Today on the Winning with Shopify podcast.
One of the things about everything I've done is I've
always done my own books, and so I'm very, very particular about
making sure my books are accurate on a daily basis, and
that's what Bookkeep does. E-commerce businesses.
It's not like any other company. You got to track all your
revenue, you got to track all your costs.
I'm a moron, I'm an idiot, I'm completely inexperienced.
I don't know anything about any of this stuff.
I think it's super important. It's not beneath you as an
owner. Accounting is the language of
business. Actually you need to be doing
this whether you're just one little little store out of a
bedroom still at or at your at your garage at home.
I started saying garage rather than garage, just the the amount
of Americans I talked to. Hello and welcome to another
episode of the Winning Wish on Five podcast.
For anyone that's not tuned in before, I'm Nick.
I'm British, hence the accent, and I've been running the show
since 2020. I believe it was.
I didn't prepare myself to read out that statistic.
Yeah, 2020 I took over from the lovely Caroline who was
Australian. Most of our listeners are in the
US and so are my guests today. I'm going to introduce it very,
very shortly. If you haven't already, please
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super exciting. Anyway, today you've probably
seen in the title, revenue automation for Shopify.
I'm delighted to be joined by Jason, who is the founder and
CEO of Bookkeeps. Jason, without further ado,
welcome to the show. How are you?
Great. Nice to be here, Nick.
Thanks. Thanks for having us.
Well, it's great to have you on the show and if anyone's
listening to the name Bookkeep and thinking we're going to be
talking about end of your accounts and how to do filing
and stuff, that is not the direction we're going in today
at all. No.
Tell us a bit more, Jason, about Bookkeep, about what you guys do
and some of the problems that you solve.
Totally. So you know, my my background is
in retail. I actually, besides starting out
on a trading desk in New York City after that, I opened a wine
store that turned into a grocery store that turned into Apos
company. So I actually built a company
called Shopkeep, which was Apos System.
It was, we were actually the first on the iPad.
Square followed US. Square got a lot more money and
got bigger, but I had a huge amount of experience in retail
and POS and yeah, and, and believe it or not, Shopkeep was
briefly, we talked to Harley about potentially being acquired
before they launch Shopify POS, we're talking 1212 years ago
now. So I have a huge amount of
experience in POS and e-commerce and data.
But one of the things about everything I've done is I've
always done my own books. I always did my books in the
grocery store. I did my books in the wine
store. And so I'm very, very particular
about making sure my books are accurate on a daily basis.
And that's what Bookkeep does. So what Bookkeep does is we take
all your Shopify data, we turn into accounting data.
We post daily summaries to your accounting system so that when
you run your reports in QuickBooks, Sage, Intac,
NetSuite, whatever accounting system you're doing, you have
accurate revenue, accurate cost of goods sold, accurate fees.
And we do this for Shopify, we do it for Amazon seller, We do
it for a bunch of other POS systems as well.
But we're really focused on Shopify and all the financial
needs of Shopify customers. Amazing.
And I said to you guys straight away when we hit record that
Jason and I, we are not going to be talking about the boring like
how to submit your accounts to your local government and you
know your nationwide government at the end of the year and pay
your tax. We're talking about how to make
better decisions to generate more revenue.
That is where we're going. And say that real time
information, we, we in my world have a lot of that in Google ads
and stuff, but it is locked into that specific system and purely
only for marketing needs. What are some of the reasons
people would need that real time information beyond just
increasing decreasing budgets or moving campaigns left, right and
centre in the in the kind of digital marketing space?
What are some of the other use cases that people would use
Bookkeep for? There well, I mean the real
reason is is you want your books to be accurate, right so your
your financial system, your general Ledger, usually
QuickBooks online, we have customers mostly on QuickBooks
online unless you're a multi entity, but your financial
system has is reconciled to your bank account.
Our system helps reconcile Shopify's revenue to your bank
account, right. And so no matter what reports
you're seeing in Shopify, what errors happen, you know, you do
the date range wrong, whatever, like your financial system has
to reconcile all that. So we and, and one of the big
problems is finding an accounting firm or a bookkeeper
that understands how to take those numbers and get it into
your accounting system. Even if they understand how to
do it, it's a huge amount of manual work and having someone
do it manually is is is just doesn't always last right.
So we consistently automatically every night post your financials
from Shopify, from Amazon seller, from PayPal, by the way,
which is a huge nightmare to deal with PayPal and fee.
So that you have proper COGS, you have proper top line so that
if you can allocate your, your spend on marketing on a daily
basis as well, you can actually get into daily PNLS or weekly
PNLS. Or you can go to your accounting
system and see how do we do the day before Thanksgiving, which
encompasses not only Shopify, but my Amazon seller and maybe
I'm on TikTok. And so, so you can see all of
that kind of in one place from a financial standpoint, it's not
going to go into order detail, but it's, it's not easy to get
that into your accounting system and, and understand how to
translate order data to financial data.
