Good morning

We’ll be posting throughout the day from the Viaduct Events Centre in Auckland New Zealand.

Check back at 9.00am NZST for live coverage from the Xerocon keynote #xerocon.

9.37am CEO Rod Drury keynote

“This is about real people, things that they play with everyday. We make things a whole lot easier.” 

9.50am Introducing some of the Xero board members

Sam Knowles, Phil Norman and Craig Winkler

10.00am

Big investment in the last year into accountant side features as it makes sense in the Cloud. Client and accountant software should be seamlessly connected. The client pays-not the advisor.

Xero is moving from being a software vendor to being a partner.

Many practices have out of date hardware which is not helping them to to move to the Modern Practice model.

Partners need a ‘common desktop’ so all of their document and file management works together. Many do-it-yourself solutions require more time in the long run.

10.10am Practice management

Announcement of the new practice management offer with the acqusition of Workflow max. Free practice management for partners who add 20 clients – that caused a ripple of excitement. I think I heard a ‘woo hoo’ or three.

10.23am Andrew Tokeley takes the stage to talk about the Xero Roadmap

You can call him ‘Tokes’.

“Even my 83 year old grandmother calls me Tokes so don’t feel weird.”

Report packs give complete control, new features such as notes can be drag and dropped to make life a lot easier.

You can now take Word or Excel tables and drop them into report fields. Lots of claps from the floor.

10:44am What’s in store for 2012 – report packs

Custom report fields e.g. banker, overdraft size, solicitor.

Automating schedule for Current Accounts and Loans.

Report code updates.

Purchase orders, quotes, stock lite and setup and conversion tools.

“We are not doing a full stock management system.” 

10.49am Next up, it’s Craig Walker 

30,000 + downloads Xero Touch from app store.

Craig tells us “what he got up to over the Christmas break.” … Address verification.

Data shows businesses dealing with the same businesses across the ecosystem.

Developing the Xero-to-Xero user features. Online invoices create online statements and help businesses get paid faster.

Users also get remittance advice (big cheer).

11:05 am Sara Goepel

Sara Goepel

The new Xero business community will be coming out on the 13 February. Businesses can help each other and work together.

Online training and a training dashboard for partner edition. Online training modules mean that businesses can keep track of their requirements.

You should see bank feeds in Xero personal in the next two to four months.

11.32am 

Back from the break. Getting ready to hear Hon Craig Foss speak.

“It is fantastic to be in room full of accountants. It’s not often you say that.”

Lots of concerns about the global economy around the world. It is a great time to be doing business in New Zealand. We are a trading nation and the world wants the stuff that Xero is making.

We need people with clever ideas and big visions.

We need exporters and investors who can see a new, innovative, start-up company and make it grow.

The huge investment in fibre adds lots of new opportunities for New Zealand businesses.

12.10pm Trevor Schoenmaekers, Hansens Accountants

GST is the biggest nightmare for his practice.

Trying to send things to India to save costs didn’t work and client’s didn’t like it. Trying to do reporting was taking too long and there was no time to spend with clients.

Switched to Xero in June 2010.

“Their (Xero’s) support to me was something I had never, ever, ever experienced before. One push of the button turned off $30,000 worth of fees to MYOB”.

Show of hands for the Rob Nixon group people in the room? A few here.

Major culture change was required as accountants in the business became more responsible for their clients. Increased transparency was hard for some to change habits. The business models have changed inside the practice.

Hired a marketing person fulltime to use new tools such as Twitter and Facebook to connect with customers. Staff turnover has basically stopped by creating fun and focusing everyone on clearly defined targets. Clients are encouraged to pay bills on time with prizes such as weekends away.

Trevor & Rod

12.40pm David Jessep, DJCA

David invested heavily in his business and then the Christchurch earthquake hit. He was in a bar called the Twisted Hop having a beer at the time. The whole building was demolished.

Up in running after three days with some cheap laptops and products such as Google Docs and Smart Payroll.

