Quick Fix #2: Finance for SaaS Founders: Meryl Johnston - MicroConf Remote

[Music] [Music] hey everyone i am meryl johnston hey everyone i am meryl johnston hey everyone i am meryl johnston and here today to talk about business and here today to talk about business and here today to talk about business finances finances finances and specifically how to become a and specifically how to become a and specifically how to become a financially financially financially savvy sas founder savvy sas founder savvy sas founder i always like to ask why should i listen i always like to ask why should i listen i always like to ask why should i listen to someone on a particular topic to someone on a particular topic to someone on a particular topic and here's a little bit about me i come and here's a little bit about me i come and here's a little bit about me i come at business finances at business finances at business finances from both an accounting perspective if from both an accounting perspective if from both an accounting perspective if i'm a trained accountant i'm a trained accountant i'm a trained accountant a child accountant which is like a cpa a child accountant which is like a cpa a child accountant which is like a cpa in the u.s but i'm also a founder in the u.s but i'm also a founder in the u.s but i'm also a founder and i've scaled my business binges up to and i've scaled my business binges up to and i've scaled my business binges up to a team of 15 people a team of 15 people a team of 15 people over the last five years i realized this over the last five years i realized this over the last five years i realized this is is is a virtual event i i add a couple of a virtual event i i add a couple of a virtual event i i add a couple of extra things extra things extra things about me particularly when it's an about me particularly when it's an about me particularly when it's an in-person event and then we can in-person event and then we can in-person event and then we can connect and chat over something that connect and chat over something that connect and chat over something that might not be accountable might not be accountable might not be accountable and maybe it's surfing or parenting or and maybe it's surfing or parenting or and maybe it's surfing or parenting or something different something different something different so feel free to connect with me so feel free to connect with me so feel free to connect with me afterwards and to have a chat about afterwards and to have a chat about afterwards and to have a chat about either this topic either this topic either this topic or something else that about this that or something else that about this that or something else that about this that is is is uh that you're interested in the way that i thought we'd frame this the way that i thought we'd frame this is to look at is to look at is to look at four different stages of business of four different stages of business of four different stages of business of particularly related to sas particularly related to sas particularly related to sas and look at what the financial and look at what the financial and look at what the financial challenges are related to these challenges are related to these challenges are related to these millionaire mary we're going to leave millionaire mary we're going to leave millionaire mary we're going to leave for today the financial challenges that for today the financial challenges that for today the financial challenges that i would normally talk about there i would normally talk about there i would normally talk about there are related to preparing business for are related to preparing business for are related to preparing business for exit and instead we're going to focus

exit and instead we're going to focus exit and instead we're going to focus on ceo carl who is building a leadership on ceo carl who is building a leadership on ceo carl who is building a leadership team team team and really in the process of scaling and and really in the process of scaling and and really in the process of scaling and he's ready to be adopting best practices he's ready to be adopting best practices he's ready to be adopting best practices when it comes to when it comes to when it comes to the finance function in his business but the finance function in his business but the finance function in his business but we're also going to have a look at we're also going to have a look at we're also going to have a look at hustling hector hustling hector hustling hector and stressed out susie her a bit earlier and stressed out susie her a bit earlier and stressed out susie her a bit earlier stage and look at stage and look at stage and look at what are some things that they could what are some things that they could what are some things that they could implement or take action on implement or take action on implement or take action on today that are going to help them build today that are going to help them build today that are going to help them build out this best practice out this best practice out this best practice finance function and also have a look at finance function and also have a look at finance function and also have a look at or why would you even care or why would you even care or why would you even care about business finances in your business so senior carl he's been in business for so senior carl he's been in business for a while a while a while now and he's he's got a team and now and he's he's got a team and now and he's he's got a team and really trying to build out a leadership really trying to build out a leadership really trying to build out a leadership team so that you can take a bit more team so that you can take a bit more team so that you can take a bit more time time time away from business you can take a day away from business