It’s always a pleasure to serve as a guest on other people’s podcasts. Back in November, Jennifer Lewis interviewed me for the Small Food Business podcast series. They released the episode today, saying:
Many of us start our small businesses with a broader mission or vision for what we’re hoping to achieve beyond just dollars and cents. In today’s podcast, we talk with sustainable small business expert and author Elizabeth Ü about how mission driven businesses can raise the capital they need in an environment that seemingly values the bottom line above all else.
But my favorite part about this podcast is the end, when I had the opportunity to describe how my passion for supporting small business owners ultimately led me to take a job with an accounting software company:
For ten years I really spent a lot of time trying to help food entrepreneurs raise capital. At first I thought it was because people didn’t know how to invest in these small businesses and so I was working with organizations to help train foundations and lenders and investors and various funders how to support these investments into small sustainable food businesses. Then I thought, well no it’s actually because there aren’t enough of these loan funds or other investment tools to support the effort to invest in these small businesses. So I helped launch a loan fund that was geared particularly toward high-impact social food ventures.
Then I thought, no it’s actually because these small entrepreneurs or even growing entrepreneurs who have growing ventures don’t understand where to look for capital, or how to speak with the people that they find once they are looking to enter into some sort of negotiation with prospective investors. So I wrote my book as an attempt to map out all the different options and how you would determine whether or not any of them is a good fit. Then once you have determined which might be a good match for you, how you would go about accessing that capital.
Ultimately, what I discovered is that no amount of passion and no foolproof mission statement or vision is going to protect you from the fact of the matter that if you are starting a business, you need to have a clear sense of how the business is doing and a clear sense of which of your products have the best profit margin. Is this product actually making you money? Or is it costing you money? So time and time again I would see these entrepreneurs who were so passionate but really didn’t care enough about the numbers, and weren’t paying enough attention to the numbers. They didn’t understand their financials, they didn’t understand how to look at the reports that their accounting software was generating for them, or they weren’t using any kind of accounting or bookkeeping system at all.
That’s actually how I ended up working at Xero, because I realized that if we really want to help these sustainable food entrepreneurs at scale, and really grow to a point where they are making an impact not only in their own lives but in all of our lives and to the planet as a whole, they need to understand what’s actually going on in their businesses. I was so excited to find Xero and see how – forget about the brand name – any system, even if it’s a pen and paper in a ledger book or a spreadsheet, that is forcing you to have the discipline to understand where the money is going and where the money is coming from, and even give you visibility into who you have sold something to. When is their invoice due? Are you actually calling them up to say, “Hey you owe me money, your invoice is overdue.” So many people lose money just because they aren’t keeping track of who owes them money and they aren’t making those collections phone calls, or they’re paying fees on bills or late fees on their credit card payments just because they’re not keeping track of their bills.
At this point I am convinced that the thing that really makes successful businesses stand apart is that in addition to having the passion and competence at whatever it is their business is doing, they also have the discipline to keep track of the books, make sure they’re reconciling their bank line items as they come in, and keeping track of all of the numbers behind the scenes in some sort of system.