EOFY - WTF???

Hello, friends. I'm Amanda Barr. And I'm Rebecca Lou Brennan. And welcome to Dance Principals United, the podcast. Together, we are passionate about helping studio owners with the business of running their studio. Join us as we talk everything from marketing systems, studio culture, motherhood, life, and everything in between. This is the Dance Principles United Podcast. Hey, friends, and welcome to the Dance Principles United Podcast and Happy New Financial Year. Hi, Nath.

Hi. Even, like, I don't. I'm not sure even I do that. That's a bit. That's a bit nerdy. Right?

Well, that's what we wanted to talk about today because it's the first day of the financial year, and we wanted to have a chat about what that actually means as a dance studio, because, let's be honest, we don't say happy New Financial Year. This is not something that actually happens in our studio. Right.

And look, and I'm not sure if it's because of, like, you know, what pops up in my algorithm because of what I'm scrolling on socials and things like that, but I do feel like it's a bit more in our faces than it used to be. Like, we see all, like, it is.

Not what's in my algorithm.

I did give that preface. Right. But, like. But we do see, like, end of financial year, the sales here, there, and everywhere and lots of people. And like I said, maybe it's that I'm a bit more nerdy and see these things coming up in my feed a lot more, but there does seem to be a lot more information out there. But we know that sometimes when there's more information, there also becomes more noise and more confusion. Right?

Absolutely. And so that's what we wanted to jump on the podcast and chat about today is like, what do we actually need to know? Or what do we actually need to do at the end of the financial year as dance studio owners? Because I think sometimes it's like, what does that actually mean for me?

Yeah. Or like the. Like, the. What we don't like to see is that you get that one email from your accountant that you haven't heard from in the last 12 months. They're like, hey, Amanda, it's the end of financial year again. Let's. Let's actually have a chat and, like, get some things in order.

Right, okay, so tell me. Let's start with that. If you haven't really heard from your accountant, if you've just gotten an email probably now asking, like, for everything that they need to finish their end of financial year. You know what, like, what's the problem with that. Tell me why that's an issue.

Absolutely. So, like, I feel like that's from, like, the. The bad old days, right. When we used to sort of, you know, people talk about having their books in account because, you know, you used to literally have to write all of your expenses into a book and things like that. So I think, like, it's a throwback to those days when from day to day, week to week, month to month, in not only dance studios, but any businesses, you didn't really have a clear and accurate picture of your numbers and your financials until very specific checkpoints in a year. If you were, like, good, you'd have pretty accurate numbers quarterly. But for a lot of small businesses, to be honest, that used to be cobbling everything together at the end of a financial year and then getting, you know, a profit and loss, you know, and then all those other, you know, reports that come with it at sort of one point in a year. But like I said, that's a throwback to the bad old days when we used to have to spend.

So we shouldn't be doing that anymore.

Absolutely not. There is no excuse in 2024, with all the amazing softwares like Xero, QuickBooks, MYOB, things like you to be having a really good and open dialogue with your accountant and or your bookkeeper on, you know, depending on who it is, like a weekly, monthly, at least a quarterly basis, to be getting more regular updates on the most important thing in your business, guys, which at the end of the day, like, is your cash.

Right, Absolutely. We're business owners, obviously, as creative professionals, we care about, you know, the next generation of dancers and all of that. Absolutely. But we are also in a business, and a part of a business is actually making some money so that you can survive and keep, you know, giving this back to the next generation of dancers, which is so, so important. So if people got that email and they are a bit like, okay, so they've given me a whole list of things to do. Yeah, it's a bit of an issue because people should be doing that more regularly, is Right. Like mainly the reconciliation. Do you want to explain what reconciliation is of your accounts?

