In today’s episode, I’m talking to Wayne Richard, Partner and Chief Operating Officer at Bean Ninjas, one of the world’s leading accounting firms and an expert in helping small businesses with accounting and bookkeeping. Aside from being Bean Ninjas’ resident e-commerce expert, he is also the author of a book called, “A Detailed Guide to eCommerce Accounting” and Host of the Bean Ninjas podcast. Wayne had a 15-year career with Hewlett Packard before starting his own cloud accounting business in Tucson, Arizona. He eventually became a Bean Ninjas contractor and equity partner, two years after he discovered Bean Ninjas – as a simple comment on their blog post led to his involvement with the company.
Recognized as a leader in Xero accounting for eCommerce, Wayne has spoken in front of live audiences at Shopify, Dynamite Circle BKK, and DC Austin. He is also the resident CFO for aDmission Mastermind and has been featured in Insightful Accountant, Fundbox, TaxJar, and A2X blog. When Wayne isn’t managing a global team, he’s being an everyday superhero to his wife and five children.
Connect with Wayne:
- LinkedIn – https://www.linkedin.com/in/waynedrichard
- Company website – https://beanninjas.com/
Book Recommendations mentioned in this episode:
- Play Bigger: How Pirates, Dreamers, and Innovators Create and Dominate Markets (by Al Ramadan) https://tinyurl.com/yay4mmmf
- Sell like Crazy: How to Get As Many Clients, Customers and Sales As You Can
- Possibly Handle (by Sabri Suby) https://tinyurl.com/yahxzotu
- Traction: Get a Grip on Your Business (by Gino Wickman) https://tinyurl.com/yb8q78u6
- Rocket Fuel: The One Essential Combination That Will Get You More of What
- You Want from Your Business (by Gino Wickman) https://tinyurl.com/y8ta9pr7
Connect with Dhiren:
4:00 – How Wayne started out, how his involvement with Bean Ninjas came about and their journey as a company
18:03 – 5 Key Tips that entrepreneurs can use to set the foundation to stress-free financials
24:12 – Xero Vs. Quickbooks Online, pros and features
26:13 – How to stay on top of your bookkeeping and accounting in the early stages of the business, 3 things to consider before outsourcing bookkeeping and accounting work
29:06 – What to do in order to make sure that your outsourced accountant or bookkeeper is the right fit for your business
33:33 – The difference between Inventory Management and Accounting
37:43 – Putting in KPI’s and tracking your financials, Top financial metrics for e- commerce operators
42:44 – The challenges that Bean Ninjas went through and how they overcame them
47:27 – How outsourcing remote, overseas talent works and how it has benefited Bean Ninjas
Thank you for listening! I hope you enjoyed this episode and I’d love to hear your feedback. You can email me at email@example.com and help me improve or if you have someone in mind that would be a great guest on the show, feel free to recommend them via email.
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Wayne Richards 0:01
It’s important for you as an entrepreneur in the early stages of business to do the bookkeeping on your own for a little bit of a period of time, because as an entrepreneur, and as a CEO or founder, you need to understand where every dollar is coming in and going outside of your business. Now, once you are clear in that understanding, then we believe it makes sense for you to move from do it yourself towards a bookkeeper. For us, there’s really three considerations we often hear about in regards to when is a good time for an entrepreneur to make that move to hire and outsource cloud accounting like ourselves. First is their accounting experience, and their willingness to learn financial skills. The second is an available budget for hiring someone else to take care of it for you. If you have the resources in your superhero abilities are not unique to organization and consistency. That kind of goes into our third so you lack experience you add the budget and also many our viewers do lack the time.
Dhiren Bhatia 1:14
Hello and welcome to a brand new episode of the elevated entrepreneur podcast. On today’s episode, I’m traveling all the way to Tucson, Arizona. Well, not literally traveled but figuratively, you know, since COVID is still around, and I’m pretty much stuck in Toronto. And that is a whole different episode, my friends. But back to today’s episode, I’m talking to Wayne Richards from bean ninjas, one of the world’s leading cloud accounting firms and an expert in helping small businesses with accounting and bookkeeping. I’m talking to Wayne about a subject that was my least favorite in school, but one of the most important ones in my journey as an entrepreneur. And that topic, wait for it is accounting for small business. But wait wait, don’t turn me off yet. Don’t get bored because we’re not talking about boring CFO stuff. But we’re talking more fun stuff. And before I tell you about that, I want to tell you about Wayne because Wayne is an amazing person to talk about this stuff. Wayne had a 15 year career at Albert Packard, before he started his own accounting business in Tucson, and then eventually became an equity partner in be ninjas. Wayne has also spoken in front of live audiences at Shopify, dynamite circle and DC Austin. He’s also the resident CFO for admission mastermind and has been featured in numerous publications around the world, including insightful accountant funbox tax jar, and the A to X plug. When Wayne is in managing a global team, is being an everyday superhero to his wife and get this five children. I’m really happy to have Wayne on this episode today as we get into all things an entrepreneur should know about accounting When running a business, if you’re just starting your business or if you’ve been running your business for a while, this episode is going to give you an amazing amount of value. So stay tuned. And let’s cue the intro. You’re listening
to the elevated entrepreneur podcast designed to help retailers restauranteurs and entrepreneurs simplify business operations and use modern technology to elevate their business is your host Dhiren Bhatia
Dhiren Bhatia 3:33
Wayne, thank you so much for coming on the elevated entrepreneur podcast. It’s a treat to have you thank you for being here.