“The Cloud enables two businesses that are passionate about different things to connect and work together.”

“We’ve made lots of mistakes but we learned lots. It was hard in 2011 but we still doubled in size.”

1.00pm Lunchtime. (I’ll plug-in and be back soon for the afternoon workstreams).

In the meantime, you might get some food tweets on Twitter #xerocon.

1.56pm Hamish Edwards - Profiting as a connected practice

“Who went to university four years to learn how to do tax returns?”

A lot of accountants have  a lot to offer business because they run their own business.

Labour is expensive and junior accountants are getting paid more.

Love the bookkeeper. “If you annoy one of your client’s staff they will go with their staff not you.”

2.19pm  The Single Ledger

The same accounting system used by the accounting and the client.

The same accounting system is used for all clients.

2.35 pm Live Demos

Spotlight workpapers + Xero + WorkflowMax

Annual financial statements can be built anywhere. Very fast and easy to do.

Richard Francis launches a new innovation on stage with his wife Julie, Spotlight Workpapers.

March 20 is the target release date. Data is imported live from Xero into the workpaper.

The one-stop shop workpaper approach enables queries to be captured and shared online, in real-time.

2.56pm Gavin George

WorkflowMax and now Xero’s newest employee as WorkflowMax country manager for New Zealand demos value-based billing and looking at improving job throughput and practice efficiencies.

WorkflowMax demo

3.10pm Hamish Edwards back into it

It’s not about time. What is the average fee per client?

Taking questions from the floor

3.30pm

Guy Pearson from Interactive Accounting presenting his journey to the Modern Practice. Aiming to go global with his practice enabled with Cloud tools such as Mailchimp, WuFu, Google, LodgeIT and Eventbrite.

Guy Pearson's Ecosystem of providers

4.30pm

A few questions from the floor from some of today’s speakers.

Speakers take questions from the floor to finish of the day session

We’re wrapping up now for a bit so we can all go and get beautiful for the gala dinner and awards ceremony at 7,30pm tonight at the Viaduct Events Centre in Auckland. Keep an eye on our Twitter feed at #xerocon for winners of the New Zealand Xero Partner Awards for 2012. Thanks for all your comments and pictures. Great to see everyone had such a fun and informative day.

Until today my proto-theory stood precariously on three principles (and some of them are admittedly hunches).

I think Osborne’s budget today just gave my theory a fourth leg.

1. The prospect of likely though as yet unconfirmed swathes of reporting and regulatory relaxation for small businesses in coming years, saving both small businesses AND the government lots of money – the latter being the clincher.
2. Improved access to more affordable and better business management technologies, like -cough- Xero, which provide small businesses with on-demand access to instant and scalable infrastructure, up-to-the-minute operational visibility (with their financial advisors and virtual CFOs on their shoulders) and tons of operating efficiency – UNLIKE medium-sized businesses still running 20+ year old ERP apps whose gnarled roots are so deeply embedded in their processes and operations that their removal fundamentally risks harming the business, or at best will cost thousands to mitigate and years to execute – hence it gets deferred and the roots get to run even deeper, ability to execute all but evaporates.
3. The fact that you used to need large chunks of capital to run a medium-sized business, what with all the traditional communications, sales and distribution networks such businesses required to trade, often as mid-supply chain intermediaries. In 2010 you don’t need the same amount of capital nor does the supply chain need lumbering intermediaries whose existence has more to do with tradition than expedience.
4. George Osborne’s newly announced ‘think small first’ fiscal support package for startups and small businesses; lower Corporation Tax, NI breaks for startups and Capital Gains relief for small business owners.

I’d say it’s a done deal.

Without our partners and early adopter clients we wouldn’t have made so much ground over the last year in this market. Hearing what others are saying about your product is the best testimonial so we decided to film a range of people who use Xero for their business and who recommend it to their clients. The videos below feature a couple with a photography business, an accountant and his client and an IT consultant/bookkeeper.

You can also find other case studies specific to your region and industry.

