App Efficiency & Profitability for Your Small Business

Ch. 1 Best practices in Building a Tech Stack Eco-System

1. Before we begin: “Master the Art of CashFlow Management”.

2. What is a Tech Stack Eco-System?

3. How do you plan for it? Using your budget(s) to create a powerful Tech Stack Eco-System.

1. Master the Art of CashFlow Management

If you are reading this, you are most likely a business owner or manager that cares about growth and profitability in your small business or startup.

Before we begin, I would recommend you first read “Mastering the Art of CashFlow Management”

A lot of the principles I discuss here stem from the lessons in that book, specifically around planning and budgeting and ensuring that the managers and decision-makers in your company understand how to accurately manage CashFlow so that profitability is not hindered by improper actions by the leaders of your company.

What is a Tech Stack Eco-System?

A Tech Stack Eco-System simply means you are planning and implementing a system of tools to aid your business, removing bottlenecks and increasing efficiency.

As a CPA, with expertise in business accounting and finance, there are two ways to increase profitability – increase revenue at a higher rate of growth than expenses, or decrease expenses at a lower rate of growth of revenue.

In other words, it’s not just about making more in revenue or cutting
expenses, as it may have the adverse impact of increasing expenses or cutting revenue (respectively).

When I am first hired to perform an analysis on the finances of a small business, the first thing I look at is efficiency.

What if you could increase your margins by 10%, 15% or 20% just by tweaking your process or implementing a new app to aid in production efficiency?

This is what creating a Tech Stack Eco-System can do for your business.

Implementing 5-10 carefully selected apps may cost you $50-$200/month in subscriptions, but can save thousands or more in the administrative labor costs or intel that they provide.

How do you plan for it? 

Use your Budget(s) to create a powerful Tech Stack Eco-System.

As mentioned earlier, if you are not familiar with the various types of business planning and budgeting, reading the quick e-book on
“Mastering the Art of CashFlow Management” will help.

Planning your Tech Stack Eco-System may seem like it is separate from your business plan, but I can assure you it is not.

Your business is a machine with interconnecting parts (departments) that can function independently but are all dependent on the other parts in order to move
forward.

Planning your Tech Stack Eco-System involves high-level planning and brainstorming to ensure your needs are met.

After all, there are literally thousands of apps to choose from and more are released each day.

So how do you plan for it?

As mentioned in “Mastering the Art of CashFlow Management“, it is important to create various budgets in a specific order.

You can use these budgets to create a Tech Stack Eco-System to suit your needs and increase efficiency, which we now know can easily increase profit margins.

Ch. 2 Accounting Systems & Apps

1. Types of Accounting Systems

The first function to be set up is the accounting system (or hub). You will essentially be creating a hub and spoke model with the accounting system to be located at the center.

An accounting system is both manual and computerized and is used to collect, record, and classify 100% of your business’s financial data.

It is then analyzed, summarized, and interpreted using Financial
Statements:

• Income Statement

• Balance Sheet

• Statement of CashFlow

• Statement of Owner’s Equity

• Notes to the Financial Statements

A business owner, or manager, cannot create the remaining systems without a solid accounting hub.

The important thing to remember is that implementing a cloud-based platform, or Tech Stack Eco-System, is very important.

2. Why do you need to be in the cloud?

Are you wondering why not just use the desktop or spreadsheet solutions out there (think QuickBooks Desktop or Excel):

1. You need real-time data to make better-informed decisions.

2. You need to work where and when you want to.

3. You need to improve your cash flow and get paid faster.

4. You need to collaborate with your financial, accounting, and tax
   advisor(s).

5. You need a secure platform.

6. You need a system that will not be erased if your computer
   (hardware) suddenly fails or breaks.

7. You need a system that backups itself up automatically (think about
   the time when your file became corrupted and you lost everything).

Pro Tip: A solid cloud based accounting platform like Xero accomplishes each point mentioned above.

Click HERE for the Xero App Marketplace.

There are hundreds, if not thousands of apps that exist today, and this number increases each year.

We have seen that businesses see greater success by hiring a consultant to help create and implement the Tech Stack Eco-System than by trying to make the decisions alone.

Ch. 3 Income Statement Focused Apps

The two major components in Income Statement are Sales (Revenue) and Expenses.

Every business should establish a Sales and Expenses Budget based on the plans and expectations of the business.

Below are some Apps that we recommend:

• Good for both A/R and A/P

• Receipt tracking

• Expense reporting

• Mileage tracking

• Company card reconciliation

• Statement Auto-Fetching

• Bills

• Receipts from Banks and Vendors
  
  

Sales Apps

Payment Gateways: 

• Stripe 

• Square 

• PayPal 
  
  

Invoicing/Quoting/Job Management:  

• Practice Ignition 

• Approval Max 

• ServiceM8 

• simPro 

• Harvest 

• Acuity Scheduling 

• Bill.com (good for both A/R and A/P) 

• Veem (good for International wires) 

• Chargebee (Great for ACH workflows) 

Expenses Apps

• Bill.com (good for both A/R and A/P) 

• HubDoc (Auto-Fetches Statements, Bills, and Receipts from Banks and Vendors) 

• Expensify – receipt tracking, expense reporting, mileage tracking, and company card reconciliation 

• MileIQ – mileage tracking app 

Ch. 4 Balance Sheet Focused Apps

The Balance Sheet is broken down into the following format:

• Assets

• Liabilities

• Owner’s Equity

The major components in the Balance Sheet that can be maximized by the introduction of apps are Assets.

Below are some Apps that we recommend that go beyond Invoice and Bill creation and payment: 

Asset Apps

Production Apps (note Production Apps also provide inventory tracking and management) 

• Inventory Planner – Purchase Ordering, Sales Forecasting etc… Good for both e-commerce and retail 

• FishBowl – Manufacturing & Warehouse automation 

Inventory Tracking Apps 

• Vend  – Point of Sale & Retail Inventory 

• A2X – Automates e-commerce accounting for Amazon & Shopify retailers 

Cash Apps (Forecasting Cash Needs) 

• Spotlight Reporting 

• Futrli 

• Fathom 

• Float 

• Live Plan 

Liabilities Apps

• Gusto – Payroll Processing & Tax Payments 

• Tax Jar – Sales Tax Liabilities & Tax Payments  

Ch. 5 What’s Next

After reading this, my hope is that you received one or two golden
nuggets, or action items, for you to implement.

The goal is for you to know just enough so that when you hire someone, you know when they are bull$#**ting you – but definitely hire someone.

If you would like some tips on what to ask when interviewing a CPA, you can download our free questionnaire.

[Questionnaire] Questions to Ask When Hiring a CPA

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