Wayne Richards 3:40
Absolutely. Thanks so much for having me. I enjoy these opportunities kind of reflect a bit on the past but also helps share some knowledge and insights to your listeners.
Dhiren Bhatia 3:49
Thank you, Wayne, and I know you from being ninjas, the cloud accounting company. So tell me please more about the ninjas and tell me your story behind the ninjas as well.
Wayne Richards 3:59
So Bean Ninjas as a company was founded, actually five years ago, on July 1. So we’re now coming close to our five year anniversary, we had an amazing opportunity yesterday, my business partner, Merrill Johnson, and I reflect on our journey and share some highs and lows along the way strategies that we had tried and implemented, some have been successful others might not have been so successful that we’ve used this learning opportunities. So we were founded actually on a premise of a seven day startup, which is quite interesting. So good. Nora wrote a book called The seven day startup and it was really the principles and methodologies that Meryl had used with her business partner at the time to found the company. So essentially what that meant is from concept to identifying a business name, registering the company, having a logo, getting a website up and running, identifying your core solution and obtaining your first customer in the period of seven days. And they were able to achieve that. Yes, it was quite exciting. She covered it in our one of our earlier podcasts episodes on the be ninjas podcast. But within the early years, we kind of were a provider of bookkeeping and financial reporting services to everybody. So anyone that had a particular need for accounting services, we were in a position and interested in supporting. We grew as a company organically and also through word of mouth. We tried almost everything in terms of marketing in the early days, and started identifying the need to really niche to start to target those marketing efforts and the products that we were delivering the services we were providing. So in the early days, it was decided it was still a broad niche. We said we provided zero bookkeeping services for online businesses. We began to support business coaches, travel bloggers, info product sales folks, SAS businesses, but also e commerce operators. And within that we were identified and introduced to certain online communities that really supported these types of entrepreneurs. One of the most important that we’ve had a lot of success in not only sharing our journey alongside but also building amazing relationships with, it’s called the dynamite circle. There’s a podcast that can be a podcast that we’ve been fortunate enough to have our journey shared on throughout the years, but also we’ve just made amazing partnerships that form great relationships and have sourced a lot of our customers from this space. within that community, we start to get introduced to us based customers, so be ninjas, to Genesis stories that were really founded in Australia and the intention was at at some point to be a global business, but certainly not as early on, as we had the opportunity. So in these online communities and in networking with entrepreneurs that had a similar interest in travel, in particular, we were able to build out relationships and identify that the pain points and the service that was being asked for from these us businesses, was very much the same as the pain points and the services being asked of the Australian customers. So we began supporting us based businesses. And around three years ago, so august of 2017, I joined the edges. And within that time, I built a small regional bookkeeping firm, delivering very similar services to be ninjas. So I had my client base acquired, which in essence, helped accelerate our US portfolio in the time Since joining the ninjas we’ve almost now become a US bookkeeping and cloud accounting firm headquartered in Australia, as our client, Nick says, nearly swapped when I joined, we were about 33% international customers as we supported customers in the US, Canada, and then also Hong Kong limited entities. And in the time, in the three years, we’ve really focused our attention on marketing to US based entrepreneurs or expats that may be digital nomads, running online businesses, but traveling and operating those businesses out of a laptop in their backpack from an amazing beachside cafe in Chiang Mai, Thailand, which presented interesting opportunities for me as well Personally, I had spent my career in corporate I worked for HP, in various roles within finance and accounting and being in a role as a finance manager have a large team, but was faced with a difficult decision and task is laying off a third of my team. And then receiving that phone call when I was done that my decision was to either relocate to three cities that weren’t quite in the mix, and a Quick Fit for where my family needed to be. In terms of my having five children. My wife and I’ve been blessed. We had two children were surprised by triplets. So we went one to five kids. So really the support structure and the community that we have here in Tucson Arizona, really helped me guide to a comfort level and taking a severance from HP. But using that as seed money to start my own venture. Again, as I shared, I built that venture independently and without the support of a team and and working alongside be ninjas. Just really think found that an opportunity for me to partner in be ninjas that had already had built an amazing brands, an amazing team that could deliver a lot of the tasks that as an entrepreneur, you really shouldn’t be invested in doing. There’s kills and what I like to call superhero abilities that you as an entrepreneur uniquely have that could best support your business. And there’s those other things that tend to fill your time. And the reason they steal your time is because you either really lack the interest in doing them, you leave them as the least priority. So it’s something that is in a position where it just has to get done at that moment, and becomes very interruptive to you to get done. Those things that you really should be focusing on. So having an ability to partner in to be nudges, and to have an amazing team support those things that I really shouldn’t have been doing. How To be in a position where now united, we can really support and focus on growth within the company. It has kind of a little bit about my role in the company in my introduction, I started as a contract bookkeeper, I saw a job ad that had been posted by being ninjas. And I thought, wow, I’m building something. But I want to know how they’re building their business. And I was very transparent with Merrill at the time. And the conversations because we had connected on a podcast episode I heard her mentioned on research the company, and in doing so I have shared a comment on one of their blogs, just really congratulating them on the transparency that they had shared within their early blog post about the progress in growing their practice and some of the things that they had tried to scale their practice and one of the action items I said to myself In this post, I hope to find an accountability partner similar to you. And little did I know my accountability partner in a short time would actually be mirror the individual I was commenting to. So, in the early stages, we really weren’t together with the idea that our vision was so you know, what we felt an accounting firm should look like in supporting customers in this virtual world and in this online space, and we were consistent in our view that the only model that traditional accounting firms use is broken. You are not motivated to be any more efficient if you are paid by the hour. So we felt is let’s uniquely understand the pain point in the problems that our customers are facing within either the stress of working on their financial system, the lack of time they have to put the appropriate attention into doing what they know they should be doing correctly. But also, like, let’s not fault us for the skills and the knowledge and experience that we can bring through insights and advisory from our unique perspective and seeing hundreds of financial statements and talking to entrepreneurs each day. So those insights and advisory or you may be an entrepreneur that’s so uniquely focused in your particular business. Unless you’re someone that’s interested in joining masterminds and spending time outside talking to others, you might be so pigeon holed into the view of your business alone, that you fail to see opportunities that could be around you. And what we hope to do is share some of those insights and advisory based on our experience with other sellers.
