App Efficiency & Profitability for Your Small Business [eBook]

Rebecca A. Casarez, CPA

Rebecca A. Casarez, CPA

App Efficiency and Profitability for Your Business - 2019 San Francisco Small Business Expo (Xero and ProAdvisor CPA) - Rebecca A. Casarez, CPA

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
another free e-book that we wrote called
“Mastering the Art of CashFlow Management”.

A lot of the principles I discuss here stems 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 planning and implementing
a system of tools to aid your business, removing bottlenecks and
increasing efficiency.

As a CPA, with an 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, its 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.null

How do you plan for it?
Using 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 of 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 the “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 setup 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 solid accounting hub. The important thing to remember is that
implementing a cloud based platform, or Tech Stack Eco-System, is very
important.

hub and spoke xero - ProAdvisor CPA

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.

Xero Connected Apps integrations - ProAdvisor CPA

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 make the decisions alone.

Ch. 3 Income Statement Focused Apps

Income Statement example - ProAdvisor CPA

The two major components in Income Statement are Sales and Expenses
and 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 and company card reconciliation
Mileage tracking app
Auto-Fetches Statements, Bills and Receipts from Banks and Vendors

Sales Apps

Payment Gateways: 

Invoicing/Quoting/Job Management:  

Expenses Apps

Ch. 4 Balance Sheet Focused Apps

The Balance Sheet is broken down into the following 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.

Balance Sheet Example - ProAdvisor CPA

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) 

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

ProAdvisor CPA:
We help entrepreneurs attain their financial goals and enjoy the journey of growing their business. We work strictly with businesses, providing strategic business advisory services.

Accounting Advisory: Bookkeeping, Accounting and Reporting.
Finance Advisory: Budgeting, Projections & Analysis (Interim CFO).
Tax Advisory: Tax Planning & Strategy.
App Advisory: Simplifying, Converting or Implementing Apps for your business.

  • Flat Monthly Plans
  • Virtual Team of ProAdvisors
  • No Hourly Billing

Contact Us if you are interested in a FREE consultation to see if we would be a good fit for your business.

Disclaimer:
This publication is designed to provide information of federal tax and accounting laws and/or regulations. It is presented with the understanding that the author is not rendering legal or accounting services.
This text is not intended to address every situation that arises or provide specific, strategic tax and/or accounting planning advice. This text should not be used solely to answer tax and/or accounting questions and you should consult additional sources of information, as needed, to determine the solution to tax and/or accounting questions.
This text has been prepared with due diligence. However, the possibility of mechanical or human error does exist and the author accepts no responsibility or liability regarding this material and its use. This text is not intended or written by the practitioner to be used and cannot be used by a taxpayer or tax return preparer, for the purpose of avoiding penalties that may be imposed.

Share this post

Share on facebook
Share on twitter
Share on linkedin
Share on email
Share on print
Close Menu