Fundraising isn’t the end-goal

Should a business bootstrap or raise external financing?

There is a time and place for either strategy, but what we've noticed is that startups tend to fixate on the latter. 

strategic business planningSome believe that once they've raised enough money, everything's going to be okay. But while raising capital definitely helps, it shouldn't be the end goal of a business.

Working with someone else's cash gives business owners a sense of confidence and accountability. But there are many things bootstrapping can teach founders.

In fact, it's quite common in Australia for business owners to bootstrap. They have credit card limits of $30,000 to $50,000 - enough to run their businesses on personal credit. That's very risky. But in the process, founders become more disciplined and thoughtful about where they spend their cash.

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Financial transparency important

Financial transparency is important to investors

When pitching a business to investors, getting the right number - whether it's net profit, sales, margins - is key.

financial transparencyBut the kind of data you present depends a lot on the stage of your startup and the kind of investor you're looking at.

As an investor himself, Sam had this advice to give: "If we're talking about seed [funding], they'll be investing more in the team, personality, vision, and market-depending on the stage."

He goes on to advise small and medium enterprise that "annual finances are useless in the beginning because business is changing so frequently. Investors will want to see on a month-on-month basis what's happening."

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Business cash payments ruling

Why the Government does not want your business accepting cash payments of $10,000 or more

From 1 January 2020, the Government intends to restrict the value of cash payments a business makes or accepts to amounts under $10,000. 

cashIgnoring the limit will become a criminal offence with penalties of up to 2 years in prison and/ or $25,200*.

Payments of $10,000 or more will need to be made electronically or by cheque.

We'll, easy enough you say, just break it up into smaller amounts! But, the law has already thought of that. The cash payment limit will apply to the total price of a single supply of goods or services, regardless of whether the price is split into a series of payments over time. If a customer is making cash payments over time, for example instalment payments on a car, the total cash component cannot equal or exceed $10,000 – payments above this amount will need to be made using alternative payment methods.

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Numbers should tell a story

Money is a tricky topic for a lot of business owners

There's the matter of how to account for it, how to present it and, of course, how to raise it. 

numbers tell a storyIn this day and age where accounting has been made a lot easier and financial information more transparent, how should business owners approach their numbers? 

Here are some things we figured out:

Numbers should tell a story
Proper accounting is more than just compliance. It's an opportunity to paint a picture of your business - where its strength and opportunities lie, as well as its risks and challenges which, in turn, can help business owners make better decisions.

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Human cost of late payments

Late payments affect business from financial and operational perspective

It's an issue that's close to our hearts and a conversation that matters.

But another conversation, one that's often lost amid all the talk about lost revenues, invoice-chasing and the rest is the human cost of late payments. Because when businesses aren't paid on time, it doesn't just affect the bottom line – it affects people.

Xero teamed up with PayPal to find out more about how late payments affect, not just businesses but their owners too. 500 small and medium business (SMB) owners shared how they dealt with this ongoing issue. 

Here are the key findings: Read more…

Collins Hume
is a CPA Business