Dhiren Bhatia 13:45
Oh, thank you, and Meryl and I have also spoken offline and I completely get your vision and I’m so inspired to have you on and that’s one of the reasons why I wanted to have you guys on the podcast is to share some of the experience, but you’ve given me so much to talk about and I want to go back to a few things that you mentioned. So number one, five kids. Wow, that’s unbelievable. I know you and I were talking offline, and we said, was a technical feat because the triplets are like a unit. And I love that expression. Because when you hear someone say I have five kids, all I can think of is all the amount of work that goes into that. But congratulations. It’s not easy, I’m sure. But you look like you’re having fun.
Unknown Speaker 14:23
So similar strategies to business really, is successful when you have the right team. And my wife is an amazing partner. We truly see each other as a team and this responsibility is unique to us. And we often hear from people, “I don’t know how you do it”. There’s no choice for us not to our children need to eat, they need to be fed, they need to be educated, they need to be loved. And they need to be felt as individuals like they’re the greatest human that is on this planet. So it’s our unique position to be that for them. So my wife and I really have made decisions that have allowed us to be present and engaged in our children’s lives and also supported each other. I made the decision, not independent of her input to leave corporate in a very traditional security that’s felt by having a paycheck, posted your account every fortnight or every other week and try something on my own, I could not have done that without her support. And in the early days, when you go from comfort in earnings that might be here, in the early days, having $250 coming in at the end after expenses from your one customer. Those are times where you really need to just have those open, transparent conversations and share with them what you’re trying and how you’re making these investments in networking or partnerships or the opportunities that you’re exploring to try new things. And I was fortunate through networking and through it My superhero ability, which is sales and connecting with people, I was able to establish some premium customers early on in my entrepreneurial journey. But then also, it is a lot of fun. I think the way that we operate business, I believe cloudscape is very similar. We operate virtually. So it provides a unique opportunity to provide freedom to yourself and your team members. And freedom is one of our core values. And what that means to us is really the freedom to be there at your child’s baseball, or soccer match or kindergarten graduation or to be at the theater performance to really celebrate enjoy their moments. I share with you early, you’re not going to remember the alleys spent on a podcast, but you will remember missing out on these unique events that your children’s huge opportunities for you to really be present for them.
Dhiren Bhatia 16:56
Acquisition memories you’re gonna carry for a lifetime and so are they And you’re so true. A couple of things I want to highlight there. So you talked about superhero abilities. And you’ve done a phenomenal job both as a parent and as a business owner, as a partner and been in just to really know your niche on that niche and do what is really important to you. I think a lot of other business owners, especially the ones that we work with, similarly, ecommerce business owners are in very similar position, they started a business because they have a superhero ability to either sell something or sell something that they’ve made. But I think where people tend to not do things correctly is accounting. And that’s because you said earlier, that it’s either they don’t enjoy it, or they procrastinate or the letter B. And I think that’s why I want to spend some time talking about accounting and the importance of accounting for an e commerce business. There is no doubt that accounting is needed, and it is important to the overall health of the company. But I want to hear from you on what are some of the things that an e commerce business owner whose superhero abilities to sell online, how can they get started with Accounting and what should they be looking out for?