And so that's really, it's really important to get that
automated because as you grow, you really want your financials
to be right. And it also of course is very
important to make sure you pay your sales tax and your VAT and
all those things. So there's a lot of reasons to
get it automated. You can't just assume that
you're going to get a bookkeeper that's going to be able to do
that because bookkeepers just, they just get overwhelmed with
paying bills, dealing with vendors, all kinds of other
stuff that they have to figure out that for them to be able to
book daily revenue is, is, you know, not something you should,
you should expect from a bookkeeper.
Yeah, and you can imagine the cost as well for a human to be
clicking buttons to try and get daily statistics running
through. But the the thing I would say,
the thing I would say back to, to what you've just described
is, is, is amazing on the basis that e-commerce businesses,
whether it's point of sale or online, it's not like any other
company. It's not like like we as a
service business, I can tell you what I'm going to be billing for
the next 30 days probably to have 9095% accuracy because
we've got contracts and we've got contracts and invoices going
out. e-commerce. Nobody knows how many sales
you're going to get today because it's going to change on
a daily basis. And at the same time, it's this
kind of constant evolving machine because you're ordering
stock in that costs cash, you've got orders coming in that
generates cash and sometimes there's a delay between the cash
coming in and hitting your bank account.
So actually having that daily real time P&L is, as you say, as
you grow is so important. I've seen so many perfectly
viable, scalable, well foundationed businesses go wrong
because they've run out of cash. And when you look at it from an
outsider video, how they got best marketing, best products,
everybody loves them, all the reviews are amazing and they
went bankrupt and it's because they didn't manually look after
their books properly. And it's not so much that you
have to do it on a daily basis. It's that if at the end of the
month you're like, why does this finance what is going wrong?
And then you have to go and drill down and figure it out
from not automated data like going back and troubleshooting
to understand what's wrong. You you want to get the daily
set up right so that when you do end up at the end of month
thinking something's not right, we're not making money like we
thought. You're going to have the
financials to look at to be able to drill down and figure it out.
So it's not like you're going to look at it every day, but it's
there when you're ready or when you have a problem or when you
want to study it. Absolutely.
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That's Tax cloud.com/winning. Back to the show, given that
businesses are so complicated in so many moving parts, there must
be some really complicated business setups that actually
need quite a sophisticated system.
Like give us some examples of those or how how do you guys
approach something? It's not a standard sort of
products come in and sales go out.
No, you, you have multiple sales channels.
So whether you're, if you're purely e-commerce, you with,
with Bookkeep, you know, you can basically segment your online
store from your draft orders from your Facebook or your
TikTok shop using Bookkeep. So that when you look at your
financials, you can actually see the PNL and the COGS by those
channels within your accounting system, right?
Depending on how you want to set it up.
One of the things is there's, there's a lot of apps out there.
There's probably 50 apps in the App Store that will sync all
your orders to QuickBooks, right?
Don't use any of them. You do not want all your orders
synced to QuickBooks. It's not accurate.
They don't get updated once they're in there.
They don't get matched to payments.
It's, it's really a complete mess.
It, it works maybe if you do 2 orders a day.
What you need is you need summarized financials that are
accurate and reconciled to the financials.
So meaning to the payout deposits or, or the money from
Facebook or, or the fact that Facebook holds your sales tax
and pays it for you, which is not really clearly represented
in the Shopify reports. So we allow you to segment your
channels, book and math and class separately so that you can
then slice and dice your financials.
And I just want to look at how I did on Facebook with COGS with
fees associated through Shopify or TikTok shop or, you know, or
you can do Amazon because we have a direct integration to
Amazon. So that's really important to be
like, well, maybe Facebook isn't just working for us because look
at these fees and there's so much complexity with Facebook
paying our sales tax and for us and, and we're really not
getting the revenue we need from that.
But you know, so but you have that you have that revenue data
to match up with with other data that you're you're putting into
your accounting system. Amazing.
And something you've just touched on there is, is one of
the biggest issues I think in my world at the moment.
And I I've spoken on a few other episodes about this recently and
it's, it's attribution. So it's attributing sales to the
right channels. But even if you had perfect
attribution, it's understanding margins to set proper targets
and KPIs. So whenever we're running
anything on Google Shopping, for example, we have what's called
ROI, return on investments. You spent a dollar on Google
Shopping. How many dollars of sales have
we made? And actually, if you've got 5
campaigns running 5 completely different product ranges and all
of them are running at say 4 to 1 ROI, so we're making $4.00 for
everyone we spend. That doesn't take into account
what you've just said, which is COGS, which is the cost of
goods. It doesn't take into account the
fact that those five product lines, one's really profitable,
3 are OK, and one's actually really like, we need to be an 8
to one over here. And then like we only need to be
1 to one on this one because it's, it's, it's a subscription.
So we need to be 1 to one in the first order.
And then after that. So actually having that real
time information, if I had access to that data as an
advertising person, that is the difference between success and
failure because things change on my end on a daily basis.
You know, the sun comes out and suddenly we're selling more
sunglasses, T-shirts and shorts. The sun goes in and it rains.
We're selling more umbrellas, we're selling more coats, we're
selling more makeup that doesn't smudge when it gets wet.