Shawn Smith and Nicole Kavanagh of Blinq Photography  (2:58)

Accountant Craig Parsons of BBT Partners and his client George Keo-Cohen  (3:00)

Gillian Rossouw of Jill of All Trades  (3:05)

Over the next 2 years, it wants to transform a predominately paper based process to one which is entirely electronic. That means that all businesses and individuals will be required to submit their tax information electronically, either by themselves, or through an agent.

What is very important to note in this change is the IRD has seen the innovation and private sector investment being made in small business solutions. Under this proposal it is effectively moving from a ‘retail’ relationship with tax payers to a ‘wholesale’ one. It will work with a number of intermediaries who will provide these services and connect to the IRD.

A Public/Private sector partnership where all parties win

1. The Government will save money
2. Private sector solution providers can provide a more compelling service
3. Small businesses and individuals will save time and money

Time is right for this initiative

1. The use of the Internet is now pervasive
2. There are private sector companies, like Xero, investing substantially in this market
3. The upcoming wave of low cost netbooks and computers have made access to the Internet affordable

The IRD has been watching what has been happening with Internet developments and has proactively sought expert opinion from the industry. The adoption of FaceBook Connect on its website demonstrates that it’s in touch with changes in the technology world.

What is the impact?

1. All small businesses are now forced to either work directly through their own secure space on the Inland Revenue website or work with an agent who is connected. If they are not yet using an electronic system they will have to.
2. Small business solution vendors, especially accounting and payroll suppliers will have to substantially modify their software over the next two years

So this is one of the biggest changes to small business technology over the the past 10 years.

The role of the advisor

At Xero we believe that the secret to small business productivity is connecting businesses to advisors. As such our approach will be to put accountants and other advisors in the middle of this interaction. Xero will facilitate accountants and other advisers becoming agents for small business owners. This is a major opportunity for advisors to add more value and drive small business productivity across the country.

Xero has always seen an initiative like this as a natural opportunity that comes from a cloud computing approach to small business compliance. We are closely involved in the process with the IRD and will continue to invest in our accountant-centric approach.

The IRD is seeking feedback on its website.

The best example of this is an item that sells currently for $9.99. This has $1.11 of GST on it, making the net price $8.88. With the change to 15% the GST will rise to $1.33, making the gross price $10.21. To my mind $10.21 is not as attractive as $9.99. A huge amount of research and live testing has gone into what’s termed psychological pricing all around the world. And there’s a fairly widely accepted belief that $9.99 will encourage more sales than $10.00.  So what can you do?One option is to actually mix up your pricing and see if you can make the next natural leap up to say $10.99, or to another price like $10.74, which feels like a discount from $10.99. Lots of big brands and retailers use this strategy.

Option two is to wear the GST rise and drop your net margin so the gross price is still $9.99. If you do this, your net price would be $8.69, so you lose 2%. If you think your volume will be adversely affected by increasing your total cost price -being the GST inclusive amount – you might like to keep the same price and forgo 2% on your net sale.

Option three is to display only the GST exclusive amount. In New Zealand the GST rules stipulate that you can display a price excluding GST, but if you do you must state that it ‘excludes GST’. This might be useful because a lot of people now use debit and credit cards to make their payments and the ‘add GST’ might be lost in their decision process. Also for a business that is GST registered, it can claim the GST back, so the net of GST price is more important anyway.

Last year there was a short-term increase in VAT in the UK and there is talk this will move again. We’d love to hear about your experiences in adjusting your pricing to accommodate a change in the rate of sales tax – wherever you are in the world.

The article outlines key principles behind successful emails, listing things such as having clean layout and a clear call to action. The idea being that if you follow these guidelines your emails will be appealing, and people will respond more to them.

In our experience (and that of loads of other companies) it’s not just about making things look and sound great to get the best results, you need to go one step further and it’s all about testing – testing everything you can.