Yeah, absolutely. In terms, obviously, of your account, your numbers. So we talk about, you know, I always tried to have in our studio, financial Fridays. Right. And that would mean that on Friday, because that was the day that I processed our pays. So it made sense not only to do the payroll, but to do things like the bank reconciliations as well. And what that is is because I know with so many studio owners that we work with, both in Tribe and Studio Growth Club, that sometimes those brave ones, after I'm talking about it for a few minutes, like, sorry, Nathan, I've got to pause you there. Like, what exactly do we mean by bank reconciliation? I'm like, okay, fantastic. Like, so appreciate you asking because there's so many people obviously out there that are in the same boat. So when we talk about bank reconciliation, that's literally having a look through. And like I said, if you don't already, please, please, please make sure that you invest and start using one of the packages that are out there, like Xero or MYOB or QuickBooks, because it saves you so much time, effort and money. So what you do is you go into your Xero. I'm just going to always say Xero, guys, because that's what I used.

Yep, that's your pick.

Yep, that's my pick. Um, but I would go into Xero once a week and I would click into my bank account and I would see all the transactions from the last week in my bank account. Now the fun ones were money coming in. I'd be like, woohoo. Money in.

Yeah.

And I would just tell Xero what that money is coming in for. Is it coming in for dance classes? Is it coming in for uniform sales? Is it coming in for holiday workshops? So I just have some specific categories that I would tell Xero what exactly that money's coming in for. And then on the other side, on our expenses is exactly the same thing. I would say a bank line statement for Facebook advertising.

Yeah.

So I'd be like, okay, I'm categorizing that to advertising.

And what about, you know, $5 at Woolies when I went and bought a new ream of paper or something like that? You'd categorize every single transaction like that, correct?

Absolutely, absolutely. And look, I think sometimes people get a little bit too caught up in the weeds and think that it's like, you know, witchcraft and wizardry around these things. But at the end of the day, guys, it's about you having your own knowledge around these things so that you can sit back, like we said, at the end of a month, a quarter, a year. And look, okay, how much did I actually spend on advertising and marketing this year?

Yeah.

How much did I spend on my office expenses this year?

Yeah. Okay, so you did your reconciliations, your bank reconciliations with weekly.

Yep.

How long would that take you each week?

Absolutely. And so we had a very large studio, you know, 750 plus students, we were turning over like well in excess of a million dollars a year, closer to a million and a half. So with a studio that size and scale, including me processing the pays, every.

Single staff members pay and every.

Having the. The super calculated, which again, Xero would do automatically for me, it would take me less than an hour.

Okay, an hour a week.

Yep, an hour a week I had allocated. And it would be very rare that I would go over that hour.

Okay, so that's for pay processing. Super. Paying outstanding bills as well. Reconciliation, all of those kind of things.

Absolutely. And look, and I was. I do sometimes worry when I like, would throw that number out there because I'm like, I know that I'm a numbers person. Right, guys?

Like, it's gonna be quicker for you.

Exactly. But the way that you gu choreography and things like that and the step that comes next in as you're choreographing a dance, like, I know this sounds a bit, bit silly, but that's how I sort of see numbers sometimes.

Yeah.

So. But then I just checked like the amazing person at Dance Sensations that's taken over that role from me. I did just sort of check in with her the other day and I'm like, just checking like, how much time does it take you to do those sorts of things? And she was about the same, about. About an hour a week.

Awesome. So, you know, if you are allowing an hour a week, then you shouldn't be getting these email your accountants at the end of the financial year or the end of the quarter going, oh, my God, you've got to catch up on your bank reconciliations. We can't do what we need because if you're doing that weekly, number one, you don't have that end of financial year, oh my God, I've got so much stuff to do. Stuff. But also it means that from accounting softwares, correct me if I'm wrong, but like zero. You can pull your balance sheet, your profit and loss at any point in time yourself. You don't have to wait for your accountant to send it to you.