You know, there's all these different products.
So actually having that real time data at my fingertips to
say the cost of goods is going up on the stuff we're selling
this week, I'm now going to make what might seem illogical
changes based just peel on the Google data, but they're
actually super logical when you look at the financials.
Yeah, and you can and you can line up and group by product
category also with our mapping system.
So so you can get down to that granular level as well.
Yeah, absolutely. And we find some brands as well,
they make loads of their own products and they have a few
supplement products or supplementary products that are
very unprofitable, but they're trying to hook people in.
Again, splitting those two and having that in the financial
information is, is super, super important.
How much does this affect multi? Oh, sorry.
Go on. Go on, Jason.
Well, I just want to say like they're, you know, getting to
that level of, you know, Zen of perfection doesn't really exist.
I mean, you, you can get close, but what we see and we're
talking, we work with customers up to a billion in revenue,
billion dollar companies. They might not be doing all
their billions on Shopify, but they're using Shopify for
portions of their business, but hundreds of millions in revenue
on Shopify are working with us. And you really need to help your
finance team just get the numbers into the books, right,
Right. They sometimes are struggling.
I cannot tell you how many calls I've been on where the finance
team doesn't know what's happening in the front office
and they they cannot figure out just from the Shopify interface
or the Shopify interface has changed.
You know, Shopify made some changes to reports in the last
couple weeks that finance teams were using.
So we have a support team that can help them if they have
questions, but but really you want to support that team to
make sure that they can get that data in accurately daily into
your books so that you know, they're not stressing out about
it. Because my guess is often a lot
of times someone's working late on weekends to try and get those
numbers in to get those books done.
Or, you know, you might see it as an owner founder.
Hey, why are we not getting our books closed?
Why is it taking weeks or maybe more than than a month to close
the books for, for that month? Right.
And, and usually it comes down to some of those things like I
can't figure out this reconciliation.
I don't understand why we didn't get enough money from Shopify
based on the revenue that I booked.
Like those things that they're always trying to figure out.
And so getting that set up through automation is is really
helpful to your finance team. Yeah, yeah.
And my bookkeeper, Lisa here at my agency, like she would be
clapping right now being like, come on, Nick.
I, I literally have to book an afternoon a month where I just
download Amazon receipts and invoices and whack them all into
our system to get them into zero, which is what we use.
And it's, you know, it has to be done like that.
If you're, it's different for me because we are an agency and we
have lots of costs going around all over the place.
But because you've got the ability to have the information
in Shopify and you've also got it, as you say, in zero
QuickBooks, whatever system you're using, being able to
integrate those two things is so important.
I, I, I think again, trying to what, what my job today is
trying to take what you're saying and put it into the, so
here's what we can do differently.
And I think there's a really obvious thing we can do
differently based on what you've just described, which is having
the books closed within like a day or two of the month ending
or the quarter ending or the year ending is so powerful.
So many brands that I've spoken to worked with etcetera and, and
myself included, I've had it where some years it's like 7
months later and like 8 months is the deadline for submitting
your tax returns. And seven months later, I still,
I don't have a fully accurate picture of what did last year
even look like, but I'm already 8 months into the next year
trying to make decisions. Now one of the things that's
going to make us infinitely more complicated is multi location,
multi bank accounts. If you have stores in different
countries, for example, you have different bank accounts in those
countries in different currencies.
Shopify is a bit of a nightmare trying to manage that.
But talk to me about that because I know you guys have
made some really good headway with this.
Yeah, that's that's really where we've really excelled and gotten
really close with some pretty big Shopify brands on Shopify is
because we're very, very strong with Shopify POS.
So when you're dealing with Shopify PO, when you're dealing
with POS, you're going to want to segment your revenue for each
location. You want to know how each
location is doing. So when you run, you know, if
you run that finance summary in Shopify, it shows you your whole
business, you know, you might have 50 locations and all your
e-commerce and that's the revenue you see.
And if you want to see one location, you got to hit that
drop down in order to see the summary.
If you're using, you know, the financial summary is a pretty
good representation of a of a day's Z report or the accurate
full summary for the day. So what we do is we basically
allow you to group each one of those channels, give it a class
and post those sales by those POS locations to your accounting
system. We work with 0 of course as well
and QuickBooks. And that's really important for
those POS locations then. But we also the important thing
also is that we help you reconcile those payout deposits.
So when that deposit hits, now you have an option with Bookie
if you're just ecommerce only generally we can group your
payout deposit and show you how much revenue per day is in this
deposit. So you can match it to OK, this
day I did this much and this deposit has this much of that
revenue in the deposit, right? But when you're a multi
location, sometimes you want to understand out of that payout
deposit how much came from each location, whether a lot of
businesses they don't care, it all goes to one bank account.
But now the the new feature that that Bookkeep launched this year
is we can take the accurate data that we have and we can actually
move funds. So we have customers in the UK,
we have customers in Canada, we have customers.