A/B Testing

Many of you have probably heard the term A/B testing or split testing. You can do it with websites, emails, phone calls and even the homeless. In the case of email, the most basic way to A/B test something is following these steps:

1. Identify a goal you want to improve on, e.g. increasing replies or clicks on a link
2. Make sure you can measure the result by using things like promotion codes, different link destinations or cool marketing software that does it all for you
3. Send half your customers the original email
4. Send the other half a slightly modified email
5. Check which email version improved your goal the most

Just remember, while you might be tempted to make lots of changes to improve your goal faster, it’ll be harder to determine what particular change did the trick.

Here’s what we did

We decided to A/B test something that’s just a small thing and often overlooked – the email subject line. We wanted to see if a company name at the start of the subject line encouraged more people visit our website.

Version A (red) had no company name in the subject line, and Version B (blue) had “Xero -“ added to the start of the subject line.

Having the company name in the subject line saw more people open the email, but the difference was so small it’s unlikely it meant anything. However, by not having a company name in the subject line meant we received around 70% more clicks through to the website.

What does this mean?

There’s a bit of guesswork in reading the results. Sometimes the answer is clear – a bigger button might attract the reader’s attention more. In this case it may be that the email felt more personal and human without a company name at the start, and people were more receptive to the contents of the email. Or it could’ve been sheer luck, and by sending the email again to a few thousand more people we’ll see the new data start to average things out to show a smaller gain.

The important lesson to take from all this is that by continually testing and measuring everything, even the very small things, you can discover your own best practices in everything you design. On their own these percentage improvements may seem tiny and disconnected, but compounded over time they can have a huge impact on the success of your business.

Things you can start testing now:

• Graphics
• Colours
• Call to action
• Headline
• Page copy
• Arrangement of email elements
• Timing – try sending emails at different hours or on different days

Well, the news is all good, Xero will be taking care of all the heavy lifting for you while you get on with more important things. This is a great example of the power of online software – you get to enjoy all the benefits of regular updates and new features without having to install any updates or pay anything extra. And from what you tell us this is important …

“Friends warned us that the software gets outdated and upgrades are expensive, plus they’re a real hassle to install. With Xero we get all the upgrades automatically for free.” – Penny Towns, Inspire Photography

So sit back, relax and look out for posts over the next few months explaining what we’ll be doing and how we’ll make the increase in GST a wee bit less painful.

We’ll also be posting more on The Budget…

The Rudd Government will look to reduce the rate of increase in government spending as Australia works it way out of the global financial crisis. Any restrictions on government spending will push more employees into the commercial sector, which should see new businesses emerge as some turn to self-employment. SMEs who provide goods and services to the Rudd Government will also see their position tighten. But if the economy as a whole grows, then in theory, the SME will be able to move their business from government to other sectors.

Australian Budget expenses

Lowering the SME tax to 28% (from 30%) is good news for small businesses which make a huge contribution to GDP. While it is praiseworthy to want to ensure people retain a comfortable lifestyle in their twilight years, the rise in the super guarantee means business owners will have to increase their employer contributions. This adds to the underlying costs of our friendly small business and makes life harder financially.  So, the Government gives with one hand and takes with the other.

Australian Budget revenues

The big problem Treasurer Wayne Swan and Kevin Rudd have is getting the Resource Super Profits Tax (RSPT) on mining through the Senate where they do not have a majority. Being a ‘no frills’ Budget there is not a lot of wriggle room to negotiate. The RSPT is such a significant feature of the Budget, that if it does not go through, then Rudd may need to go back to the drawing board. Uncertainty hurts any economy.  Australia we need a decision soon.

