistance in that area. For example, if a client wants to launch into a new sales channel, or hire another employee. By sharing these plans, clients can tap into the wealth of knowledge and be advised more specifically.
GAAP Financials - How Complicated Is It, and What Is It?
One of the live podcast listeners asked a very popular question; “I’m being asked by my investors to move over to GAAP Accounting, how should I do this?”. Brad explained the differences between accrual and cash based accounting and which method Accountfully typically uses. Brad explained, “what GAAP is; it is the reporting mechanism that you're required to use if you're a publicly-traded company, if you go get an IPO. We start our clients on an accrual basis.”
A solid accrual based accounting method can be relatively easy to switch over to GAAP when needed, but you will need to allow enough time for it to be done. In short, it is a way to show your investors that you have your financial shit together.
How An Entrepreneur Can Leverage The Data That's Being Recorded Through A Good Process Of Running Monthly and Weekly Financials
You are getting a much more accurate picture because your P&L is being segmented into more detail, such as by sales channel, etc. You will benefit by understanding things like your top line revenue, net revenue, etc. Brad says, “what is your gross margin; factoring in your product cost, your landed costs, in a warehouse before you sell it? Contribution margin. We look at the costs after the fact, from getting into the warehouse, to your customer credit card fees, fulfillment fees, freight out.”
You are also seeing things like operating profit margin, but it is factoring in sales, commissions to your brokers, advertising fees, or your spending on Amazon, or Shopify direct expenses on those specific sales channels.
By seeing the “true cost” of selling in each sales channel, and better understanding how best to focus your sales efforts, you can make better decisions moving forward into the areas that offer the most return.
Best Systems To Use For Accounting and Inventory Management
Most of Accountfully’s clients are on Quickbooks Online, because it is not bulky and the size of client businesses are not in a larger ERP zone yet. To complement Quickbooks, are a few other tools like Bill.com and DEAR Inventory, but Accountfully can support and employ other systems too.
The Thing That Bites Most CPG Businesses In The Butt: Inventory
The mis-management of inventory is one of the most common things Accountfully sees in clients, and becomes a company’s biggest money waster. Once a company understands the importance of inventory as an asset, and how it should be tracked and managed, they can start to save a significant amount of time and money. Brad notes, “I think with inventory, our biggest coaching point to our clients, or our biggest issues that we have with our clients - literally on a monthly basis - is inventory control, inventory management. Your biggest spend is inventory.”
Advice For Other Entrepreneurs As an Entrepreneur
Don’t waste time on the things that you’re not great at. Allow a pro to do it right the first time. Brad explained that he and his wife created their initial business name and wasted time trying to focus on things they weren't great at - like design and marketing. Once the right team was in place, the name and branding became what the world now knows as Accountfully.
If you are a business owner feeling the struggle when it comes to wearing too many hats that don’t serve you, it’s OK to outsource. Let us help you on the accounting side, so you can free up time to focus on your core business.