A lot of these are franchises, but some of them are brands, but
these brands have sub entities. And so the sub entities need the
money, the funds from a single business location to go to a
specific bank account. So we actually calculate that
those numbers and create money transfers that automate the
funds movement from their main bank account into those other
bank accounts. So we're working with a lot of
franchises in the US and Canada, some UK based businesses that
are multi entity but under the same brand.
And this has been really helpful because Shopify has moved
quickly into POS, but this is a, it's funny because it's a
feature that I've been in retail forever.
You just expect that you're going to get a separate payoff
for each POS location. A lot of times customers come to
Shopify and they start using POS and they're like, wait a second,
why are we getting one big deposit for all five of our
locations? And then they come to us and,
and, and we figure that out and help them.
But you know, so, so we're moving millions and millions of
dollars a week in the US and Canada for a lot of these
customers and with our automation.
Amazing. And again, thinking about a use
case of that and and something I have many conversations and I've
actually introduced you guys. Well, I'm about to introduce you
guys to a brand I I spoke to recently as well.
I just happened to have this this same problem of multi
locations, multi currencies, etcetera.
One of the biggest things then thinking about reporting to make
good decisions is if your PNL is not broken down accurately by
location, and that has to be a manual process again.
However long the manual process takes is both expensive and
you've lost time when something might actually be wrong that
needs to be changed. IEA location is making a loss
because you've stopped too many of a certain product there
because you think they're selling, but actually the cost
of cost of goods for that product is really high.
So you're not making much money on that product.
So again, having that data split as it comes out of Shopify from
POS and online. And even if it's even if it's
multiple online stores that that that's the biggest one we have
is a business is based in one country and they say, right, I'm
in the UK so I can ship to Europe really easily because
it's around the corner or I'm in I'm in the US so I can sell to
Mexico and Canada or I'm in the US, but my products come from
Europe, so I could sell to Europe really quickly.
So I'm going to open a warehouse there, multiple warehouses.
So the multiple locations, I think everybody sort of sets out
with a really good mindset of like, let's do this and we can
just find a Courier to deliver there.
And then suddenly when you get into the nuances of taxes,
fulfilment, imports. Exports.
Yes, exactly. The different entities are
cracking down exactly and Shopify gives you the details
and might give you the reports, but you need that to flow into
the right entities. We have a customer in the US
there 150 locations grouped into 10 entities.
They use Sage intact. We book 150 daily summaries to
their accounting to their Sage intact and they're they're
tagged, you know, they have basically the right dimensions
for the right entities. So they can run entity PNL and
Sage intact for those regions using our reporting.
And there's just no way anyone's going to type those numbers in.
You can run those reports in Shopify, but it's basically
having the flexibility to basically take what's happening
on Shopify and turn it into multi entity, multi location
journal entries with the right dimensions.
It's basically the flexibility that you need as you grow.
Yeah, absolutely. And I think just to make the
point as well, if you're listening to this at the moment,
guys at home and thinking that's not me, I'm not multi location.
Actually you need to be doing this whether you're just one
little store out of a bedroom still or at your at your garage
at home and running. I started saying garage rather
than garage, just the the amount of Americans I talk to like like
yourselves based in Brooklyn. But yeah.
And so I think the whether you're one small business or
you're, you're a big kind of multi entity, multi location,
multi country, eventually intergalactic when we reach that
part of civilization growth. But I think the the big thing
I've found over the years and, and having run lots of
businesses and I've got lots of things going on at the moment,
the numbers, they tell you such a story.
And whether you're making one sale a day or you're making a
sale every minute, the numbers are so important.
And like I've tried to emphasize almost every point you've made
so far, Jason, if you don't have the numbers under control,
you're going to miss things. You're not going to be as
profitable as you should be. We've even done this too.
You're going to miss errors. I mean, I come from a
controlling standpoint. We, I cannot tell you how many
accountants come to us and say, no, the owner says we did more
revenue. I'm like, and, and we go back
and we run history for them and realize that they did not close
out draft orders properly months before.
They didn't get paid for them, right.
So if you're not doing this, I mean our system automatically
reconciles essentially your your payouts to your revenue, but
there's a lot of places for draft order errors and and
people miss that. Absolutely, and I mean even 1
Shopify business I looked at recently, they paid me to do
some and I don't offer this by the way for anyone else emails
me. I just did it because they're
local and I really wanted to help out.
I did a deep dive into all the mechanics of their business and
it turned out, and this was the conclusion I gave them, is if
you fired your whole marketing team, you scaled down 90% of
your warehouse and spent no money on advertising, you would
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the episode. All those things are wasting
money. Your warehouse does not need to
be where it is in a really expensive location.
You have too many staff in the warehouse.
Your marketing team are so busy running campaigns that pretty
much break even. And actually if you just kept
your historic customers just without even emailing them, the
ones who don't respond to emails don't see an advert, the ones
that just organically come back every year to buy another
product because that's roughly the shelf life of your product.
Though if you just kept those ones for the next 10 years, you
could make more profit doing nothing.
And it was like, ah, and it, the conclusion wasn't he got rid of
all his staff and we, we kind of wound things down.
The conclusion was this needs to be running better.