you can take a day away from business you can take a day off here and there off here and there off here and there but it's still quite difficult for him but it's still quite difficult for him but it's still quite difficult for him to to to to take a week or two weeks or a month to take a week or two weeks or a month to take a week or two weeks or a month off and so he knows that he needs to get off and so he knows that he needs to get off and so he knows that he needs to get his financial house in order his financial house in order his financial house in order there's three main things that he needs there's three main things that he needs there's three main things that he needs to do in order to to do in order to to do in order to assist with that the first is assist with that the first is assist with that the first is making sure that there's a clear set of making sure that there's a clear set of making sure that there's a clear set of deliverables and a timeline deliverables and a timeline deliverables and a timeline so what actually needs to happen what so what actually needs to happen what so what actually needs to happen what are the deliverables or the results are the deliverables or the results are the deliverables or the results that we're aiming for and this would be that we're aiming for and this would be that we're aiming for and this would be similar that would be a marketing and similar that would be a marketing and similar that would be a marketing and sales function sales function sales function in the business as well and again it'd in the business as well and again it'd in the business as well and again it'd be a clear set of deliverables be a clear set of deliverables be a clear set of deliverables might be writing a blog post or whatever might be writing a blog post or whatever might be writing a blog post or whatever it is

it is it is the next component of that is having the next component of that is having the next component of that is having documented sops documented sops documented sops so that it's really clear about how so that it's really clear about how so that it's really clear about how these things need to be done these things need to be done these things need to be done and that they can be done consistently and that they can be done consistently and that they can be done consistently and you've got backups in place if and you've got backups in place if and you've got backups in place if something's happened to different team something's happened to different team something's happened to different team members members members and then the last is looking at well and then the last is looking at well and then the last is looking at well what financial reports what financial reports what financial reports should you be looking at as a founder should you be looking at as a founder should you be looking at as a founder and how can you use and how can you use and how can you use dashboards right let's start off with dashboards right let's start off with dashboards right let's start off with the bookkeeping timetable the bookkeeping timetable the bookkeeping timetable and really here i'm interested in who and really here i'm interested in who and really here i'm interested in who needs to do what by when needs to do what by when needs to do what by when and the deliverable is typically month and the deliverable is typically month and the deliverable is typically month end reports end reports end reports that would include a profit and loss of that would include a profit and loss of that would include a profit and loss of income statement and a balance sheet income statement and a balance sheet income statement and a balance sheet and there's probably some other more and there's probably some other more and there's probably some other more specific reports that are customized specific reports that are customized specific reports that are customized to your business as well and in order to to your business as well and in order to to your business as well and in order to do that do that do that there's a number of steps that need to there's a number of steps that need to there's a number of steps that need to be completed be completed be completed before we can get to the reports so we before we can get to the reports so we before we can get to the reports so we need to know what are those steps need to know what are those steps need to know what are those steps who needs to do them and and when they who needs to do them and and when they who needs to do them and and when they need to be completed by need to be completed by need to be completed by and the way i like to break it down is and the way i like to break it down is and the way i like to break it down is to look at well what are some of the to look at well what are some of the to look at well what are some of the monthly monthly monthly tasks okay in order to finalize in a tasks okay in order to finalize in a tasks okay in order to finalize in a month then month then month then there's a number of steps that we need there's a number of steps that we need there's a number of steps that we need to do you might pay to do you might pay to do you might pay your suppliers and your team fortnightly your suppliers and your team fortnightly your suppliers and your team fortnightly right so that's in the fortnightly right so that's in the fortnightly right so that's in the fortnightly category category category there might be some weekly tasks and there might be some weekly tasks and there might be some weekly tasks and then daily then daily then daily this is just a template you would adapt this is just a template you would adapt this is just a template you would adapt this to your business this to your business this to your business as i said what's really important here as i said what's really important here as i said what's really important here is getting clear on what the deliverable is getting clear on what the deliverable is getting clear on what the deliverable is and then who needs to do what by when is and then who needs to do what by when is and then who needs to do what by when in order to achieve it in order to achieve it in order to achieve it the next part of that is the how which

