Apps can't run your business for you
You are accountable for choosing them, understanding them.
Including your General Ledger (GL).
GL is the app you'll get with the lowest "talked about/ importance" ratio.
But get it wrong and you are [censored]
We went on a journey as we started Ship Shape to choose a GL.
TLDR: went with Xero.
But the video shows why, and some pros/cons.
Transcript of the video above:
Hi, I'm Alistair, the grumpy CIO. And what am I grumpy about this week? I'm grumpy about startups not making good fundamental decisions about how they're going to choose applications to run their business. Why is that important? Well, you're a director, you're liable for your business, you don't want to be seeing this person, your accounts that go up at the end of the year to Companies House, the representation you put forward to your investors count. If you get them wrong, and duck things up, you end up here.
It's not where you want to be. It's your choice. It's on you. I got grumpy about this. Because years ago, I was starting up as the head of operations for a startup. And I was really concerned about how I was going to run good business operations by which I mean finance, HR, payroll, cosec. And I went to a conference where there were some really respected operators. And I deferentially said, oh how do you run business operations with so few staff? And the answer I got was, "oh, there are apps that do that for you". There are no apps that do it for you. You're accountable. Now, of course, there are apps that apps do run your business, you don't sit there with an abacus doing things, but you're still responsible for working out how they work, why they work, and you or the person up in court. You can't sit there even in March 2023 years record this going. Ai told me to do this, I'm sorry.
There are sexy apps out there. But there's also quite fundamental apps. And actually, you need to do need to build from the base up as with most things in life, do the boring stuff first. The sexy stuff gets easier. The humble general ledger is something that many startup founders may not know about. You may have never needed to interact with this in your life before, you might have used finance apps in a company you worked at before, but been hidden from the actual GL. There is an obvious trio of these things to look out for you tilde, we went for zero. But there's sage and QuickBooks. They're very well supported. They're very well known in small businesses.
There are many, many others. And if I actually just come here to a place called Software Advice, I just googled it and I come up in here. There's lots of other ones you can go for, initially arrived, sponsored, don't beat them up for that they got to make money somehow. But there's things that you have to look out for it. So you go to highest rated, and you get lots of other options for your general ledger. At the time when I had to make this recommendation to our business. I didn't have a general manager in place I now do I went to her evening, even she has never heard of half of these things. But you have to make a recommendation. And I started up at shipshape and I wrote this little piece.
This is just an excerpt of the paper I wrote about why we should go with zero and the people I've spoken to and why it isn't perfect. At the time of writing it treats you're posting periods for your invoices you're receiving the invoice date is the same. Why is that? Why does that sound really boring and doesn't matter? It does. Because if you get a late invoice, you have to put it on your books, it actually goes on to a previous accounting period that might affect your year end, not by much. But you have actually already posted your end, you've posted up the company's house, it's now wrong. That actually is very important, doesn't sound it but is important. Zero has no concept of group. Whereas it needs to because when you open a US subsidiary, you will have two separate general Ledger's not working in tandem, they don't come together, you'll have to consolidate them on Excel or there are actually things on the Xero marketplace to do that. But they're not part of the existing part of Xero.
At the moment, it does handle foreign currency transactions. But at the time of recording this, you have to pay extra for that there are these little quirks that go through for all that we've loved Xero, my general manager that works here who'd never use Xero, before quickly loves it also has a payroll option, which is not part of your same finance solution. But it works well for us and we use it. Sage and QuickBooks are out there as well, but actually just a lot more variety with them.
The other advantage for Xero as a startup is it's one package and it just works. When do you actually need to do this? You do need to do it before you start seriously on product development. Before you've started seriously hardcore bootstrapping or even worse, you've got your first grant or you've got your first investment in. You don't want to be sitting there working out how am I going to do my end of year end of month book, bookkeeping and how am I going to produce my p&l balance sheets and cash statements? For myself? Nevermind or certainly my investors. You certainly don't want to be going What is a p&l balance sheet or a cash statement and realising that balance sheets they balance you need to know that before you start into the series product development, you need to select an option. Acknowledge there might be a risk of pivot you do something different later. But select one and set up for success before you start doing hardcore into your business.
Thanks for watching. I'm Alistair the grumpy CIO. I'm the grumpy CIO for shipshape VC. We are the venture capital search engine. If you are looking for investment for a startup, please come to our site www.shipshape.vc It's free and you'll find the investor who gets the business that you are talking about thank you