This needs to do better. And actually I what I need to do
and what I asked him to do. And, and he has now done, and
it's been fascinating watching the results is every single
member of his team has done a timesheet and we've allocated
revenue into certain groups of teams and then split the revenue
by employee and looked at the cost of them and taken the
entire premise of warehouse and office and split them by the
employee. But if you're using Shopify,
you've got the ability to get, as you say, all of that data
into your accounting software faster.
And your accounting software should know salaries broken down
by employee, your rent costs, your services, and if they've
been allocated properly, you can have this nearly in real time
these days. So I think again, trying to look
at those decisions we make, you're absolutely right with
the, the ability to spot errors as well.
I, I'm the most guilty person of getting so excited about my next
podcast recording or event we're doing or the new car I'm buying
or whatever it might be. I get so distracted by that,
that then actually understanding this is how much we spent on
this recently. And then that's split by the
performance of people across the business.
This is how much everybody needs to work slightly harder to cover
the new tax costs or something. So that, that granular detail is
so important, isn't it? And once you get that Shopify
data in, you can actually do that within your accounting
software. Yeah, and you should be
reconciling your books every single month.
You should be getting statements from your finance team, your
bookkeeper every single month so that you know how you're doing.
It's not a quarterly thing. It's not an end of your thing.
It's not. I send out all my documents to
my accountant at the end of the year and they do my taxes.
Your accounting system. Yeah, Yeah, your accounting
system is, is a key, is a key metrics for your business.
And I actually posted something on LinkedIn this morning about
this. You're going to have a bunch of
front end systems that are going to give you reports.
Your accounting system is your reconciliation of what all those
reports are telling you to what actually hit the bank account
essentially. And and that is you're going to
find a lot of stuff that doesn't make sense.
And even in our own business, you know, we we're a SAS
company, we bill through Stripe. And even still, it's so
complicated with this order got cancelled.
There was a refund. Oh, they did a refund against a
credit or against the store credit or one other thing that
we find a lot is why are all these orders marked as paid and
they weren't paid? Oh, the customer care team was
really, really on it and they wanted to get this customer
their item. The only way they could figure
out how to get it to ship was to mark it as paid, you know,
because the customer was complaining.
And so those are all going marked as paid under manual.
And that manual bucket is growing and we're like, what the
hell is happening here? Like if you're not watching that
stuff, you just look at your Shopify reports and see order
closed and paid. Well, what if the money didn't
come in, right? So we see a lot of that stuff.
We train, we help people. We, we, you know, our automation
does it. But when people have questions,
often they can talk to our customer care team and we help
explain some of those things because accounting is often a
lot of people are like, I don't understand accounting.
I have an accountant. You got to understand accounting
as a founder. You got to understand accounting
as a business owner. Absolutely.
And I mean we've you mentioned earlier and I think it's a
really interesting point to to touch on.
So I know a lot of you guys listening are CEOs, founders or
senior marketing people. It's it's frustrating sometimes
when I jump on a call and the CEO or founder sort of says to
me like, yeah, yeah, we're a, we're $100 million a year
business. And I sort of really, and then I
go and have a look at their shopper farm, like, yeah,
there's $101 million in there. So that's $100 million business.
And then you kind of go, right, let's take the sales tax off.
All right, we've just lost what 22% across the board and
suddenly it's like and actually, so then what's actually hit and
again, something you touched on earlier, I think it's really,
really key is taxes get taken out like Facebook pays your tax
or Meta, sorry, pays your tax for you.
But Shopify, it works differently.
And then when you're, when you've got the UK versus the US
versus Canada versus Europe, the taxes come out at different
points for different people. And it can get really, really
not, not turn this into another episode about tax because
obviously we mentioned earlier, we do have a tax cloud as well
at one of our sponsors. But the having those
complexities then logged somewhere to say, once we took
all of that out and we have now have fast accurate data hitting
our accounting software. It's like where we thought we
made $101 million, actually it's more like $62 million after the
returns refunds, $62 million is coming.
We're a $62 million business. And that that is a really
defining factor then between like actually how the CEO is
thinking about the company, which will change the decisions
that he or she makes. Exactly.
And a lot of times those CE OS are looking at the reports in
Shopify. I mean, we, we were just dealing
with an issue this week. You can cancel orders in
Shopify, they still show as income in Shopify.
And so we're, we're, so sometimes our reports don't
match Shopify reports because of some of those issues where
orders were canceled. So we don't show it as income in
our financials for your accounting system, but Shopify
might. And so those are just things you
need to be aware of. It's not, doesn't happen all the
time, but that's really where your controller and your, your
finance team or or and our software together can help help
with that. I, I often say to brands in
response to, to, to all of that actually, that when you go from
one sale, if that sale was not profitable and you suddenly go
to 10 sales, they're unprofitable.
You've just 1000% scaled up your business even in those early
stages and you suddenly got this 1000% size problem or 10 tenfold
size problem that you didn't have previously.
And I think one of the biggest issues with that is or one of
the biggest challenges we find is people then obviously sign up
with Shopify. They think they've got the data
in front and think they can run this amazing business and
suddenly a year in, six months in or five years in or later in
some situations, you look back at, I wish I was doing this on
day one. Say back to your point, Jason, I
think people, they need to start looking after their books.
