When you own a business, one of the key components to make sure it runs smoothly is a good accounting system. For accountant-turned-entrepreneur Scott Trevethan, managing director of the two companies he owns, there are several accounting concepts that he was able to apply to his businesses.
Scott started as an employee and embarked on a career in marketing and accounting before he founded his accounting-related business and later joined and acquired Scott Partners Chartered Accountants and Business Advisors. Two years ago, he opened his offshore business, called Go Global Bookkeeping. Throughout his business journey, he found himself constantly evolving and growing as a person. “For me, it’s the ability to change and adapt and try new things,” he remarked.
The business environment is a challenging space. But as long as one has a thorough understanding and a good grasp of the industry and the market, one can forge ahead despite the difficulties. “From an accounting perspective, it’s all about planning, budgeting, forecasting, sticking to your key performance indicators, and making sure that you’re aware exactly where your business is at all times,” Scott said.
Here are some accounting terminologies we can relate to the entrepreneurial journey, based on Scott’s insights and experiences.
Profit and Loss
If there are gains and deficits in financial parlance, there are also risks and rewards in starting and managing a business. “It’s been a turbulent ride. The highs are very high, and the lows are very low,” Scott describes. His journey has been full of sleepless nights, cash flow issues, and various concerns. “We’ve been very close to running out of cash. We even had to go to the bank and ask for extensions on our overdraft and loans. We have been through periods when we haven’t been able to pay our mortgage and pay ourselves of salary,” said Scott, referring to him and his wife, Kerry, who also works as Practice Manager of Scott Partners.
Being a business owner means taking responsibility for his employees, clients, people related to the venture and other tasks needed to move the business forward. “Massively, the pressures of running a business are in relation with cash flow, taxation, and regulatory requirements. Also, it is whether you are going to make a profit, even month-to-month, or not. In accounting business, we might make a $30,000 profit one month and a $10,000 loss the next month because of the cyclical nature of the business. Understanding those numbers and not being too stressed out from those is probably key to happiness.”
Assets and Liabilities
Resources, when they turn out good for you, become an asset to the company. On the other hand, if they don’t work well for you, they become a liability. For instance, people who contribute to the venture are assets to the business, while those who don’t become liabilities. Branding and identity is another thing.
Because Scott acquired Scott Partners, he also bought its history, clients, process, culture, and its way of doing things. It has taken him nearly ten years to have his DNA embedded into the business and to perform changes where necessary. “We’re a lot more business-focused now as opposed to investor-type focus. The client mix, the way we operate, and the way that I’m personally involved in the business are the things that changed. Technology is another thing. We were a traditional accounting firm before I came into the business. Now, we use cloud technology and a whole bunch of different technologies that are becoming more commonplace in accounting firms,” Scott cited.
At some point in his journey, Scott brought in a business partner to help him run the business. But it didn’t work the way he anticipated it would work. Acknowledging the strength a good team can bring to the venture, Scott ensures that they recruit high-calibre managers and train their people extensively so that they deliver their work based on the core beliefs of Scott Partners. He explained, “We set the standards for them, and then we give them the freedom to operate within the range of those standards.”
Balancing is a significant part of entrepreneurship, whether it’s juggling various tasks, managing two or more ventures, or looking after different aspects of one’s life. Keeping life in balance is one of the reasons why Scott joined EO Melbourne. “The core thing that attracted me to EO was that it wasn’t just about business. It was also about looking after you and your family. It helps you understand that you can’t run a business and be successful at it if everything else in your life is falling apart. I think EO is tremendous in the way that they balance you out,” he commended.
Scott endeavours to live a holistic life, no matter how difficult it can be. He spends quality time with his family and enjoys his hobbies, such as snowboarding and scuba diving. Apart from keeping himself fit physically, he also hones his mind through constant learning and meditation. When it comes to looking after two businesses, he keeps them separate, setting daily huddles for his respective teams.
When you hold on an asset, you gain from it over the years. To take a broader business perspective, Scott cited longevity as one of the key things to success. Things will turn around if you keep hanging in there. In other words, perseverance will yield positive results. Resilience and tenacity are among the many qualities Scott mentioned that would help entrepreneurs achieve their goals. Staying true to the core values and walking the talk, starting from himself, can spread out to his team and his clients.
As Scott looks at his entire entrepreneurial journey, he has learned from his various experiences, which he hopes could also inspire and motivate others who aspire to become business owners. “Choose your partners wisely. Make sure that your cash flow is under control and that you have plenty of cash reserves. Make sure that you understand your target market. Try a niche wherever possible, and make sure that you fully explore that niche both vertical up and down. Make sure that your accounting work is under control so that you’ve got everything in place.”
He added, “Don’t panic. Meditation has been extremely helpful to me. It helps clear the mind and space. When pressures get too much, you can make better decisions quicker. And then having the support of your family around you. Something like EO can help tremendously to make sure that you’re not isolated. In the business world, you can feel very alone, even with a larger company. So, having people around you that understand what you’re going through is immensely beneficial. That’s the beauty of EO as well.”