the next part of that is the how which the next part of that is the how which is the standard operating procedures is the standard operating procedures is the standard operating procedures and due to time constraints i won't go and due to time constraints i won't go and due to time constraints i won't go into examples of standard operating into examples of standard operating into examples of standard operating procedures procedures procedures but the finance function is very similar but the finance function is very similar but the finance function is very similar to to to other areas of your business and then other areas of your business and then other areas of your business and then you would have a defined way you would have a defined way you would have a defined way of doing things whether it was a defined of doing things whether it was a defined of doing things whether it was a defined way of paying your suppliers way of paying your suppliers way of paying your suppliers a defined way of preparing your a defined way of preparing your a defined way of preparing your end-of-month reports end-of-month reports end-of-month reports to find a way of chasing out customers to find a way of chasing out customers to find a way of chasing out customers if you're doing something like if you're doing something like if you're doing something like enterprise sales rather than having enterprise sales rather than having enterprise sales rather than having customers on customers on customers on direct debit or they're paying for direct debit or they're paying for direct debit or they're paying for implementations implementations implementations the next thing i wanted to talk about is the next thing i wanted to talk about is the next thing i wanted to talk about is having as a founder having access having as a founder having access having as a founder having access to metrics and some kind of weekly to metrics and some kind of weekly to metrics and some kind of weekly dashboard dashboard dashboard that really helps you keep a finger on that really helps you keep a finger on that really helps you keep a finger on the pulse typically the pulse typically the pulse typically even though we're aiming for monthly even though we're aiming for monthly even though we're aiming for monthly reports typically many founders that i reports typically many founders that i reports typically many founders that i speak with speak with speak with and not actually getting reports on a and not actually getting reports on a and not actually getting reports on a timely basis timely basis timely basis which is making it hard for them to make which is making it hard for them to make which is making it hard for them to make decisions decisions decisions so on the one hand i encourage you to so on the one hand i encourage you to so on the one hand i encourage you to get your your bookkeeper or your get your your bookkeeper or your get your your bookkeeper or your accountant to get accountant to get accountant to get reports to you quickly within 10 reports to you quickly within 10 reports to you quickly within 10 business days after the end of each business days after the end of each business days after the end of each month month month but the other component of that is what but the other component of that is what but the other component of that is what metrics can you track on a regular basis metrics can you track on a regular basis metrics can you track on a regular basis to get a feel for what might lie ahead to get a feel for what might lie ahead to get a feel for what might lie ahead and these are metrics that i track and these are metrics that i track and these are metrics that i track this report i get this report on a this report i get this report on a this report i get this report on a weekly basis and that goes to my weekly basis and that goes to my weekly basis and that goes to my management team management team management team and this really helps us from a sales and this really helps us from a sales and this really helps us from a sales and marketing perspective we have an and marketing perspective we have an and marketing perspective we have an idea of the pipeline idea of the pipeline idea of the pipeline from a delivery perspective we can track from a delivery perspective we can track from a delivery perspective we can track how we're going

how we're going how we're going and then also looking at onboarding and and then also looking at onboarding and and then also looking at onboarding and cash flow too cash flow too cash flow too so the metrics and the key drivers of so the metrics and the key drivers of so the metrics and the key drivers of your business will be different your business will be different your business will be different for example if you're offering free for example if you're offering free for example if you're offering free trials trials trials and then you've got an idea around and then you've got an idea around and then you've got an idea around conversion rate there conversion rate there conversion rate there you might be tracking how many new you might be tracking how many new you might be tracking how many new people signed up for a free trial people signed up for a free trial people signed up for a free trial or if you're doing enterprise sales then or if you're doing enterprise sales then or if you're doing enterprise sales then you might