What it means for small business

• Reduction in corporate tax rate to 28% effective from 2012/2013 FY 
• Write off Assets up to $5k in the year of purchase from 1/7/2012 and a simpler single pool rate of depreciation of 30% (buildings) 
• Superannuation Guarantee (SGC) increase to 12% by 2019 (0.25% increment from 2013 to 2014 and 0.5% annually from 2015 to 2019)
• Establishing a single online business name register will save businesses money as they currently register (and pay) state by state. This was announced initially in 2009. No definitive date for roll out announced 
• If you report GST on a Cash Basis you will be able to claim upfront credits for GST on HP agreements  
• Government will target the cash economy and fraudulent/skipped BAS returns, compliance in general – in line with this it will also invest in simplifying compliance costs to business 

http://www.budget.gov.au/

The other biggie (which we wish other OECD countries would adopt) is a $5,000 write-off allowance for fixed assets. It will save so much administration time accounting for small assets, which now can be written off at time of purchase. Brilliant.The Hon Wayne Swan is coping a lot of flack from big business with their significant PR clout, but the unsung heroes of the Australian economy,  the Mum and Dad business owners, will be singing his praises. A lot of noise is being made about the effect on jobs in the mining industry and fair enough, but if an economy can grow and develop its SME sectors, the employment prospects are massive, even bigger than mining. The social impact of breeding a society of entrepreneurs (who need employees) will last far longer than mineral deposit. For example look at the result of the coal mine closures of England and Wales. Some of those communities are only just getting back on their feet now and the UK Government had to develop significant retraining and investment in the SME sector. The UK ate all it made from North Sea oil, leaving no financial asset or natural resources for future generations. Norway on the other hand invested all the revenue generated and has quietly become a very wealthy nation.

If this is a sign of things to come, we eagerly look forward to the release of the Budget next week. AND if you are listening Kevin (Rudd) or Wayne, can you please drop individual income tax returns just like New Zealand has done…the accountants hate doing them and charging for it.

You can read the executive summary of the Henry Review here.

Congratulations Angels.

You can read about what’s new here: Introducing Google Places.

There are lots of new features such as Twitter style updates and (for the US) introduction of QRCodes.   This allows stickers to be put on your store front to provide easy access from customers to your Places profile from their mobile.

Pretty interesting stuff and a great way for small businesses owners to get more experience with the web as well as make it easier for new customers to find you. I wonder how long until the term ‘star the business‘ (set as a favorite) becomes part of our normal lexicon.

Since 2008 we’ve been sponsoring the E2theMax Business Makeover Challenge. Our CEO Rod was quoted saying,

“The Challenge provides owners (small business) with the mentorship and tools necessary to really encourage, build and accelerate their businesses.”

The New Zealand based Challenge gives 50 businesses the opportunity to collaborate with some of the best business minds, develop a solid plan and execute it with the teams, within 12 weeks. Participants receive up to $60,000 worth of contributed expertise, products and services that focus on giving their business a real boost.

This is followed with extensive promotion of each boosted business at the Challenge 2010 Reveal Event and in this year’s Challenge publication.

If you think your business could benefit why not check it out. But be quick, space is limited and applications close on 12 April 2010. You can register your interest here.

This is a great way for small businesses to promote themselves. Authentication is by a phone call which usually happens pretty quickly.

It also allows photo’s and images to be loaded.  This is a great way for small businesses to differentiate.

Google are a winning search engine and we expect to see many new applications built on top of this directory data. Therefore we think it’s very important that you take control of how you are presented in search. Its simple enough to do yourself or talk to your website provider who should be able to quickly set you up.

http://google.com/lbc

Adding accounting into Rockmybaby™ wasn’t something we considered until we saw Xero. Now we can add more value to our Rockmybaby™ licensees and help them get their business running better. Xero makes the business side actually fun. – Ursula Maidens, CEO Rockmybaby™

Over the last year we’ve been enjoying increasing success with franchises. As the economy has tightened many people have considered a franchise as an alternative way to move ahead.

As we looked at the franchise market we saw some great operating models, but in most cases the accounting systems and processes were not included. Yet these are the areas that often cause the most pain for franchisees.

Online accounting software is the ideal solution for smart franchises. Check out our franchise page for more: www.xero.com/franchise.