Wayne Richards 18:03
Yeah, so we really share five key tips that entrepreneurs can use right now to set the foundation to really stress free financials. And the first is really set up a cloud accounting system we love zero. At the ninjas were exclusive providers only using the zero cloud accounting platform. I will share this only because we have one year to celebrate, but we are 2019, zero bookkeeping Partner of the Year. So every opportunity within these 12 months I have made sure simply to recognize team for the effort that they’ve put in and helping us earn this award. We’re not in it for the awards, but it is nice to feel validated. It’s almost like that metal you get from crossing the finish line of a race. You know, there’s all that hard effort that we didn’t get the training and the preparation and building up to achieving that goal. And this for us. is one of those moments and being an earlier firm in terms of our history, only now coming up on five years to have an opportunity like this, so early is something we certainly salary. So I’ll share with you the five tips. Step one, set up zero, but also set up a receipt management system. So, hub dog is a great solution hub dog actually comes free with zero and the way they interact together is as an e commerce seller, you get a lot of paper statements, you can simply have email directly those statements, or have a dedicated email address that’s set up to receive these statements. Simply drag and drop from your computer or use a smartphone to snap a picture and upload these statements to this receipt management solution. that then can add to the efficiency and also accuracy of the entry of those transactions into a cloud accounting system like zero because they interact with one another the second time Step is to make sure you’ve got your flow banking in place. So the reason we suggest these cloud accounting systems over a paper based system, or a manual entry Google Spreadsheet sales spreadsheet is that they provide an opportunity for banks. Now fakies provide an opportunity for your bank to seamlessly integrate into your accounting system, so that the transactions are automatically fed. So that data entry and input and the opportunity there for error from coding a 70 instead of a one has been removed. But also the unique thing is when you have transactions that are fed into your accounting system, the efficiency of those systems also allows you to set up automated bank rules. So as an e commerce seller, you often have software subscriptions that are just auto recurring. Every month, it’s the same rate. You’re going to pay the same monthly fee, month in, month out. So you won’t For those transactions to consistently be recorded into your accounting system so that one month you don’t have your clay vo subscription posted to marketing, where the next month you have it coded to software subscriptions. The next is really get clear and consistent with your chart of accounts. Now Chart of Accounts is a counting term. But really simply what that means is this is the Rolodex or the coding sequence that you’re going to use to organize your incoming sales and your outgoing expenses. So I gave an example of software subscriptions, that may be one line item within your chart of accounts. It’s larger areas that you’re going to group, all of those transactions that are posting in from your bank accounts and credit card statements. Now the fourth step is to set up and schedule your bookkeeping rhythm. Now it’s important that you actually take the time put in your diary. For your calendar, a time in the week, that you’re going to reconcile these transactions and a time once a month that you’re going to set aside to review your financial reports. And that’s Step five, generate and understand not just what your business reports are telling you, but also what business insights can be pulled through the relevant reporting most most needed for you to feel that peace of mind and comfort to know where your business stands. So when you do these things, right, you’ll get never said results and really transform the way that you have an ability to base decisions on data, rather than just run your business based on hunches.
Dhiren Bhatia 22:44
So many amazing points in there. And I think a lot of what you talked about is true across the world doesn’t really matter where you do business. And like you said, some of these online systems make life so easy. So I just want to point out that I know in Dubai, where we are based, a lot of the Banks already integrate with zero bank like Nbd banks like bank bank. And as the same across the world, I think right in Canada, the US, all of these banks have already got set up feeds directly that connect with zero. And then you can set up automatic banking rules that can really take off a lot of that pressure. And as you were talking about that, I’m thinking about my bookkeeping exercise, because I do my own bookkeeping so far for cloudscape. And you’re right, I have the exact same rules set up, I don’t have to pay a lot of attention to these because these are exactly the same transaction, the same amount that happened every year, and they’re set up on autopilot. So very little bookkeeping for me to do. And the last one that you just mentioned, which is set up a reconciliation, rhythm, that is so important, anything else in life, if you have the discipline to put it on your calendar and get it done. On those days, things become so easy unless you want to wait till your VAT is due or your taxes are due and you’re then sitting there and spending time and minutes and hours trying to reconcile the last minute. It’s not pretty. So I’m so glad that you mentioned that reconsideration and Rhythm is of that requisition is so important. So thank you for sharing those tips. Now, I know you mentioned earlier on that you recommend zero but I think a lot of these can also happen in QuickBooks. Is that accurate? That’s right. So
Wayne Richards 24:13
Xero’s fiercest competitors, QuickBooks Online. So we would recommend if you are using the QuickBooks suite is really easy online product. Also, the benefit is we operate in a space where you want access to your numbers at anytime, anywhere you have internet access, and these cloud based solutions provide you that you don’t need to be specifically set at someone’s PC was in their office to access your books, you have that unique ability to pull up your smartphone. And you may be in a cafe waiting for your order, but you can quickly peek in and see the snapshot of where your business stands in terms of its financials.
Dhiren Bhatia 24:52
Right. So irrespective of the system that you have, it’s really important that they have a cloud based system that can make their life really easy. Like you said, you could be doing this anywhere from your phone Thank you for sharing those again. Congratulations for being Partner of the Year. It’s a phenomenal achievement. And that’s amazing.
Wayne Richards 25:08
Thank you so much. We are so pleased to hear the award.
Dhiren Bhatia 25:12
And the other thing that I want to point out to our listeners is while you were talking about that medal going on your neck, I couldn’t help notice the poster that you have behind you. You’re a runner, and you’ve completed a half marathon. I can see.
Wayne Richards 25:23
I have been I’m not sure what’s behind me now. But yeah, so I had been an endurance athlete before we went from two to five children. So yeah, I’ve run a number of marathons and have raced in a number of century bike rides as well. One of my lifetime goals is to continue to grow a business while completing an Ironman triathlons. So as you guys competed in each individual element, but I’ve never put all three together. So in time, I’ll be able to achieve that
Dhiren Bhatia 25:55
was an amazing ambition and we wish you the very best and I’m certain that we’ll be on your way to do it very soon. Soon. That’s fantastic. So, I want to ask you also, when you’ve talked about the five steps to get started, are there things that you can share that a business owner should keep doing when they already got the basics out of the way?