And most importantly, I'd love to hear your thoughts about how
much they need to understand those books even when that first
order arrives or they do their first product order of stock.
Yeah. I mean, it's when you start a
business, you really the first thing you should do is set up a
bank account, get your 0 or QuickBooks set up, make sure you
do everything out of that same bank account and then keep track
and do the books yourself if you can.
It's easier when there's not much going on.
You can learn If you have to pay one bill, you have a couple
sales, Great, let's get them into the accounting system, see
how they line up. Because your accounting system,
yeah, your accounting system is your key metrics for your
business. And accounting is the language
of business. It doesn't have to be that
complicated. It's basically, you know, what
you sold minus how much it cost you, how much, how much you
marketed for. And you can line those up in.
Where people get confused is because you have to line it up
in terms of the time period, but but you know, for the month or
the day or the week or however, you know, how am I doing in this
period? And but it's, it doesn't have to
be that complicated. And if you get started early,
when it's easier, you're going to be better off.
Same with just the automation is getting the, you know, getting
bookkeep set up early, getting your sales tax automated so you
don't have to pay that or VAT in the UK.
That all kind of stuff is going to help you, especially as you
mentioned, when when you want to sell the business later, you
want those books in order. It's a lot easier to sell a
business when you have good books and you trust the books
and then somebody else will trust the books.
And we'll come on to the selling in a minute because I think it's
such a big topic and it, we didn't even have it in our
notes. But now we're talking about it
like it's such a big part of this building to sell, scaling
to sell and why you should do that even if you end up not
selling or don't aspire to why it's a good option.
So we'll talk about that in a minute.
But one thing I just want to quickly interject with as well
is just to back up exactly what you just said, Jason.
I got to about 8:00 or 8:00 maybe nine years into running my
business and I went along to an accounting course and the first
sort of session was free and I walked outgoing going, I'm a
moron, I'm an idiot, I'm completely inexperienced.
I don't know anything about any of this stuff.
And the guy in the first seminar, the first session in it
was only an hour long. He listed about 8 or 9 things in
the 1st 5 minutes that I was sitting there thinking, I don't
even know that. I don't know what my incoming
expenditure really is. I don't know what my margin.
I mean, I'm a service based business.
I didn't really understand what my margins are.
Lots of e-commerce brands, I talk to you, they don't
understand, as as mentioned earlier, that the cost of sale
or cost of goods. If you don't understand that,
how on earth you're going to make all the other decisions
about marketing. And one final point, and I'm,
I'm quite passionate about this these days about people
understanding these things. The final point as well is when
you're talking to an investor, a staff member, a client, a
marketing agency, when you're explaining as the business owner
as the linchpin of everything, when you're explaining your
decision making process or the rationale reasoning why
decisions being made. I found as from a personal
level, it's a lot easier to communicate that when I'm using
the numbers and not just saying, saying like I feel like $5000 is
a lot of money. That's the worst thing for me as
an agency to hear. It's like, well, it's
irrelevant, isn't it? If it's 5000 to make 50,000 most
businesses, that's fantastic. Some businesses that's awful.
It's got to be relevant to the number.
And so you guys must find a massive difference between
people that have been on those courses and understand EBITDAR
and all these other random terms I'd never heard of before in my
career to when they don't. Yeah, and you don't, I mean,
don't get confused with the terms.
I mean, as a founder, as an owner, don't it might not be
good to take an accounting course because you're going to
get taught by accountants, but you want to be, you want
accounting for owners, right? How much money am I making?
And it really, you know, it has terminology, cost of sales, cost
of goods sold. You don't need to worry about
EB. That's never important for, for
making sure that you're, you're how am I doing?
But really comes down to how am I doing and making sure you got
to track all your revenue, you've got to track all your
costs. And then it gets a little
complicated because of inventory and understanding.
Well, inventory is really cash. It can be turned into cash, but
it's, and how much cash do I have?
What are my assets? Those are really the important
things and as you get busier and busier, you want to automate a
lot of that. You want to automate your bill
pay. You want to use like a in the
USA, bill.com or there's a great relay bank is awesome.
I use them myself. I pay all our own bills.
I pay all our bills. I do all our revenue accounting.
I do everything for my own business.
I do it all in QuickBooks. I do have a controller and she
checks my work and she reconciles and she drills into
problems that I don't want to spend time figuring out.
And you should have a bookkeeper to do that, but you shouldn't
just assume the bookkeeper is just going to do it and give you
something. You need to really own it.
And I've always done that on my business, whether it was my wine
store, my grocery store, my software company, and now this
new software company. So I think it's super important.
It's not beneath you as an owner.
Accounting is the language of business.
Absolutely. And I've always taken the
approach which my my lovely uncle who is, he was an
accountant, he was a finance director, very wise, very
knowledgeable. He always said to me, never hire
someone to do a job because you don't know how to do it.
Find out how to do that job yourself and hire someone to
grow and scale. So now you've got 15/20/30 of
you with better personalities fitted for each role that you
could possibly have for all of them.