you might you might have a sales section that looks a bit have a sales section that looks a bit have a sales section that looks a bit like this where you know like this where you know like this where you know that typically 10 calls results in that typically 10 calls results in that typically 10 calls results in two customers of a certain dollar value two customers of a certain dollar value two customers of a certain dollar value of revenue of revenue of revenue and so this really gives you an idea of and so this really gives you an idea of and so this really gives you an idea of how you're tracking how you're tracking how you're tracking these dashboards can be they can be these dashboards can be they can be these dashboards can be they can be tracked in excel in google sheets i tracked in excel in google sheets i tracked in excel in google sheets i think that think that think that that's fine it's a good way to start out that's fine it's a good way to start out that's fine it's a good way to start out and there's also and there's also and there's also dashboarding tools where you can bring dashboarding tools where you can bring dashboarding tools where you can bring in data sources in data sources in data sources from multiple different platforms and i from multiple different platforms and i from multiple different platforms and i think brian think brian think brian who's also in this community has i hope who's also in this community has i hope who's also in this community has i hope i'm getting the name right here i think i'm getting the name right here i think i'm getting the name right here i think it's called sunrise kpi it's called sunrise kpi it's called sunrise kpi where you can track kpis as well so where you can track kpis as well so where you can track kpis as well so that's another option for you too that's another option for you too that's another option for you too the key steps in in this being the key steps in in this being the key steps in in this being meaningful or giving you meaningful meaningful or giving you meaningful meaningful or giving you meaningful information information information uh one actually figure out what metrics uh one actually figure out what metrics uh one actually figure out what metrics uh the drivers of your business and it uh the drivers of your business and it uh the drivers of your business and it may be different and then may be different and then may be different and then what's an effective way to track them what's an effective way to track them what's an effective way to track them and then three and then three and then three carving out time to look at the numbers carving out time to look at the numbers carving out time to look at the numbers coming to you now i wanted to go back a step so we've now i wanted to go back a step so we've looked at carl looked at carl looked at carl and really what a best practice finance and really what a best practice finance and really what a best practice finance function would look like

function would look like function would look like where there's a really clear set of where there's a really clear set of where there's a really clear set of deliverables everyone's clear on who deliverables everyone's clear on who deliverables everyone's clear on who needs to do what by when needs to do what by when needs to do what by when the how is documented in sops the how is documented in sops the how is documented in sops and then there's financial reports and then there's financial reports and then there's financial reports coming in within coming in within coming in within 10 days after the end of each month and 10 days after the end of each month and 10 days after the end of each month and there's a dashboard there's a dashboard there's a dashboard that's being looked at on a weekly basis that's being looked at on a weekly basis that's being looked at on a weekly basis with the king metrics of the business with the king metrics of the business with the king metrics of the business that's where we're aiming for but if that's where we're aiming for but if that's where we're aiming for but if you're just starting out you're just starting out you're just starting out you're probably not at that point yet you're probably not at that point yet you're probably not at that point yet and actually you and actually you and actually you probably should be focused on other probably should be focused on other probably should be focused on other things like making sales things like making sales things like making sales and trying to increase mrr monthly and trying to increase mrr monthly and trying to increase mrr monthly recurring revenue recurring revenue recurring revenue but there definitely are some simple but there definitely are some simple but there definitely are some simple things that you can do today things that you can do today things that you can do today to help with the financial side of your to help with the financial side of your to help with the financial side of your business business business if you're hustling hectares are you just if you're hustling hectares are you just if you're hustling hectares are you just starting out don't have any employees starting out don't have any employees starting out don't have any employees yet you've got some freelancers that are yet you've got some freelancers that are yet you've got some freelancers that are helping to build your product helping to build your product helping to build your product some of the things that you can do uh to some of the things that you can do uh to some of the things that you can do uh to implement client accounting software implement client accounting software implement client accounting software i use xero then there's other tools like i use xero then there's other tools like i use xero then there's other