Wayne Richards 26:13
Yeah, I think for me, it’s important, we advise a lot of potential customers that set up a discovery call with us that it’s important for you as an entrepreneur, in the early stages of business to do the bookkeeping on your own for a little bit of a period of time, because as an entrepreneur, and as a CEO or founder, you need to understand where every dollar is coming in and going outside of your business. Now, once you are clear in that understanding, then we believe it makes sense for you to move from yourself towards a bookkeeper. And really for us, there’s really three considerations we have to hear about in regards to when is a good time for an entrepreneur to make that move to hire an outsourcer How to champion like ourselves. Really The first is their accounting experience and their willingness to learn financial skills. If you’re someone that just is not in your wheelhouse or numbers just never have really been your thing. And you don’t have that deep seated interest or willingness to do the research to understand how to do your books regularly again correctly, then it might make sense to outsource. The second isn’t available budget for hiring someone else to take care of it for you. If you have the resources, and as we discussed earlier in your superhero abilities are not unique to organization and consistency and maintaining discipline against that for keeping rhythm that it might make sense for you to use that time to go out and generate thousand dollars an hour on sales, as opposed to pay an accounting provider. A much lower equivalent hourly rate. For the same time, and that kind of goes into a third, so you lack experience, you add the budget, but then also many entrepreneurs do lack the time, to me invite a sense for me to outsource something like content writing, because you know what, it’s a skill that I don’t have much experience in and my time to learn it, I feel there’s more value in being an expert, and using my time to be at my children’s events, and to use that time spent in ways that are more meaningful to me, but still allowing for the expertise to cover those known deadlines and requirements that I know are important.
Dhiren Bhatia 28:44
Indeed, so you actually segues very well into my next point, which is hiring an outside company to help you with bookkeeping, and you’ve actually hit the nail on the head in the key three reasons why ecommerce business or generally an entrepreneur should look at giving that task to someone else. What are some The question that they can ask someone like an outsourced bookkeeper to make sure they’re the right fit for each other.
Wayne Richards 29:06
It’s really important nowadays because of the opportunity for firms to so particularly niche within a certain industry to make sure that your accounting provider understands your industry. There’s unique pain points and problems that need to be addressed for e commerce sellers, that are not the same problems and pain points that need to be addressed to marketing agencies, as you are more productized service providers. So you want to make sure they have an in depth knowledge of your industry. You also want to be sure that they have experience supporting customers that you see as being like yourself, the opportunity and we shared a little bit about this earlier, the unique perspective that we have, as the provider of choice of customers is that we can share with you some of the success stories and some of the challenges that other entrepreneurs may have faced making the very same decision that you’re looking to make in your business. So we not only act as the accountants helping you address the financial reporting, which is really meant for the audience of your government tax department, but we also help support managerial accounting, which is a little bit different. And it’s usually a concept that it’s not as clearly understood. So managerial accounting really provides a business intelligence, that data points that you can use to make more insightful decisions within your business. And one that you probably know quite particularly is things like inventory planning and forecasting. It’s not a very unique skill, that many accountants have had the experience and support. So it’s important that you understand your key points. within your industry event, your counting provider understands those and has had experience. So you may ask for them to mention case studies with customers they may have worked with that have supported this or take a look online. Many of us now we’re in a position where no advantages we tend to market through education. So we’re often asked to help share guest posts on certain partners, blogs, such as Google, the partner that you’re looking into, and if they have any experience or mentions across certain topics that you’re most interested in getting the support. And then I said the last one is spend some time on the phone or in a video chat. Make sure you get along. This is someone you’re going to schedule time with. We often see it it’s not a surprise. The most successful customers in our business are those that we often meet at industry events and have coffee with and chat a whole lot more About the life that we do their business because for many entrepreneurs, their business is simply a vehicle that provides them the freedoms that they want in their life. So the ability to travel, to see interesting places to be a part of their children’s lives, to have the means to provide for their families, unlike they may have had opportunities with in the traditional corporate world. So I’m interested in hearing those stories and being a part of seeing how we can help them align those goals with the numbers that they’re seeing in their business.
Dhiren Bhatia 32:37
So true, I love what you talked about that is that the business really is the vehicle for them to live their dreams and their passion and at clouds could we believe the very same thing in fact, we keep seeing it often that you want a good system so that you can unchained the business owner from the business and the business owner can do all the things that they started out the business in the first place to live the dream that they wanted. So important at the end Don’t think you can accomplish that without good systems. And big part of that is accounting and bookkeeping. I want to also ask a question about something that I see happen very commonly in the space that we work within. In terms of inventory based businesses, ecommerce businesses. Oftentimes, I see that business owners will confuse inventory management and accounting. And I’ll meet a lot of people that say, Oh, well, I have an accounting system. That means my inventory systems are fine. Do you have similar experiences to share? Or do you have any advice for those kinds of business owners who have not been able to distinguish between the two just yet?
Wayne Richards 33:34
I think what needs to be understood is inventory, in terms of accounting is simply a line item number. But there’s a need to manage that more appropriately, has significant impacts in your business in terms of your ability to have the resources to sell to potential customers, it can handcuff your business, not making a large enough investment in the appropriate tools. To help you effectively manage inventory control, and also forecast the restocks that are needed to support your growth projections going forward. So I often talk about five ecommerce accounting mistakes, and among them is inventory control, simply because cash flow planning and inventory go hand in hand. inventory is often one of the largest areas of scans for these e commerce operators. So in inability to appropriately spend, or know how much to spend at what times is so critical. So they’re very different, because in the accounting perspective, inventory looks like any other line item, but the complexities of managing the details Ledger’s behind that line item are its own industry. And I’m glad to be in a position to have to having the conversations with you and finding a partner that understands One of the tools but a number of the options that are available to sellers.