But I think, but I'm exactly the same as you.
Like I would not let anybody else make financial decisions in
my business. People can present the facts,
present the data and do what I've asked them to do and manage
things in the way I want them. But I've got to be in control
because when it all goes wrong, I'm liable.
And if I'm liable and I know what's going on, I can deal with
situations and the situations don't don't grow and become a
problem. But a lot of ecom commerce
brands and I, I think I think you wouldn't and, and your team
would agree with me on this. A lot of e-commerce brands when
they come into Shopify, they see like the Shopify analytics and
go there's load of numbers in there.
That's my that's kind of box tick like you have do I have
reports? Of course I've got reports.
It's like they're all completely inaccurate and they don't make
sense and I can't make any decisions from them.
And I don't know what the numbers mean, but they're there.
And that's where using some automation software like like
you guys or, or getting better dashboards and better data can
start to feed the right information through plus even
the to setting it up. You're going to get to the nuts
and bolts of the actual economics of how your business
operates, aren't you? Exactly.
And I wouldn't say they're, they're accurate.
The reports are accurate, but there's errors that happen.
So there are errors that happen in transactions.
There's they're they're also because you're putting a bunch
of, if you connect a bunch of apps into Shopify, you're going
to get a lot of apps don't properly create orders in
Shopify. So they might do it enough so
you can fulfill the order, but they don't do it enough so that
you can actually properly account for the order.
So that data, you really need to protect and understand that
data. And that's where you end up
reconciling it to your bank account using Bookkeep and your
accounting system, right? So, so, yeah, so you need, you
know, it doesn't have to be that complicated, but you do have to
understand how does that data reconcile it?
Just just today I was talking to a client in the UK who is
doesn't understand why the revenue doesn't look right.
And I said, well, because the gross sales also includes your
gift card sales and then the gift card sales go against the
liability. They don't they.
Well, the gross, the number that you're seeing in Shopify, you
have to add the gross sales to add to the payment to, to equal
the total of the payments, right?
And those are just things that you would need to figure out to
make sure that you don't have errors, that there aren't
mistakes. And one of the things is that,
you know, you have you as the owner need to understand it
because you might hire an accountant, but the accountant
is not really going to understand Shopify unless
they're really specialized with Shopify.
However, if the account uses Bookkeep, then they're going to
understand Shopify better because they have us to back
them up because that's really we kind of bridge that gap between,
you know, you know, in house, in house teams use Bookkeep because
it helps them automate. And we also continue to educate
them when they're not getting totally into the weeds on, you
know, why does this cancel order still show up in the reports in
Shopify, but it doesn't show in your report?
Well, because it was cancelled, but Shopify still shows it as an
order and stuff like that. But we can always, we help
educate. Plus we keep finding new things
that Shopify does and you know, whether it's new fees that they
charge through the payouts and stuff, but that we just keep up
to date to make sure that all the finance teams do.
So it's kind of it's a team effort, but definitely the, the,
you know, running the business, you need to, you know, have a
pretty good understanding of it before you just throw it over to
an accounting team or an accountant.
Absolutely. I I think the way the way people
need to look at this is actually acknowledge that Shopify is a
sales making engine and nothing more.
It's it. It doesn't have your cost of
goods, it doesn't have your profit margins, it doesn't have
the rent you pay on your offices and warehouses.
It probably doesn't even reconcile delivery costs per
order. So then what once you start to
work out some of the terminology, like the difference
between net and gross, I mean that that was honestly one of
the most Eureka moments of my life is the difference between
net and gross. And I was like, I need to know
both of those things at all times.
They pay, they make a lot of sense now, but I didn't even
know they were things. You know, it's that's what I
mean about understanding the terminology and that kind of
thing that Shopify is not going to include any of that stuff.
So let's just to finish off, I think as a final point, we'll
come in to land on this then. If you're building a business, a
lot of people will say you should build the business as if
you're going to sell it, even if you have no aspirations to sell.
Worse still, you should build it ready to sell.
If you are actually going to try and sell it.
What would a potential buyer look at and what kind of
problems would people run into having not kept a proper grasp
on the numbers? Where are people going to become
quite stuck trying to actually sell their their asset?
Yeah. If you're buying a business,
you're buying, you're buying the history of that business, which
it needs to be in the books and records.
You're buying cash flow. You know, you're you're buying
obviously a brand, but you need, but there's a huge amount of
work that goes into validating that information before
someone's going to acquire your business.
And so you need to have accurate books and records all the time.
I mean, as you get bigger and bigger into the 10/20/20
million, 25,000,000, you know, by by accounting standards, you
have to have those books and records.
But small businesses too, if you eventually want to sell or bring
on a partner or get a loan, honestly, even if it's not to,
you want to have that stuff at your fingertips and you want to
have accurate financials at your fingertips so you can get that
loan. So it, it's really important to
in the early days, get on, get on top of the automation and get
your books done and do your reconciliation every month,
close your books every month. Know how you're doing.
That becomes easier and easier to do over time.