tools like quickbooks quickbooks quickbooks out there what's important here is that out there what's important here is that out there what's important here is that it connects to your bank account it connects to your bank account it connects to your bank account and also has the ability to connect to and also has the ability to connect to and also has the ability to connect to other apps other apps other apps or add-ons too so that you're reducing or add-ons too so that you're reducing or add-ons too so that you're reducing the amount of data entry required and the amount of data entry required and the amount of data entry required and eliminating risk of errors eliminating risk of errors eliminating risk of errors so having xero setup really helps but so having xero setup really helps but so having xero setup really helps but also being disciplined with also being disciplined with also being disciplined with firstly setting up business bank firstly setting up business bank firstly setting up business bank accounts and then using them only for accounts and then using them only for accounts and then using them only for business purposes business purposes business purposes personal bank accounts for personal personal bank accounts for personal personal bank accounts for personal business bank accounts for business

business bank accounts for business business bank accounts for business and it sounds quite simple but i often and it sounds quite simple but i often and it sounds quite simple but i often this is this is this is often where i see a bit of a mess when often where i see a bit of a mess when often where i see a bit of a mess when people are just getting started people are just getting started people are just getting started with building their finance function and with building their finance function and with building their finance function and then the third then the third then the third receipt management again it sounds receipt management again it sounds receipt management again it sounds simple and it should be simple but again simple and it should be simple but again simple and it should be simple but again something that typically isn't done well something that typically isn't done well something that typically isn't done well particularly by founders in their first particularly by founders in their first particularly by founders in their first couple of years couple of years couple of years just pick a receipt management process just pick a receipt management process just pick a receipt management process and stick to it and stick to it and stick to it you might pick dropbox or google drive you might pick dropbox or google drive you might pick dropbox or google drive it might be an email but something it might be an email but something it might be an email but something all of your receipts should be going to all of your receipts should be going to all of your receipts should be going to one location one location one location typically travel costs are handled typically travel costs are handled typically travel costs are handled poorly poorly poorly we're doing less of that at the moment we're doing less of that at the moment we're doing less of that at the moment so if you've got physical so if you've got physical so if you've got physical receipts from buying meals out receipts from buying meals out receipts from buying meals out hotels things like that take photographs hotels things like that take photographs hotels things like that take photographs and again and again and again save them to whatever system that you're save them to whatever system that you're save them to whatever system that you're using using using and that will save you a lot of headache and that will save you a lot of headache and that will save you a lot of headache at tax time at tax time at tax time dressing out suzy sorry stressed out dressing out suzy sorry stressed out dressing out suzy sorry stressed out sophia is sophia is sophia is she's a little bit further along than she's a little bit further along than she's a little bit further along than hector she's hector she's hector she's starting to transition her team of starting to transition her team of starting to transition her team of freelancers freelancers freelancers into a team of employees she's scaling into a team of employees she's scaling into a team of employees she's scaling up the businesses up the businesses up the businesses growing she's got more customers and growing she's got more customers and growing she's got more customers and really for her really for her really for her the main issue is around cash flow the main issue is around cash flow the main issue is around cash flow there's more pressure on her there's more pressure on her there's more pressure on her to make sure that there's enough money to make sure that there's enough money to make sure that there's enough money to pay her employees to pay her employees to pay her employees some of the things that she can do some of the things that she can do some of the things that she can do assuming that she's already put in place assuming that she's already put in place assuming that she's already put in place the the three points that we talked the the three points that we talked the the three points that we talked about with hector which we're about with hector which we're about with hector which we're getting zero or other cloud accounting getting zero or other cloud accounting getting zero or other cloud accounting software using business bank accounts

