Mentor Sophie Andrews is the award-winning director and owner of the Accounts Studio, an accounting firm that works to build profit for creative thinkers.
Mentee Kate Crews is the founder of The Nursery, an online store specifically designed to help busy people buy beautiful baby gifts.
They met to discuss small business marketing and social media as part of our beautiful business campaign.
What does it mean for a small business to be ‘metrics driven’?
Sophie: “A lot of business owners I speak to as an accountant naturally get caught up in the day-to-day operational running of things. They find themselves pulled in so many different directions that it becomes hard to find the time or energy to focus on the financial side.
“When we can guide those people to easily identify, understand and care about even a few metrics in their business, it makes a massive impact to their profitability and cash flow. You see the moment of realisation: these numbers mean something. They become excited about what can be achieved by being across their figures and tweaking a few key drivers, and take proactive steps towards the business or life they want to create. That’s what it means to be metrics driven.”
Kate: “As a small business owner, you need to understand so much that’s outside your experience. Before I met up with Sophie, I wasn’t confident about what numbers should really matter to my business, and when the priorities would change.
“But I think a big part of finding success as a small business owner is about having the confidence to seek out the right people with the right skill sets to help you on your way. I’m no accountant, but that doesn’t mean I can’t start to understand more about my own metrics from the Accounts Studio.
“I’d also say that as a small business owner, you need to question every regular outgoing or direct debit you commit to and ensure you’re using the systems you’re paying for to the best of your ability – or move on. I could tell there was so much to Xero that I wasn’t getting out of the platform, so the focus on my metrics helps me make more of my monthly investment.”
What are the key financial KPIs for small business?
Sophie: “The KPIs you want to keep an eye on as a small business owner very much depend on your business. As an example, I’ve recently been consulting for a company in the design space and we identified that their biggest expense is staff. For them to be profitable, it’s important to track and measure staff profit and get an understanding of where people spend their time. But if you’re an online store, it may be more important to track your inventory first and foremost.
“If you’re a small business owner without experience in this area, I really recommend you seek advice from someone who knows about the key metrics you can track. Pinpoint just three to five key metrics that you can work with. These metrics might change over a period of time, but you set yourself up for success from the start.”
Kate: “Since talking with Sophie, I’ve decided to seek some advice and training in this space. I want to make sure that the setup of my Xero account – and the way it plugs into the stock information from my website – has been done effectively. That way I can get a solid grasp of my business metrics and know how to break them down in a meaningful way. Once you have the setup optimised and you know what you’re looking at, generating the report is child’s play.
“I’m going on holidays soon. I intend to read Sophie’s book, write down all my questions, then reach out to get everything set up for the next financial year. I already have access to so much more information than I had before, and I can’t wait to see the changes I can bring to my business in FY19.”
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