A couple of months ago Richard Burton from Hoodeasy, a company that sells leavers hoodies to students, contacted me about an idea he’d had. Richard’s been using Xero since June 2008 for his small business that sells personalised hoodies to groups of students in the UK, particularly for those leaving who want a memento.  He was considering how the development of an application to enable his various suppliers to access Xero, and add draft invoices directly into his account, might be achieved.

Richard told me that he sometimes struggled to keep on top of all his paperwork and so he thought if his suppliers could add invoice details directly into Hoodeasy’s Xero system, it would save him several hours a week. Rather than have Hoodeasy go to the bother of building a custom application I thought it might be simpler for them to either:

• Request each supplier fill in a simple spreadsheet which could be emailed to Hoodeasy and imported into Xero
• Or that he simply invite each trusted supplier into his Xero organisation using the  employee role. This gives them secure and restricted access to enter their draft invoices.

Richard preferred the second suggestion and promptly sent his suppliers employee role invitations from his Xero organisation. He then contacted them to explain further.

Richard reported back:

None of my suppliers were worried about the proposal from a technical or security point of view. They all seem comfortable with web-based software which is great. I didn’t have to educate them and they found it very easy to add invoices. Hoodeasy’s suppliers now get paid sooner because we get the invoices instantly and any queries can now be resolved instantly over the phone. It’s a win-win relationship.

But, paying suppliers early – surely that’s counter intuitive in a cash starved economy?

Negotiating extended credit terms with suppliers can be a quick way to free up cash in hard times. Reducing credit to incentivise suppliers to enter their invoices directly in Xero seemed quite a price to pay to free up several hours each week.

I challenged Richard on whether he thought the benefits outweighed the costs:

We don’t go to production with an order until we have payment and so our cashflow is fine. I’m more than happy to pass some of those benefits down the supply chain if it means that they’re happy saving me a few hours a week in bookkeeping.

This arrangement isn’t going to be suitable for every businesses but it does show how technology can change the dynamics of relationships between supplier and customers. Queries can be resolved quickly and payments made promptly. A small business owner can free up time to focus on their business rather than worrying about staying on top of bookkeeping.

Xero saves you time because it’s easy to use. Having suppliers do your bookkeeping for you – it doesn’t get much easier than that!

The report focuses on Tax as their research shows that of the overall compliance burden – taxation makes up 42% of the load.

You can read the report and comment here: http://www.smetax.co.nz/reports/

The key recommendations in the paper that I took notice of include

1. Basing tax on turnover (revenue)
2. Introduction of cash basis of accounting for income tax

My comments on the report are as follows.

It’s great to see the thought that has gone into this and some great ideas floated. Thank you.

In our experience small businesses are in all shapes and sizes. So coming up with a formula that fits all will always result in large (actual) numbers of businesses being disadvantaged. As you note, low margin businesses don’t suit a turnover approach.

As an accounting software vendor the perspective that we would add is that some of the reasoning behind this paper appears to stem from the way existing small business accounting software works. For example accrual accounting is hard if the software does not do it for you. Yet accrual accounting makes sense because it matches income and expenditure – but in most software systems it’s too hard to get both a cash and accrual perspectives.

Compliance costs are high in part because of the friction of accountants getting access to the data. We’ve heard that 35% of accounting fees are around getting access to the data and ‘pick up put down’ costs of working in a disconnected way. So some of the policy suggestions can be addressed with better software that makes the hard stuff easier and reduces the unproductive cost of moving data around (and we’re trying to do that as fast as we can).

We should not confuse policy suggestions arising from existing software not being smart and fundamental tax changes that can drive productivity.

We would see moving to a cash basis as a big step backwards.

An example of good policy that gained limited traction for environmental reasons was the GST Ratio Method for Provisional Tax introduced last year. In part this may have been because accountants did not have good access to client accounting data within the period, without incurring fees back onto business to get a picture of their books. Therefore accountants did not promote the change and it had minimal take up.

Hopefully our perspective adds something to the discussion.