software using business bank accounts software using business bank accounts and receipt management so she's got all and receipt management so she's got all and receipt management so she's got all of that happening of that happening of that happening really she should then be able to review really she should then be able to review really she should then be able to review a set of reports the profit and loss and a set of reports the profit and loss and a set of reports the profit and loss and balance sheet at a minimum balance sheet at a minimum balance sheet at a minimum every month and she should be able to every month and she should be able to every month and she should be able to have those reports come out of something have those reports come out of something have those reports come out of something like zero like zero like zero and either work with a bookkeeper or an and either work with a bookkeeper or an and either work with a bookkeeper or an accountant or someone accountant or someone accountant or someone in-house or maybe it's her to in-house or maybe it's her to in-house or maybe it's her to to check those numbers and make sure to check those numbers and make sure to check those numbers and make sure that they're accurate the last thing you that they're accurate the last thing you that they're accurate the last thing you want to do is want to do is want to do is make decisions based on what you saw in make decisions based on what you saw in make decisions based on what you saw in your financial statements your financial statements your financial statements and for them to have not been accurate and for them to have not been accurate and for them to have not been accurate and there's checks and balances that you and there's checks and balances that you and there's checks and balances that you can do and can do and can do and my second dot point here around my second dot point here around my second dot point here around financial literacy skills financial literacy skills financial literacy skills also really helps and i think every also really helps and i think every also really helps and i think every founder should have a baseline level founder should have a baseline level founder should have a baseline level of finance skills some knowledge of of finance skills some knowledge of of finance skills some knowledge of accounting and bookkeeping accounting and bookkeeping accounting and bookkeeping and some knowledge of taxes as it and some knowledge of taxes as it and some knowledge of taxes as it applies to the country applies to the country applies to the country and the location that you're in and and the location that you're in and and the location that you're in and there's books you can read courses that there's books you can read courses that there's books you can read courses that you can do you can do you can do and i think every founder should invest and i think every founder should invest and i think every founder should invest in building some of these skills in building some of these skills in building some of these skills and enough to know that when you are and enough to know that when you are and enough to know that when you are hiring an accountant or bookkeeper hiring an accountant or bookkeeper hiring an accountant or bookkeeper you can ask the right questions and you you can ask the right questions and you you can ask the right questions and you can know that they're doing can know that they're doing can know that they're doing a good job and also it gives you a good job and also it gives you a good job and also it gives you confidence in confidence in confidence in when you're reviewing financial reports when you're reviewing financial reports when you're reviewing financial reports that you can use that information to that you can use that information to that you can use that information to make make make good decisions not relying on other good decisions not relying on other good decisions not relying on other advices advices advices so if we do a little bit of a recap we so if we do a little bit of a recap we so if we do a little bit of a recap we spent most of today talking about spent most of today talking about spent most of today talking about ceo kyle and what a best practice ceo kyle and what a best practice ceo kyle and what a best practice finance function finance function finance function looks like and the reason i wanted to do

looks like and the reason i wanted to do looks like and the reason i wanted to do that was to paint the picture that was to paint the picture that was to paint the picture of as your business where when your of as your business where when your of as your business where when your business scales up business scales up business scales up what it can and should look like so what it can and should look like so what it can and should look like so something painful something painful something painful but i also wanted to talk about some but i also wanted to talk about some but i also wanted to talk about some earlier stages of business and we talked earlier stages of business and we talked earlier stages of business and we talked about hustling hector about hustling hector about hustling hector and stressed out sofia who were at the and stressed out sofia who were at the and stressed out sofia who were at the early stages early stages early stages of their entrepreneurial journey and of their entrepreneurial journey and of their entrepreneurial journey and some of the things more simple things some of the things more simple things some of the things more simple things that they could implement today to that they could implement today to that they could implement today to really help them really help them really help them on that path to where ceo and carl is that's it for me i'd love to connect i'm that's it for me i'd love to connect i'm definitely more active on definitely more active on definitely more active on linkedin than i am on twitter but here linkedin than i am on twitter but here linkedin than i am on twitter but here are are are the options if you would like to connect