Dhiren Bhatia 35:05
Absolutely. What I want to get to is the fact that you’re very succinct in saying that inventory is merely just a line item. But the planning and the forecasting and research that goes into making sure that you have that all accounted for is so critical. A simple example, that I see a lot of business owners misstep is landed costs, for example. It’s not something that they know of. And it’s just because the system doesn’t have it, they don’t see the importance of it. But there are things like these that can become very apparent, and become very important when they have the right systems in place so that the soil becomes automatic. Thank you for specifying that I thought that was really important.
Wayne Richards 35:44
And just to add on that a second, it’s something that will become most critical. If you’re in a position and your goals are to exit your business through a sale alongside your financials. The broker is going to look for to you to intently understand your landed cost. We have conversations with numerous brokers and they’ve shared with us templates that are required requirements for potential sellers to bring to them to do the due diligence that they do to feel comfortable in listing those businesses on their marketplaces, an understanding of your landed cost is one of those detailed Ledger’s that are asked for. So it is so critical. And my suggestion is always be proactive in understanding that it finally plays into achieving the highest sales price that you can get from your business. But also, it’s so critical to understand your landed cost because simply if you’re not understanding your contribution margin, some call it your gross profit margin, you then lack the understanding around how much fuel you have available to then spend on there. The second most important spending your business and that’s covered requisition, most do that through paid ads. So when you see within e commerce, a lack of understanding of their contribution margins, you can find yourself in a state where you’re putting money toward progressing sales in a product that you might not have priced appropriately, and may actually be scaling yourself out of this.
Dhiren Bhatia 37:20
So true. Absolutely. You can see what I’m vehemently nodding my head as you’re speaking because these are such key items that a business owner should keep in mind. So thank you for sharing those. One question that I want to ask you as we were talking about outsourcing bookkeeping agency, do you recommend putting in place some sort of KPIs or how would that relationship continual growth?
Wayne Richards 37:42
Yeah, absolutely. I think it’s critical frauds pretty well as to understand those numbers that they intently want to be comfortable with to feel secure in your business. There’s no reason to feel stressed about your business financials. If you are aware of those red zones in your business, then you can take action to make them better to make those investments and turning those numbers around. So absolutely, there’s many. But we love to really look across these top nine financial metrics for e commerce operators that they should review on a monthly basis. At a minimum, I know some that they’ll have detailed dashboards that they have a unique opportunity to look at this every day. But the top one is a vanity metric, but it’s important to know where your store stands in terms of sales and revenue. I think more importantly than that, it’s important for you to understand as we alluded to a little bit earlier contribution margin. So what amount of funds are you actually receiving after your landed costs for those units sales and beyond that we take a step further than your profit. Your profit is simply that contribution margin, less your ad spin operating expenses, we believe in the growth equation that was shared with us by our friends at common thread collective. They shared the growth equation for e commerce as being a simple formula of visitors to your site times conversion rate, times average order value equals your revenue. So for us, we just feel it’s important for you to understand those three metrics, in addition to your revenue. And they’re found by making sure you have Google Analytics set up on your Shopify store with the enhanced e commerce option. And then creating simple dashboards or having a VA responsible for sharing those with you. You can see very quickly trends. And when you see trends, then you need to look deeper into what actions did we take or get into Facebook groups or share with others? You know what you’re seeing in your business. I know, we happen to be a member of a number of e commerce folks masterminds where you’ll see owner say, Wow, I’ve seen two weeks of increased visitors but a lower conversion rate you see, and often entrepreneurs will share suggestions. Wow. Okay. Did you do the heat mapping on your site to understand your conversion rate? What are your follow up sequences look like. And often when you know where to focus, then you can take and put forth in 10 goals around making those impacts to those areas, because it’s overwhelming to run an e commerce store. Now, there’s so much that you can be involved with, but what you want to do is look at those areas where there’s the largest gaps, focus on turning those around first, and then go about picking off the next priority within your business. The two I haven’t touched on cart abandon rate. It’s interesting that on average about 70%, we’ve seen a stack here of the average cart abandonment rates. commerce businesses 70%. So it means seven out of every 10 shoppers think about buying something, and ultimately don’t. So what are you doing to follow them up to ensure that they do become customers and that you are presenting your product in a way that makes it so appealing for them to get to that cart and and actually check out and then also refunds? I think one line item that folks fail to consider, especially around December, January, is the customer refunds the return rate, because you’ve seen the cash come in through these black friday offers and deals and these months, we typically see the largest volumes of sales in your business and you failed projects, but that impact might be from your return rate in the following month. So if you’re making decisions based on what you think you’ll see in sales, without that money coming back out of your account, you may be in a rough position, where you lack the cash flow to support those calls, sizes.
Dhiren Bhatia 42:03
Yeah. So right, especially during holiday season, during festive occasions, there’s a lot of customers that don’t want what they bought. And it’s important to keep an eye on that number. Thank you so much for sharing that been really, really nice to have these tips. And I’m sure everybody who’s listening is probably looking for a pen and paper, just to make sure that we listed all of these things down. I want to go back also a few steps to your own journey at be ninjas. Talk about as an entrepreneur as a partner there. What are some of the challenges that you guys overcame? I didn’t get to ask this early. But I think there’s a lot of value in you sharing some of your personal story and how you overcame those challenges. Because there are a lot of other business owners who probably are in similar situations.
