Time to embrace technology

Straight-talking GoFi8ure executive director Lisa Martin has concerns about an ongoing issue that prevents businesses from reaching their potential – an aversion to technology adoption. It’s time to invest in the tools and the training.

ou can sense the frustration in Lisa Martin’s voice. She doesn’t mince words. Many business owners are still “asleep at the wheel” when it comes to embracing new technologies that could vastly improve the performance and efficiency of their business, she says. 

It is 2021. Why are many businesses stuck in the dark ages?

If you’re in business there are some absolute non-negotiables, Lisa believes. Yes, you must have a solid Internet connection, preferably high-speed, and the ability to work from anywhere. 

It’s imperative you have a responsive IT provider, a set of
cloud-based software apps to manage the likes of customer relationship management (CRM), file backup and storage, email,
and the all-important accounting software linked to your bank feed – not to mention an expenses and receipts file that integrates with your accounting software so there’s no double entering. 

“It’s important when processing invoices and bills that figures only get entered into the system once,” warns Lisa. “When you’re running a business you need to be fast, efficient and responsive. You can’t afford any downtime searching for files, so all information should be at your fingertips, including your accounts.”

She recommends Xero for simplifying the accounting process, and making sure that every entry is coded promptly – not the night before GST is due. 

“Do it once, do it right and do it immediately,” is her advice. 

Cybersecurity and insurance are areas of concern too. “I’m still surprised at how many business owners don’t have public liability insurance or professional indemnity insurance, or even have their premises covered,” says Lisa. “Insurance is not a set-and-forget scenario – owners should meet their broker annually to ensure everything’s up to date.”

If you’re responsible for running a business, generating money and paying wages, you can no longer be negative towards technology and just hope somebody will do things for you, she adds.

“You have duties and responsibilities, and you must front up to them.”

Judging by the disappointing take up for recent GoFi8ure education classes, Lisa queries whether many people want to become better directors or shareholders or learn skills around subjects such as conflict resolution or employment contracts. 

People say they’re too busy just doing the basics; are held back by the fear of the unknown or simply not prepared to learn about new technology and so stick with the status quo. Lisa calls it “below the line thinking” and questions whether people who continually take a negative view on new ways of running a business should remain in the game.

“If you’re not invested in putting in the effort, learning from others and learning about the technologies available, then perhaps you should go and work for somebody who is.”

Keeping track of inventory is a particular failing for many business owners, Lisa points out, with owners reluctant to put in systems or processes to manage inventory properly. “They don’t even want to be shown how proper systems can save them time. It’s so disappointing.”

To succeed in business you must adopt all the tools technology delivers and get proper training from day one, explains Lisa. A single ledger that can be instantly accessed in real time by the business owner, accountant, advisors, insurance provider or bank is absolutely vital.

A cloud-based payroll system is also mandatory – even if a business only has one employee. It’s a small investment that makes all the difference for accurately calculating annual leave.

Understanding the basics

Setting up a ledger correctly requires business owners to at least understand the basics. Some questions GoFi8ure asks new clients include: How do you earn money? What do you sell? Are you GST registered? What’s your tax structure? Do you understand the difference between gross margin and net profit? 

You’ll need the answers to all those, and more.

There is a lot to factor in when setting up the accounts too. “For example, businesses can’t differentiate revenue and direct cost of sales from overheads,” says Lisa. “Many also don’t understand the difference between gross margin and net profit.”

Measuring the effectiveness and efficiency of the cost of sales and salaries or wages is vital. “People don’t understand that they’re paying a big percentage of their overhead costs on each individual staff member, including annual leave, sick leave, domestic leave, Kiwisaver, downtime, training, and so on. So they must be trained properly on their software tools to see where they’re bleeding money or actually turning a profit.

“Capturing your time and direct expenses so you can email your invoices out quickly is also vital, and those invoices must include essentials such as terms of payment and bank account number, followed up by a statement.”

Technology training should also cover how to get supplier invoices into your system and then extract batch payments so you get paid, as well as get your payroll system automated with your accounting system, and secure your accounting and payroll tools with secure logins, passwords and two-factor authentication.

“Never give your login and password to anybody else, because that can’t be tracked on any audit trail,” says Lisa, “and the same goes for your bank account details.”

The road to efficiency

Business owners must utilise technology to boost efficiency. Lisa says retail offers many great examples involving inventory, merchandising, delivery and various apps or software platforms that feed coded information into Xero.

But that coding function may only be capturing around 70 percent of data, she says. 

“If you’re selling items, you’ll need software like Vend that hooks into Xero and generates monthly reports. This tells you that your revenue is all correct and reconciles to your cash register; whether your inventory has moved through the system and been purchased, on-sold or is still on the shelf; and at any time you can value it all and reconcile your balance sheet.”

Payroll software should be linked to Xero in the same manner, so each month you know how much you’re earning and paying, what your overheads and liabilities are, and what profit is left over for drawings.

Staying totally on top of your finances in such a way will also raise any red flags, such as theft.

Lisa’s final piece of advice for business owners, regardless of how well they’re embracing technology, is to invest in some continuing education. To stay agile people must brush up on accounting and on different ways to earn revenue, she believes. They should become au fait with digital finance, micro-finance, cryptocurrency and all facets of financial management, as the landscape will be very different in five years’ time.

“Learn new things, consult with digital advisers and be prepared to pay for expert advice. Knowledge sharing is the key to growth. You can even learn a lot from those who’ve failed before you. 

“Your own people are also one of your biggest technology assets. It helps if they’re keen to champion a new tech resource that they can knowledge-share with their peers and with your customers. Your customers will then see something transformational, not transactional. You’re adding value to their lives and they’ll tell ten of their friends, which results in more clients, more revenue and happy shareholders.”

Your team can be your biggest champions, Lisa says. “So get your employees excited about technology.”   

www.gofi8ure.co.nz