How much does it cost to hire an accountant for a small business?

Even in your average small business (1-3 employees, less than $500k turnover) there will be a broad range of options for accounting and finance including getting specialise setup, tax structuring advice, finance systems and processes together with the everyday bookkeeping and accounting functions.

Is an accountant needed for a small business?

An accountant can offer comprehensive startup and ongoing small business advice, while making sure tax compliance is prepared and filed with the relevant authorities on time.

What is the role of an accountant in a small business?

Being a business owner can be a tough job, and it’s good to have a trusted advisor to lean on in times of complexity or uncertainty. An accountant will be able to help you navigate your business through these times, and help keep compliant with relevant tax authorities.

Xero is an integrated accounting platform that can complete all small business invoicing, receipts, bank transactions and reporting for the IRD. Being cloud based means your advisers can have access to your information in real time.

Is Xero Accounting any good?

Xero is a great tool for small businesses as it gives you real time access to the financial data of your business - information we couldn’t imagine being in business without.

What are Unit Economics?

In startups you don’t have stable financial statements to make decisions with based off, nor a lot of history to compare with. Assessing a startup based on sales growth or profitability can often be meaningless when trying to make decisions on where to spend your next dollar, cut costs or employ new people. It’s often necessary to break down the financial statements into relevant, useful, actionable data.

Unit economics involves breaking down the financial numbers to a per unit basis rather than a simple dollar value. A unit doesn’t always have to be a customer, this can be per salesperson, company employee or even events such as trade shows or individual contracts.

An example of Unit Economics is Lifetime Value of a Customer (“LTV") and Cost to Acquire a Customer (CAC).

LTV: Average Revenue per Customer / Customer Lifetime

CAC: Sales & Marketing Costs / New Customers

In a successful business the lifetime value of a customer will be many times the cost to acquire. These metrics can be important to monitor in the early stages of your business to determine if your business model is correct, and that the assumptions you make will leave to eventual profitability.

Unit Economics provides a smell test for your business model.

Board members who are not working in the business day to day need reassurance on at least a quarterly basis that the business model strategy is financially viable. Breaking down your financials into a per unit basis helps your advisors to see that although you are burning through cash, you will eventually make lots of money.

Unit economics are also helpful when building your 3-5 year forecast model. Year on year revenue increases of 100%-200% cannot be assumed just because you will be in business next year. Revenue and costs need to be backed up with at least one level of detail. Using Unit Economics in your forecasting process also allows you to determine where you went right/wrong once actual financial data is available. You can determine if your assumptions are correct or not and what impact that will have on the future direction of your startup.

Schedule a meeting to assess your startup unit economics