Wayne Richards 42:45
I think early on, there was always the desire to go full time in the business but for a lot of entrepreneurs, especially within the world of e commerce, we see this often. It started as a side hustle and the confidence to make that jump full time often has a lot of other factors that come into play. So you’re looking at making those investments and you’re trying to decide, do I want to teach it best in the business and we use this cash flow toward marketing or am I in a position where I can afford to pay myself full time in the business. So some of the challenges we faced early on are much like your early e commerce businesses where it’s making that decision around when is the right time to cut the consulting customers that you might have that are pulling your time away from the business and also making the move in, but then also hiring decisions. We our business operates because of our ability to source the best talent that can support our customers that we can possibly find. And some of the growing pains were identifying where we were going to source that town from. early on. We were hiring contracts. Mountains. So folks that could offer us, you know, 510 hours a week. And we made a decision really early on that we were going to be a company that put people over profit. That doesn’t mean we’re going to just spend recklessly. But if we identified a candidate to clock certain strengths, or certain leadership capabilities to the table that we saw as gaps within our company, we’re going to look to find a position and create a role for the company. So many of our leadership team came on board in that capacity. Many of us are parents, and we had opportunities with a number of key leaders in our team that had amazing careers, and had really stepped outside of those careers, to be full time mothers, to their children. But within that they strive to do interesting work and they were looking for opportunities that would challenge them professionally. And we were in a position to provide that to a lot of folks. So we hired them on outside of having a true business plan. That’s When we achieve this much revenue, we’re going to bring in our customer experience manager, or we’re going to bring in sales coordinator. We just through our networking efforts in and great timing found resources and made the role available to them and made the offer alongside our service delivery team. We started using in country resources. So in the US, we had us content that would have delivered support. And we started seeing more and more customers using virtual assistants and best shore locations and lower cost areas throughout the world. And we made a decision to trial, some resources across different areas, some in Eastern Europe, some in the Philippines, and test if that was an option that would provide us an ability to maintain the customer service that we are delivering to our customers, but also operate in a way that we are They’re not limited to the best talent available at that time you put up the job posting that limited geography, that you may have made it available, but look to those resources really across the entire country, and then across the world. So we’ve been able to build now a team of about 10 full time resources. In the Philippines. We have two supervisors, manager and cloud accountants within that team. We have team members in Eastern Europe delivering cloud accounting services, as well as some operational and internal managers in Spain, the UK, of course, in Australia as well.
Dhiren Bhatia 46:43
That’s phenomenal. You know, the one thing that I feel a lot of people who are listening might say, well, this is a cloud accounting business. So it was very easy for them to hire remote offshore workers. But I think you said something in there, which I thought I want to highlight. It’s not about the model of the business to some effect. Yes, but It’s actually the decision and the drive of the owners and the entrepreneurs to say, you know what we can indeed bring on talent outside of the country, despite the business model being a non online business, because as long as you bring the right people, it doesn’t matter where they’re working from as long as they can get those things done. And if you’ve been able to highlight exactly the key tasks for them, they can be done from anywhere. So it’s not really the business model. I just wanted to highlight that one more time.
Wayne Richards 47:27
Absolutely. It’s been an amazing test, right for many businesses where the unique side we’re recording here in June of 2020, we’re in the midst of the COVID endemic and it’s forced many businesses to operate online and find ways to communicate virtually. And this has been a way we’ve operated since the inception of our company. So for us, it was not new to operate and have communications via zoom chat in to deal with customers through email or other online communication forums such as slack But what I’m interested in seeing is the ability for those progressive companies to use this test period to implement some of these things, but go beyond finding those resources within your town. I can say there’s amazing opportunities to be seen in leveraging talent from lower cost areas of the world like the Philippines, like Central America, like India, within Eastern Europe as well. And if you’re clear in what your expectations and requirements are, and you have a recruiting and hiring process that establishes checkpoints to ensure some of the challenges we found early on that we learned that we needed to implement were, make sure you have provided internet test results. What we do is we have set up trials zero files that we have candidates work through to assess their technical ability, but we use Luna video, so we in fact see their Ace on the screen. And they narrate as they’re working through this test file, and sharing with us their thought process. The reason why I’m coding this to this particular account code is because I’ve researched in Google. And I found that clay vo is email marketing software, and decided to put it in a spreadsheet. So we’re able to see, not just the time it takes them to complete a task. But we also hear from them and get a feel for what their communication style might be like, is their English clear. If we’re looking for someone that’s going to have an opportunity to speak to our customers, we want to make sure that there’s an ability for our customers to clearly understand their communicated language. We also have to email us their results so that we see their written communications. And we’ve just been in a position to learn how we go about utilizing this amazing resources and talent that’s available to us throughout the world, but doing it in a way that serves past our customers, but also us as a leadership team in terms of cash flow perspective and benefits that come from.
Dhiren Bhatia 50:07
Yeah, absolutely phenomenal. I love some of the tips you suggested. And even as simple as sharing your internet test results, because some of the most obvious things sometimes can go on observed. I love your idea of having the record themselves while they’re doing the work so that you can see their thought process and you can see the gears turning in their head to figure out how to solve a problem. That’s amazing. Thank you for sharing that was a phenomenal. I want to start towards wrapping up and there’s a couple of questions that I want to ask you. Number one, you mentioned earlier, the seven day startup and I think every entrepreneur should make reading a part of their daily regimen. Do you have any books that you recommend for entrepreneurs and for business owners?
