HeavyChef compiles an astounding guide to financial management for startup businesses

According to HeavyChef’s recent survey into the habits of over 90 000 South African entrepreneurs, seventy eight percent of entrepreneurs rate their budgeting skills as very poor to average and a more sobering 41% learned about budgeting only after they started their own business.

These are the findings of a recent survey by entrepreneur education provider Heavy Chef into the financial habits of over 9000 South African entrepreneurs.

To address the dearth of savvy budgeting habits Heavy Chef and its partner Xero have published a ‘recipe’ book outlining all the steps (necessary ingredients) entrepreneurs will need to put their business ideas to work and the financial skills are required to do so. 

Called The Heavy Chef Guide To Financial Management For Startups and written by Philip van Zyl, CEO of Simple Books, a leading cloud-based accounting solutions provider, the book is packed with insights designed to help entrepreneurs thrive and grow.

In a chat with Chi Chi Gule, Philip van Zyl discussed the book and what it aims to achieve

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What inspired you to write a guide for entrepreneurs on financial management, and what kind of challenges did you observe that entrepreneurs face in this area?

In my journey as an entrepreneur over the last twenty years, a recurring theme was that I didn’t understand financial reporting at all, nor basic accounting principals. Like most entrepreneurs, I didn’t study accounting and my passion was in creating and selling amazing services and products, not in studying reports. I was intimidated by the language of accounting.

The guide was written on the back of starting a new company in 2013 – Simple Books – that offered simple and understandable outsourced accounting and payroll services to entrepreneurs. I share all that I learned, and translate accounting terms and principles into simple to understand language. I also interviewed over 30 South African entrepreneurs and added in their key learnings to what I had learned. All of this is in the guide.

Can you discuss some of the key financial management principles that you cover in your guide, and how these can help entrepreneurs to build sustainable and profitable businesses?

The guide tracks the journey from when a new business idea pops up, through the planning stages, to the launch and sustaining of the business through the first years of existence. There are lessons and many deliverables and principals for each stage along the way that are shared in a step by step fashion. One that many entrepreneurs miss is the critical one of having a plan and goals for his or her own life, and making sure this dovetails with the business plan they are penning. An entrepreneur who doesn’t have a five year plan for themselves has a significantly reduced chance of succeeding with their business over that same period.

How do you balance the need for financial discipline and planning with the need for flexibility and adaptability in the fast-paced and dynamic world of entrepreneurship?

That is one of the dances of entrepreneurship. Create a plan, stick to the plan, and don’t change the plan without considering all of the implications that you can. Find at least one outside mentor, an entrepreneur who has started and run their own businesses. Run your ideas past them. Sometimes a pivot is a great idea. Not if the change is premature.

Do you have specific examples of entrepreneurs who have successfully applied the principles and strategies outlined in your guide, and any measurable impacts that they have achieved as a result?

More than 30 entrepreneurs were interviewed who share their own experiences of implementing the principals. Katlego Maphai shares some of the learnings in founding Yoco in South Africa, Justin Drennan speaks about cash flow management and the dangers of personal surety in starting ParcelNinja and other companies. Catherine Luckoff speaks about getting your IP right from the start ands the benefits of staying lean in the early years. There are many more in the guide.

Can you discuss the role of technology and automation in financial management for entrepreneurs, and how it can help to streamline processes and improve decision-making?

Chapter 10 of the guide is dedicated to technology and systems that help you streamline your business processes and leverage the power of cloud-based platforms that speak to each other and can be accessed from wherever you are. The sooner you start using these systems, the more they will be woven into the way your business operates, and the sooner you will feel the benefits. If you are wondering where to start, a cloud-based accounting platform that can give you real-time access to how your business is doing is the place.

Looking ahead, what financial management trends or innovations do you see on the horizon for entrepreneurs, and how can they stay ahead of the curve in this area?

Get your financial processing done in as close to real time as possible. This gives you access to key data points that you need to measure the success of your business from day to day and week to week. Cloud-based accounting platforms like Xero, together with great online reporting tools like Syft Analytics can ensure that you get financial information you need, when you need it, and from wherever you are located in the moment you need it. If you don’t have the capacity or desire to do the processing yourself, outsource it to an outfit that specialises in it.

There are an estimated 650 000 single-owner-operated businesses in South Africa.. This doesn’t include the approx. 2.5 milion informal entrepreneurs. Neither does it consider the approx. 3.5 million that operate within the gig economy.

Recent research undertaken by the University of the Western Cape estimates that between 70- to 80% of South African start up businesses fail within the first five years.

“This is particularly scary given that entrepreneurship will be the only route towards making a living for many South Africans.   As providers  of education for our local entrepreneurs we need to be making as many tools available as we can to ensure that they have the best possible opportunity to succeed,” says. CEO of the Heavy Chef Fred Roed. 

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