Absolutely. And look, that's the, that's probably the biggest issue around. Like you said, when you get that email, you're like, oh, I've got to go in. And there's 40, you know, or sometimes literally hundreds of lines to reconcile. It seems like a bit of an insurmountable mountain. Right. And all that does is just delay the feedback on your business, which is super, super important. What I loved about doing it on a weekly basis was that at the end of a month, it was there ready for me to go. After I'd done my last hour of that month, I could then run my profit and loss and my statement of CA flows, which is another really, really important one. I could run that for the month and just give myself a really quick and easy position of where the business is if I had any questions. I had a really great relationship with our accountant, so I could just shoot him off a question because, you know, as good as I am with numbers, I'm not an accountant.

Yeah.

So I would. Hang on a sec. Like something didn't quite make sense. I would. I actually started doing loom video recordings, which were even more powerful. But I just asked the question, hey, this doesn't quite make sense to me. Can you just help explain it? And because like I said, I've got a great accountant that was really responsive to these things as they should be.

Yep.

He would shoot me back an email within 24 to 48 hours answering my question and giving me more clarity around that.

Okay, so I have a couple of questions to go back on. Yep. We were talking about bank reconciliations, and you said that you feel like some times people get like, too in the weeds about how to reconcile their accounts and maybe what to code things under, if that's right.

Yeah. What to categorize. When Amanda says code them, she means, like, what category to put.

Yeah. So are they office expenses? Are they advertising expenses? Is this, you know, what. What is each thing categorized for? Can I ask? So the money coming in. Because I think that's a big one for some people. So, you know, you get your end of day, you know, from your EFTPOS machine. How do you actually know what is dance fees and what's merchandise or does it not matter? And you just put it all as income.

Absolutely. And look, this is like, how long's a piece of.

Yeah. And people are going to do it differently.

Exactly. And everybody's. And working with dance studio owners who've got great accountants, I get to see, like, a really great range. And some accountants treat it differently in a really good way. And like I said, there's no right or wrong. I think that's what in so much of what we see here, so many people get caught up, especially tense teachers in that right versus wrong thing. And the more that I learn about accounting, the more that I see there's no such thing. Like, there's just so much gray.

There's different ways.

There's different ways of doing things. So there's no there's no, like, one size fits all. So you know what we see. And look, what I used to do is. And this, like, would give me more. More speed on it, I guess. Is that as. Because, like Amanda said, we would just get the big chunk of money in from Jackrabbit.

Yeah.

And that money would come in or.

From the F BOSS machine or whatever it was.

Yep. And that would come in all, like. Yeah. Every day from the post machine. It would come in multiple times a week from Jackrabbit. We just get chunks of money in.

All the time that was from direct debit payments, right?

Yeah, absolutely. And so I didn't want to spend my time each and every week getting down in the weeds and splitting out what's for dance fees, what's for uniform, all those. What's for costumes, what's for costumes, all those sorts of things. Because on a weekly. Like, on. On a weekly basis, that's taking me too much time.

Absolutely.

And what I would do.

Does it really matter a dollar here, a dollar there? Sometimes, like, yeah.

But I did want that at the end of each quarter because it's an important number to know as well. Now we have. We use Jackrabbit. But again, when I say Jackrabbit, please, like, interchange this with Class manager, Dance Studio Pro, whatever you use as well. But whichever one of those platforms you use can be set up really well to track your transactions. And that's what we would use Jackrabbit for. It was our point of sale for all of our uniforms.

Yeah.

It would bill everything. Class fees, uniform fees, costumes, costume fees, extra workshops. When we used to do the registration fees, it would track that as well. And so instead of doing this on a weekly basis at the end of every quarter, because that was a good checkpoint for us because that's when we have to submit our bass quarterly and things like that. I would go through and I would run a revenue report in Jackrabbit, which would break it down for me. Report really, really nicely. And it would show. Hey, Nathan, out of the. You know, let's just call it $100,000 that you've taken this quarter. $80,000 of it was for dance fees, $10,000 was for uniforms, $5,000 for costumes, and 5,000 for holiday workshops. Oh, gosh, I hope that added up to 100. I think it did, but. But you know what I mean. And then I would just send those numbers to my accountant, and they would make the adjustments.