Rod Drury CEO – Xero (http://www.xero.com)

We feel really strongly about this and we’re starting to see the benefits of well designed software. The big goal in the paper is:

“no more than one hour’s tax compliance cost per month”

We are delivering on that:

It’s great to see some thought leadership happening in the area. Either comment directly on the SMEtax website, or comment below and we’ll forward your feedback.

It’s now a few weeks since I became the new Country Manager for Australia and as I see the potential of online accounting software that’s created especially for small business, I keep being reminded of the 12 years in which I ran my own computer company.

After university I became a developer of financial planning software that ran on an IBM PC (everyone thought I’d shot my career down, PCs were never going to replace mainframes – how little did everyone know). Within four years I was doing my own thing – selling and providing support for SME accounting software. You know, either the red box or the purple box (bit like the Matrix).

I had my successes and made plenty of mistakes along the way. It was certainly a learning curve starting out, the first hiring, first sacking and juggling the work life balance.

Why did I do it?  The same as most people. The lifestyle, being my own boss, a passion for an idea and financial freedom. But funnily enough I’d end up working crazy hours, live at the beck and call of clients, my partner became the pseudo bookkeeper (doubt if that’s in a marriage vow) and I’d often work longer for less than as I would’ve as an employee.

So what did I learn? That business is all about getting and keeping a client, which means you have to do all those things that will make people want to do business with you. There needs be a strategy for who you want to attract and how you go about it. The marketing you do might drum up leads but they then need to be turned into a sale. And once you’ve got the client on board you need to maintain the relationship.

More than anything I’ve learnt instead of being so caught up in your business that it runs you, time has to be put into reviewing your client acquisition and retention processes. So it’s about working on your business instead of in it.

If you or someone you know want to see what others are saying about Xero we have case studies on our website which are listed by region. Brand new to this series are some great companies based in the United States. These include branding and advertising firm Monaco Lange integrative solutions company CoreLogic LLC, a design consultancy focused on digital media and user experience Story+Structure and full-service creative agency Paper Tiger Marketing.

Up front and personal

To make the case study experience more dynamic we’ll be making available videos of people using Xero for their business and in their practice. The first video in our case study series features Rebecca McLeod who founded Made4Baby, a company providing natural skincare for babies and children. The second features husband and wife team Sonya and Peter Jackson from Peter Jackson Plumbing.

It quotes Alisdair Thompson, who made this very point when I co-presented with him a couple of weeks ago. I was glad to see it in print (though can’t find a link) as it struck me as insightful.

10 years ago, 10% of SMEs were funded by direct business loans. Today that figure has dropped to between 3% to 5%.

The rest finance their business by a mortgage over their house.

Banks generally cannot provide figures on how many house loans finance business, because they didn’t formally differentiate the lending when the house market was running hot.

This is the reality of small business. Very few businesses have a loan that is secured on the assets of the business. Effectively it is secured over the business owners house or with a personal guarantee. This is what makes small business so different from big business – it really is personal. If that deal doesn’t come in you have to face your CFO across the pillow at night and explain that the bank now owns another room of your house.

It also reveals why it is so hard for young entrepreneurs to get started. Without having a chunk of equity in your own house or having a close relative provide a Personal Guarantee it will be very difficult to obtain any sort of funding.

When we did AfterMail we soon worked out that as you grow you need cash – not for investment, just to fund cashflow.  Say your business costs $50k a month to run, and you get your sales up to $50k a month. Home and hosed right?  Well no. Your sales invoice might get approved for payment after a month because you’re in an implementation phase, and it might take another month for you to get paid.  So you need 2 months cash ($100k) just to stay alive.  Without an overdraft you need to raise that $100k as equity or you are forced to slow growth down to build your reserves.

It makes my blood boil when I see bureaucrats delaying projects or holding onto payments. They do not understand the stress it places on entrepreneurs who are risking it all and sweating how to make payroll.

Cash is oxygen. Small amounts of credit allow the entrepreneur to fund growth. It would be very interesting to know how many small businesses are funded by their home loan. I suspect it would be over 90%.

