Xero for Small Business
IS IT WORTH THE MONEY?
When I first started my business back in 2010 I made the obligatory trip to the accountant. He is a genuinely nice man, and I trust his advice.. mostly... When he asked how I intended to manage my bookkeeping I mentioned Xero. His response was baffling to me. He said "oh you don't need that. You will probably only have 5 to 10 transactions a month".
Xero for small business; is it worth the money?
Huh? 5 to 10 transactions a month?
I don't think so!
I knew I was going to be successful before I started. I had to be. There was no Plan B. There was no going back. There was no boyfriend, husband, sugar daddy or anyone else to feed and house me.
I felt like my accountant had me pegged for a failure before I started. He didn't seem to want me to spend money on my business. Weird.
I knew there would be a lot more than 5 to 10 transactions per month. I was aiming for 8 clients, there is 8 transaction right there! Was I really going to save all that much money by using Excel?
Spending money to save money
My accountant tried to sway me to Excel so I could save $50 per month. It annoyed me. I knew that in the long run it would cost me more not to have a good system in place for my business income and expenses. I knew it would cost me more than it saved me to use spreadsheet.
Oh and here are some other reasons why Excel (or Google Sheets) isn't the best solution:
Lots of people simply can not use Excel/Google Sheets.
If you're going to learn a program you may as well go for the best.
Excel is not designed for bookkeeping. It is a spreadsheet, not a program to help you understand your business financials.
If you mess with a formula or incorrectly input one you're screwed! It can cost your business hundreds and maybe thousands of dollars with formula and typing errors.
Excel doesn't know if you've lost receipts.
Xero does! The live bank feed is the best thing since screw top wine bottles. You can check the receipts you have against the bank feed for errors. Xero is the 5th top used SaaS (Software as a Service) product among small businesses, that means they know small business!
Xero data comes from customer's bank statements, ie. Xero know what small businesses are paying for and what is the most popular.
What if you're a business that holds stock?
You will need other programs to do stuff like invoicing and managing inventory. Having bits of your business managed in multiple places is a major time suck. It just isn't efficient and this is where big costly errors happen.
You will be more likely to leave your data entry to the end of the financial year, that means no accurate reporting for a full 12 months!
Oh and a massive ugly job in July!
... but Excel is free and Xero costs money
Why do you think that is?
Let me tell you. It's because Xero is designed specifically for small business owners. It is designed to help you better track, manage and understand your financials in the shortest time possible.
I have battled with many a client over this need to not spend money on stuff in business that doesn't float your boat.
The average woman in business is happy to sign up to subscriptions that help them build landing pages, create pretty shareable images and manage their social media. They don't mind dropping $150 on a great business networking event, but they avoid spending money on managing their business like the plague!
It makes no sense to me!
Free can often COST, not save you money
This is a perfect example of a freebie costing you more than you would spend on a paid solution. I am an Excel ninja, I can whip up fancy formulas while sucking down a G&T in the blink of an eye. My business is pretty simple to run, it is mostly automated. I don't have a huge number of transactions, yet, I still pay for Xero. The time it would take me to complete the data entry I would need to each month outweighs the investment in Xero. Hiring a bookkeeper to enter the receipts into a spreadsheet, well that would just be madness.
I am a micro business, isn't accounting software for big businesses?
No Ma'am! It certainly is not. The thing I love most about Xero is that it is designed for micro and small businesses.
It is super user-friendly for non-accountants. It has the most wizz bang training and if you get stuck a good bookkeeper can log in from literally anywhere in the world to get you unstuck.
If you intended to make money from your business you need to behave like a business. That includes bookkeeping! I feel so strongly about this I recorded an entire podcast episode on essential upgrades your business needs to scale.