So he'd adjust it in Xero at the end of the Quarter, not so that you're not sitting there weekly taking ages to do it. 100% kind of like broken down a little bit easier. What if the money doesn't add up?

Cool. So I would have.

That would happen, right?

Absolutely. And look, this is. We always see. And look, I don't see them as much anymore, but people always asking, like, do you link your QuickBooks to Dance Studio Pro or do you link your accounting software and your dance studio management software? And for me it was always a resounding no.

Yeah.

Because again though, like getting down in the weeds and sometimes like some of those systems, they don't let you like go any further and they like sit there and Absolutely, like grind to a halt if you're out by a dollar here or there. And like I said, guys, like, I'm a numbers person, I love money and I love things balancing up. But at that end of quarter thing, in a hundred thousand dollars, say for every $100,000, if, when I like compared it, if it was out $5, I didn't bother.

Yeah, because that's exactly right. Right. Like, you know, the hundred thousand dollars in zero shows us how much money bank, you know, for example. But Jackrabbit might show that you actually took 95, 000 and 99, 000, you know, or whatever. Like, you know, or a different amount because someone forgot to put something through, but it still went through the F boss machine, but they forgot to put it through. And that happens. Right. And you just like, just code it somewhere and just. Yeah, absolutely. Going. Don't get too in the weeds about it.

Absolutely. Like, don't get me wrong, if there's $10,000 difference, I'm cool.

Yeah, that's a problem. Yeah.

Then we've got to go back and look through and my accountant would help me let me go. But that very rarely if ever happened.

Yeah. And it's more just if it's a small amount. Well, that's just a human error somewhere. And it is what it is, right?

Absolutely.

Yeah. Cool. Okay. So that was one of my questions. My other question that I had when we were talking about that you can now get your balance sheet yourself, you can get your profit and loss yourself from Xero, all of that. You still need an accountant. Right. Because that's for tax purposes. So can you explain why people still need an accountant?

Yep. So everybody should have an accountant, a registered accountant, because they're the ones that help make sure that you're meeting your obligations. Like, it's, it's a bit boring. But we've all got to comply with Australian tax law.

Absolutely.

And I was listening to somebody the other day, and they were saying that Australia has one of, if not the most complicated taxation system in the world.

Oh, fun.

So, yeah.

So it's just what we want.

Exactly. So it's not an easy thing. It's something that we need professional help with and advice around to make sure that we're being as efficient as we can with our taxes. Like, we all have to pay taxes. That's understandable. If we're making more money, that means we're paying more taxes, and that's okay. But we also don't want to be paying more than we have to. So helping accountants can help you with that, obviously. But also what we talk with a lot of people as well about is a bookkeeper. And, like, what's the difference between an account and your book?

And do you need both? And how does that all work?

Absolutely. So a really good quote I read on this is that the company's bookkeeper, or businesses bookkeeper is the person with their finger on the financial pulse of the business.

Okay.

And that's why I always thought it was really important, guys, for me to be doing that.

Absolutely.

It is something you can outsource and look, because I know, for example, like, Beck outsources hers.

Yes.

But it is something that if you are going to outsource, like, I see way too many tales of people not getting good bookkeepers, essentially, and doing it the wrong way.

Yeah.

Getting a good bookkeeper, again, is somebody that you communicate with on a regular basis.

Weekly, fortnightly, very least monthly.

Like I said, I know Bec does it really, really well.

She does it weekly. She has an hour meeting once a week with her bookkeeper, I believe.

Absolutely. Because that's super important. She's running a very big business. There's. Her bookkeeper also helps her across her other businesses as well. So, like, very important. But if you're not having that regular communication with your bookkeeper, because they're the ones with the finger on the financial pulse of your business, that's when things start to go wrong.

Okay.

Right. They can sometimes, like, should be picking up things like, hey, like, I just noticed we've had a bit of a jump in expenses in advertising this month. Just wanted to flag that with you.