The very nice people at edgeofmyseat.com, have written a useful review on their experience in implementing Xero.

Moving accounts from Quickbooks to Xero

Edgeofmyseat.com is a web development consultancy based in Maidenhead. Thank you Rachel and Drew for sharing your experiences.

Our team has been working really hard for several years now. We’re absolutely blown away that so many businesses use our software and delighted that people really like using it. We’re all really proud to hear from real users and to know we’re making business easier.

I was invited to speak and I talked about how important this blog has been to the success of Xero. I shared some insights on why that is, how we manage the process of writing it as a team and other ways we’ve been using WordPress.

I just happened to come across these “10 harsh truths about corporate blogging” and they are definitely closely aligned to our experience and advice.

My slides are below and Idealog has a pretty good summary of the preso.

The six tips are:

• Know why you’re in business

• A bird in the hand

• Tell people what you do

• Spend every dollar like it’s your last

• Be financially well organised

• Get help

People asked us where they might get a copy of the presentation so we thought we’d share it with you.

The Web Widgets site builder allows businesses to build their own e-commerce site without any technical knowledge. Businesses can then push invoices from their e-commerce site to Xero. Businesses that offer payment other than by credit card are also catered for – they can send the invoices out from Xero and match the invoices easily when payment is received.

Have a look at the walkthrough the team at Web Widgets have provided us. For more details about the Web Widgets site builder – see www.webwidgets.co.nz

This post is written by Simon Telfer, director  of Stimulus Consultancy, which specialises in SME governance, strategy and succession planning.

You’re a baby boomer business owner. Healthier and wealthier, you are no longer content with having your nose to the operational grindstone right up to the day you exit your business. But neither can you stomach the idea of waking up one Monday morning as an “ex” owner.

You believe you still have a significant amount to contribute to your business, matched by a desire to remain commercially stimulated and connected. Securing a mid week bowl’s club membership or joining the local coffee set doesn’t overly appeal. Flexibility is key for you. After all, you’ve got your second OE to organise.

Traditional succession planning is, however, typically framed in the context of “selling your business”. Despite a holistic approach being touted by legal and accounting advisers, planning quickly turns to discussions around likely acquirers, financial valuations and pre sale reviews.

Don’t necessarily want to sell? Well now may be the time to consider some precession planning: bringing in a new GM or CEO with you moving to non-executive director (or at least a semi-executive director). Experience shows what a powerful transition this can be within an organisation. You get a new lease of life, working strategically and with a greater degree of flexibility. The engagement of a new GM or CEO introduces fresh energy and ideas to the company as a whole.

For successful precession planning consider the following steps:

• Attain absolute clarity on your personal wants and needs
• Allow time for the implications of the transition to be fully thought through
• Assemble a board or a key independent adviser to support your transition
• Define a broad company strategy for the next 3-5 years
• Engage a new GM or MD with the competency to execute that strategy
• Streamline your operations with services like Xero

While the concept of hiring a general manager and taking a less hands-on role is not new, now is the time for it to be more actively promoted as an alternative for those owner managers caught in a ‘where to now dilemma?’ Put succession on hold and undertake precession planning to maximise the mileage left in your baby boomer tanks.

Read more about precession and succession planning on the Stimulus website.

I’ve attended each of these Expos, and I have to say, it’s amazing to see how far Xero has come in three years.

Year one was all about explaining the benefits to being online. Year two was about business owners realising the importance of having up-to-date financial information. Year three has been about sharing the stories of how Xero has changed what accounting means to the business owner.

At Xero we are delighted to see it all fall into place. I liken the look of excitement on a Xero customer’s face as they walked up to the stand, to a kid crossing the finish at a Weet-Bix Triathlon!

For those who visited the Xero stand, we take great delight in announcing the winners of a bottle of Moet Champagne and exclusive Xero merlot. 

• Allen Court from Next Steps
• Dered Sampson from Zexx
• Laura Cibilich from Designstein