Spencer Sheinin, an Entrepreneurs' Organization (EO) member in Vancouver, Canada, is a CPA, speaker, and founder and CEO of Shift Financial Insights, provider of simple accounting solutions and financial insights for emerging businesses. As a serial entrepreneur who understands the bookkeeping challenges of startups, we asked Spencer about the specific financial needs of businesses on the rise. Here's what he shared.
You've said, "Bookkeeping as we know it is dead." Give us the post-mortem.
Bookkeeping is dead―or, at best, on life support―for two reasons:
1. Lack of usefulness to entrepreneurs without a finance or accounting background, which is most entrepreneurs. Sure, basic day-to-day accounting and monthly reporting are critical for banks, buyers and auditors, but without translating those reports into plain, understandable and actionable language, they're really of little use. Most entrepreneurs I talk with are embarrassed by how little they use and understand the information in their books. And no wonder―it's written in a completely foreign language; without a competent translator who speaks "entrepreneur," it isn't much help to them in running their businesses.
2. Technology. Like the classic example of Blockbuster being replaced by Netflix, bookkeeping is being replaced by automation software. Cloud accounting software and a host of robust apps have already automated most basic bookkeeping transactions and the rate of innovation continues to accelerate. Every day we get closer to a world where bookkeepers are redundant.
Yes, bookkeeping as you know it is dead. It's being replaced by useful and insightful financial information that entrepreneurs can actually understand and take action on―without getting an accounting degree.
How has working with up-and-coming entrepreneurs impacted you?
I've seen so many amazing, talented and motivated entrepreneurs struggle with financial literacy. It pains me to see how their financial blind spots hold them back from accelerating their businesses. One of the most common comments I hear from entrepreneurs is: "I'm not getting the information I need to run my business. And, if I'm being honest, I don't know how to get it; I just know I'm not getting it."
That pain point, the frustration of entrepreneurs not having a clear and simple roadmap to follow (we all love our one-page plans!) is the basis of everything I do today. My goal is to have accounting serve―rather than confuse―the entrepreneur.
How can choosing the right accounting firm make or break a startup?
If your accounting was perfect, but your sales were a disgrace, your business would be on shaky ground. The reverse is also true. You can be crushing it in other areas of your business and still be struggling with cash flow or financial decision-making if your books are a mess and you're not getting the insights you need. Those bad decisions can even be fatal to a company.
To be clear, I'm talking about either your in-house bookkeeper/accountant or your outsourced accounting solution, both of whom would work with your year-end accountant.
What's the biggest lesson you've learned in your own entrepreneurial journey?
Two words: Follow passion.
I spent almost 20 years owning different businesses that I wasn't passionate about or that didn't have a clear "why." The outcome? A massive case of burnout that took three years to recover from. I spent a couple of years figuring out my passion and how to roll that into a business model I was excited about. My two main passions are entrepreneurship― because I believe entrepreneurs can change the world; and endurance sports. Though it remains a hobby for now, I have competed in several ultra-distance running events, marathons, Ironman races, distance cycling events and marathon swims.
Today my "why" is helping entrepreneurs change the world by helping them through their financial blind spots. My experience as an entrepreneur has been totally transformed by having such a clear and powerful "why." Sure, there are still tough times and situations I'd rather not face. The difference now is that I'm inspired to make a huge impact, which makes wading through challenges a little less tough.
What are the top three financial insights that every entrepreneur should know about his or her business?
- It's time to change your relationship with your numbers. If it's set up right, accounting doesn't have to be something you dread. When done right, you will find accounting to be a source of power instead of a source of pain.
- Specifically, it's your accountant's job to cut through all the noise and shine a light on the biggest financial issues in your business and present the impact of those problems in terms of "cash" and "profit." Even those with no financial background whatsoever will understand that. Once armed with that knowledge, it's your job to fix those top problems. We know you're great at solving problems―you're an entrepreneur.
- There are multiple resources available that can help reduce the pain of accounting and bookkeeping, or take it entirely away if you choose to outsource it. In changing your relationship with your numbers and setting up bookkeeping automation tools, it's critical to nail a couple of things:
- Get help establishing the ideal foundation. This means everything from picking the right software and setting up your reporting package to implementing policies and procedures and ensuring they are followed correctly. When you're working from a solid foundation, a lot of other issues disappear.
- Make sure that resource also provides financial insights. Perfect bookkeeping is one thing. Perfect bookkeeping from a source that also provides perfect clarity on your business is magic!