Yeah.

And then you might say, oh, you know, that's cool. Like, we've had open week. We put some big spend behind it. Not a problem.

And the results have worked.

Yeah, yeah, absolutely. So, like. But they are there to flag those things. But again, guys, like, I want to sort of bring it back to that point. For me, it was an hour a week.

Yeah. And that's what I want to come into. Because a lot of people are like, oh, how much do you pay your bookkeeper? I should get a bookkeeper. But if you could do it in an hour a week, as for a large studio, if you're a smaller studio, you know, kind of doing under 500 grand a year, you know, really, you should be able to do this even at worst case, in an hour a week. Really think about if you have to pay someone, like, how much is that hour worth? Like, you know, like work it out on a per hour basis. It's going to take them a lot less than an hour, I guarantee it. Absolutely. It would take you an hour to do it. So, you know, really, is that worth it or is that something you can do yourself? You can learn yourself? Because there's great, like, there's so many great youtubes on how to use zero well, how to understand it better. Right. Like something you could do yourself.

Yeah. The tutorials in those platforms, because they want you to stay in that platform. Like, that's really, really easy to follow along. And like Manda says, like, we're all for outsourcing where it makes sense for your business. But what I see too often with dance studio owners and especially bookkeepers, sorry to all the bookkeepers out there, is that for that hour a week, they're paying well in excess of $100 a week. And like I said, like, for most studios, it's really only half hour a week.

Yeah. So their bookkeeper might not take them 15 minutes, let's be honest.

So now we're talking like 200 an hour tasks.

Yeah.

And outsourcing 200 an hour tasks that you could do yourself is where we start.

A better financial understanding of your business as well. Because you do need to still, it's not like you can just outsource it and never think about it. You still have to have a. You still have to spend some time on it. Right. Regardless of. Even if you're outsourcing it.

Without a doubt. And that's where we compare it. Like I always compare it to like cleaning the studio. Because cleaning the studio should be the first thing that we outsource business owners because the job itself doesn't really add any value to our bottom line. It's something that needs to be done.

It's a 30 or a $40 hour task. Yeah.

Let's outsource that straight away. But when we're Talking to the 100, 150 to $200 an hour a week, or, sorry, an hour tasks, that's when we got to start to think, hang on, that's a really expensive task. I could do it myself. And it actually adds so much value to my understanding of my business.

Yes. Whereas something like cleaning the studio doesn't actually add any value and doesn't make you a better business person.

Absolutely.

Okay. Really, really interesting things to think about. So if you're kind of coming into the end of financial year and going, oh, shit, I have no idea what's going on. I haven't caught up on my bank reconciliations. I haven't heard from my accountant for a really long time. It might be the right time to be looking for someone new. Is that right?

Yeah, absolutely. Start shopping around and, you know, thinking about before. We used to have to get an accountant that was sort of, you know, in our main street because we had to go in and see them in person. That was the only way to get lots of these things done. But, you know, for example, my new accountant for Dance Principles United lives in Adelaide and we're based in New South Wales, because in 2024, we don't need to be going in person to visit them, so there's plenty of options around there. I know that a couple of our studio owners have reached out and found new accountants that they really gel with and really get on with, because that's a really important thing for them.

Absolutely.

But they're probably never going to meet them in person because they can. We can do everything by Zoom now.

Zoom is incredible. Oh, awesome. Well, thank you so much for kind of clearing up some of the questions around end of financial year. You know, it's a perfect time to be looking into your studio, looking at what you're doing, and maybe making some changes for the new financial year. But we hope you've enjoyed this podcast. Thanks, Nath.

Thanks, everybody.

We hope you enjoyed this episode of the Dance Principles United podcast. If you'd love to learn more from us, we have a special offer just for our podcast listeners. Go to the link in the show notes right now to get two weeks free in Dance Principles United Tribe. We would love to see you there.