And then you're going to have this great set of books that you
can use when you're when you're ready to sell the business.
Absolutely. I couldn't agree more.
And the the thing I've come up against where I needed that
information in some situations later in my career I've had and
earlier in the career definitely did not have is it is on one
level it's embarrassing and on the second level, as you say,
you get stuck when somebody asks you a question you do not have
the data to answer. If someone's thinking of giving
you a loan, and I love that as an example, it's not just
selling the businesses even a loan.
They will say, well, I'm only going to lend you this money if
you can prove to me. Now I'm going to get it back.
So if you go back and say, yeah, look at all my books and they
run some numbers and say you're not profitable and you want to
get a loan from us and you're not profitable, We need to see a
bulletproof way you're going to become profitable or US giving
you this money and a loan, we're clearly not going to get it
back. And if someone buys the
business, as you say, there's the brand, there's the customer
base, but they're going to look at your, they're going to want
to see your cash flow and go, you are a profitable business.
You make this much profit per year.
And then you're going to negotiate some sort of multiple
of that profit as the buy price plus assets and stock and cash
and other things. But if you don't have any of
that, it's like they're not going to buy the business.
And you guys listening, you're not going to buy a business.
If you someone says, trust me, it's a great investment, that's
not going to cut it. It's going to be spreadsheets,
financials. And if you've got it all in in
in order, even if the books are not making loads from the,
you're going to save yourself loads of time and someone's
going to trust you more as someone to buy a business from
because it's not making tons of profit.
That's the reason I'm selling it.
But all the books are massively in order and everything is
looking really, really clean and it's clean as a whistle.
And it's so important, isn't it to have to have that both
decision making as we've spoken about loads, but also when you
come to any of these kind of financial matters.
Totally, Absolutely. You have to have you, you, you.
You have to have it for yourself if you want to keep the
business. You want to know how you're
doing, and you have to have it if you're going to sell the
business. Absolutely.
Absolutely amazing. Well, look, Jason, I said I was
going to be the last question if anyone there is one final
question, but it's nowhere near as detailed as that if someone's
listening going. All right guys, you've over
convinced me now about 50 billion reasons why I need to
get my books in order, why there's more to life than
Shopify analytics and Shopify data, which obviously there is
as as you very well explained today.
So thank you so much for that. How can people reach out to you
guys? How can people get in touch?
What's the best way to to give Bookkeep a a go?
Definitely the Shopify App Store.
You can look up bookkeep in the Shopify App Store and you can
add bookkeep right there or go to ourwebsite@bookkeep.com.
And you know, anyone can e-mail me jason@bookkeep.com any time.
We're we're, we're here to help and we work with so many Shopify
stores all over US, Canada and Europe.
Amazing, amazing. Every time you you or anyone
says the UK or Europe, I'm like come on guys, we got this yeah,
always follow the Usus and Canadian economies are so much,
so much. They're not necessarily bigger,
but yeah, there's so much so much going on across the pond.
And also you guys dedicated on boarding and free trial I've got
in my notes as well, so yeah, you.
Can try us out completely without having to put a card on
file and see how it works. See how the reports get
generated. I tell a lot of people too.
Just run us for two weeks, see how the reports look.
You don't have to post it to your accounting system, but then
you'll understand how the data matches up to what you think is
happening. Amazing.
And so that, that is my challenge to all of you guys.
I, I, we're trying to talk about accounting and, and stuff too
much because it doesn't seem to get as higher views, but it's so
important. There's no pointing with the fun
marketing staff and the branding and product lines and
developments and Netflix series for some brands we've had on.
There's no point doing all of that if you're making a massive
loss. It's like it's the biggest kind
of hypocritical way of running a business is the business has to
be making money. And you can only do that with
the right data. So Jason, to both you and the
team, thank you so much for joining us.
Thanks for inputting so much and we really appreciate your time.
So thank you so much. Great to be here.
Thank you so much. Amazing and for everyone
listening at home, we'll be back on We're back on Tuesday.
I keep saying this and it keeps stuttering me because I've spent
five years saying back next Friday, back on Tuesday for
Tuesday tea break talks. I've got some really cool stuff
coming up this week as well, so make sure you tune into that.
They're much shorter than these Friday episodes.
Back again next Friday with an amazing guest.
So make sure you tune into that as well.
If you haven't already, hit subscribe and leave us a review
on whatever platform you are listening to this on.
Thanks for tuning in. Hope you can join us again next
time. Do you ever find that in your
warehouse you have dead stock? You can't sell it, no one wants
to buy it, and you can't get a refund on it.
Or alternatively, you're missing inventory in your warehouse that
you need, you've got sales coming in and you're low on
stock and you haven't ordered more stock.
In time, all these things hit profit and I've been there.
I've run my own Shopify store and had exactly that problem,
but we've partnered up with Inventory Planner who have the
most incredible app to help you manage that and forecast exactly
what products, what skews even down to what colour of product
you need to order in advance to make sure stock levels remain
consistent throughout. They're also running a seven day
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emails every seven days and it takes the same amount of time as
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Both links are in the description.
Enjoy.