Wayne Richards 50:49
So there’s a few I’m currently reading and I’m motivated, simply because I feel as though Venus is in a certain place in the business where Yes, we deliver CloudFlare Adding services. But I also feel as though we’re almost creating a new category within the level of support that we provide in terms of our insights and advisory services. So I’m looking at us more as growth coaches within e commerce businesses. So I’m reading the book now, play bigger is the title of the book. I’m getting a lot of motivation from that. I did enjoy just more from a technical aspect because I’m not someone in the field of digital marketing, but I did enjoy the ideas and the examples presented in Sabri Susie’s book sell like crazy. That was one I really enjoyed. We’ve implemented and I’ve had a lot of success with the entrepreneurial operating system described by Gina Whitman and his book traction. I think that’s been a core book that we’ve had right now off the top of my head. That’s about all that comes to mind. Another Gina would be booked That has been a favorite amongst that leadership team has been rocket fuel. It was important to me to learn that it was okay to be a dreamer to be a visionary, to be the one that says I think the industry is going in this direction. And these are the types of services that we need to deliver as a company. And understand that it’s okay not to be the one that has to then create the project plans, identify the team required and the deadlines that need to be met to deliver against that vision. So I exact as an integrator that supports me within the key, and we try to understand that within all of our leaders, is this a leader that’s a visionary, or an integrator, and where we see the gap, position them alongside another team member that might offset that role, so that as a collective unit, you have someone that says, I think the company needs to go in this direction, or as a sales organization. I think the sales are going needs to go in this direction. And behind that visionary, you have the integrator that says, Okay, here’s what it’s going to take to get there. But where’s he going to fit in the priorities of the other visions that you shared with me? along the way? Is it going above this task we’re currently working on? Or is this something we can look at, and focus on our next six weeks sprint, so it is important to understand those.
Dhiren Bhatia 53:26
Firstly, thank you so much for sharing the books. And second, again, we come back to that recurring theme of finding your super magic powers, and then finding the people that complement the powers that you don’t have. So true. I think that’s the success behind any business, right, finding the right people who can complement each other well, and bring a great deal of superpowers.
Wayne Richards 53:44
I think that’s exactly true. I mean, you mentioned something that I speak to often it was shared with me very early on, actually was my father in law. Who mentioned this to me. In the early times. When I met my wife and we were dating he said, the success in your life will be defined by the people you meet, and the books you read, and for me, I hadn’t been well read at the time. But I’m not allowed to really enjoy books and learning. But I really believe in that I think I reflect on the success I’ve had in my professional career and in my life. And it’s very much to be aligned to the people I met at certain times. And the opportunity I had to be in that same room with a particular person. And really, that spark in that connection was felt, and the opportunities that came out of that have really been shown for me to be true. And then the books that you’ve read, I think it’s important to understand that business is always evolving, and you need to be evolving with it. So without personal and professional development, in reading, but also implementing those tools that you’ve read about are going to be the wage success in business. So it’s funny because I often credit him for that in podcasts. knew I speak but I just remember, I don’t quite thank him enough in person. So I’ll take an action item from this call to make sure I’m able to share with them that is continue to come up in my career in life and it’s something I’m thankful for and sharing.
Dhiren Bhatia 55:15
Yeah, and maybe a case of beer and
Wayne Richards 55:17
little bourbon or red wine. Absolutely.
Dhiren Bhatia 55:20
Absolutely. One last question before I ask you if we can find you. What does aggravated entrepreneur mean to you?
Wayne Richards 55:29
I think it’s being in a position to be open to meeting new people, and reading books and applying those networking, those tools that you’ve read about into your business. Also, for me, I reflect on two words, that five years ago I looked at as my theme across my journey into entrepreneurship and that was valid and growth. And I think ballads, for me is really meant an opportunity to build a company that I’m proud of but also be a dad. That Present and engaged, and leading my family as a father figure. And then growth, it’s just always growing. It’s a core value that we share at the edges. But for me to just simply do the same thing day in and day out, it’s not enough. I always want to be leveling up and I really apply by the principle of being everyday better. I think you can only do that through growth. And that growth often comes in really researching and understanding where you have weaknesses and finding those resources to help you level up.
Dhiren Bhatia 56:31
Love it. Thank you so much for sharing. And finally, when where can people find you if they want to speak with you, look you up? What are some of the places they can look up so we can add them in the show notes?
Wayne Richards 56:41
Absolutely. So if you’re an e commerce entrepreneur, we have a free download on our website, zero e commerce toolkit that you can find at Eden edges comm also share with Dhiren, we have a guide to ecommerce accounting that provides you a lot of our insights and knowledge to getting started or understanding how accounting can help benefit your ecommerce business a little bit better. I’m on LinkedIn, when Richard available to chat to anyone that reaches out via message, I enjoy this the best thing for me the role and having an opportunity to connect with people. I’m in a position within our company to handle a lot of our sales calls. So to hear the startup story, and to hear really the energy that’s behind these entrepreneurs, and understand the tales in the road that they took to grow their business has just been unbelievable. I love having conversations with entrepreneurs or people. So if there’s anything that you need, jump on LinkedIn, let’s connect.
Dhiren Bhatia 57:41
Wayne, thank you so much. And it’s a pleasure again, to have you on the show. I hope that we can do more of these and share some more of your amazing knowledge and experience.
Wayne Richards 57:50
That’d be awesome. Thanks so much for having me. I appreciate your time.
Dhiren Bhatia 57:56
If you haven’t already, please consider subscribing. To the elevated entrepreneur show at elevated entrepreneur.fm, or wherever you’ve been listening to this episode. And finally, if you would, please do leave the elevated entrepreneur podcast a review so that you can make it easier for other entrepreneurs to find this show. Thank you much love, and I’ll see you in the next one.