Chapters

Summary

We invited Viral Shah to share his expertise in accounting for ecommerce businesses and startups. Simon first asked for the best way to structure accounts.

Shah said that it is a common question. Therefore, his team always holds an initial setup meeting with their clients. They first ask for their motives behind starting an ecommerce store. Then, they always consider their backgrounds, such as family, lifestyle and experience. After all, running a business is not easy.

Shah recommended starting with market research if you are building an ecommerce business. He added that it comes down to knowing the numbers to be successful. It will save you a lot of time if you do it in advance. In other words, do what you need to do as a business owner first.

Simon then asked for friendly advice on being a sole trader on a side hustle. The two speakers first put a disclaimer that there is no versatile structure. The situation will be different between a person who already has a job and one who doesn’t. Liabilities will change depending on your assets. You will also need to think about how you can mitigate them. Shah highly recommended talking with an accountant before you start your business.

The next topic was marketing expenses. Shah claimed the importance of having a learning attitude for managing finances. Most people run to an accountant when it is too late. He said business owners need to understand all the metrics involved in running a business. Some examples are:

• Customer acquisition rate
• Customer retention rate
• Churn rate and more

Utilise these metrics to calculate whether your paid ads are making a profit. Shah recommended taking some Udemy courses on accounting. Make sure you don’t run bankrupt without knowing it.

The topic moved on to scaling a business. Everyone thinks of scaling, but you need to nail your business beforehand. There are a lot of behind-the-scenes operations that you need to establish. Some examples include:

• Publishing a bug-free website
• Developing a quality product
• Managing shipping and order capacity, and so on

Both Simon and Shah stressed the fulfilment part. Fulfilment is not complete when you hand your parcels to a courier. You need to provide tracking and an excellent unpacking experience. Nail the ultimate touchpoint between your business and your customer.

Next, Simon asked for a framework for organising costings. Shah said the first month of running a business is a good time for a sole trader. However, he would eventually recommend using accounting software such as Vera, QuickBooks or MYOB. It will help you and your accountant keep track of your money in real-time.

It would be best to keep many questions in mind while organising your costs.

• When will you reconcile your bank account?
• When will you write your profit and loss statement?
• Do you have separate divisions for your cost of sales?
• Are you charging enough to cover shipping?
• Are you gaining more than what you spend on marketing?

Shah explained that there is no set formula. Each business and each costing will be different. However, the general principle remains the same. You need to make more money than what you put in accounting. There will be many aspects that you need to learn as you go.

Simon then asked which accounting software is the best for ecommerce owners. Shah recommended QuickBooks and MOBY. They provide many integrations with ecommerce-related platforms.

Shah also runs a coworking space called Thrive Coworking. Simon asked about the benefits of working in a coworking space for ecommerce business owners. Shah raised the community as the best benefit. The connection with people is a significant aspect of growing your business. As Shah mentioned, investing your time in people will return multiple times, over and over.

Lastly, this episode ended with Shah’s call to action. He shared two points he learnt upon running a business in Australia.

1. Have an Australian Business Number (ABN) before starting.
2. Buy your business name from ESIC.

You can register an ABN for free. However, it will incur a business cost of $37 per year after registration. Some scams say you need to pay to register your ABN. Make sure to stay away from those.