Financial literacy, not gut feelings, key to female founders scaling past the $1m mark


Tanya Titman, founder of Acceler8 Academy

Women have ‘boundless potential’ to lead multi-million dollar businesses but many are being held back by a lack of financial literacy, says Tanya Titman, the founder of Acceler8 Academy, a growth program for female-led SMEs, and Consolid8, Xero’s 2016 Accounting Partner of the Year. 

Having assisted over 200 female founders to scale their businesses through Acceler8, Titman – an accountant with more than two decades of business experience –  is now expanding the 12-month program out of Brisbane into Melbourne and Sydney. It offers participants face-to-face, activity-based workshops addressing key components of business success (e.g. identifying business goals, financial and cashflow management, pricing, growth and marketing strategy, funding options and succession planning), with Titman guaranteeing each a lift in net profit of at least 30%. In addition, Acceler8 will next month be introducing shorter online finance modules for people to complete over 12 weeks.

Breaking through the invisible ceiling

According to Titman, $1 million in revenue is often an ‘invisible ceiling’ to the further success of female-led businesses. She explained to Dynamic Business that founders who allow gut feelings and bank account balances to dictate business strategy will find it difficult to not just scale up to – but also push through – the ‘million-dollar barrier’. She said that while women often go into business with a passion to deliver a product or service, many struggle with financial literacy: “this isn’t something people just know, unless they specifically go out to educate themselves on this”.

The approach she advocates to women is making informed, strategic decisions based on a clear understanding of their true financial position.

“Having worked with a number of female business owners over the years, and helped many to pass the $1 million threshold, I’m aware of the significant lift in profits they can achieve when they understand – and can confidently speak about – their numbers,” she explained.

“Whether an owner is seeking funding for their business or seeking to launch a marketing or social media campaign, it always comes back to knowing the numbers. In the case of those examples, owners need to understand the right type of funding for their business and the ROI they can expect from their marketing spend. At the end of the day, there’s nothing to stop people from going into business without any financial education… but there’s also nothing to stop them going broke.

“Running a business can be tough, so if you’re going to put yourself through the experience, there better be financial rewards for you at the end of the day. If an owner is not prepared to pay themselves a market-rate salary, create a business asset and produce a profit, it’s less of a business and more of a hobby. I’m passionate about working with women who are motivated to lead high-growth businesses and helping them realise the benefits to be gained from knowing their numbers.”

Once such business is The Vet Shed, an online retailer and public-facing warehouse based in Queensland. Titman has worked with the founder, Tania Withers, for close to two years, with a particular focus on raising the business’s value.

“Tania was approached to sell The Vet Shed but I didn’t feel the offer was adequate or that the business had reached its potential in value,” Titman said. “So, we’ve worked with her to strategically grow the business and improve the value.  Over the last two years she’s had incredible increases in her business value as well as revenue, profitability and cashflow. The value of The Vet Shed has almost tripled in just three years, and Tania has seen a 222% increase in profit and 77% lift in revenue in the last 12 months. Rather than selling the business, she’s resolved to stick with it and she has also signed up to do the Acceler8 program for a third year. Her plan is to scale the business nationally by setting up additional warehouses in Melbourne and Sydney.”

Common pain point: pricing strategy

Asked to name an aspect of business female founders commonly struggle with when they seek to scale, Titman said their pricing strategy: “It’s important for founders to accurately value their time, especially if their business is serviced-based, and price it correctly in their business model. If they’re basing their pricing on what their competitors are charging, that’s not necessarily the right approach.

“Pricing strategy is all about gathering data and working out the true cost of delivering your product or service,” she said. “Understanding how much time it is really taking and valuing that time is critical. My advice is to use technology to track everything you’re doing from admin and research, to client liaison and actual delivery. This should always form part of the pricing structure and many women are surprised at how much time they invest behind the scenes. I also recommend restructuring your Profit and Loss statement so that these activities are not hidden in the expenses. Changing the way you track your time and finances can provide a clearer indication of what your pricing should be.”

The right people for the right roles

Titman said that many female entrepreneurs and business owners are time-poor, for reasons that include wearing multiple hats to fulfil various roles in the business (book keeper, IT support, business development) while also juggling family and household commitments. Fitting more hours into the day, she explained, must involve building – and leveraging – a team populated by the right people for the right roles.

She admitted that recruitment wasn’t her strong suit when she was first establishing her business, Consolid8: I recruited some amazing talent but they weren’t right for the roles because they were too much like me and that wasn’t a great fit for the business. Since then, we’ve implemented great systems and processes and I’ve become accredited in extended DISC, which has led to a major transformation in the business. By using this work-based profiling tool, business owners are able to understand a person’s natural style of communicating and working, for example, they might be fact based communicators who are prone to overanalyzing and need clear instructions before they can start a job (a C style). It’s certainly allowed me to become very strategic in the way I scale up my team as it ensures I hire the right people for the right roles. In a half hour interview, you often don’t see someone’s true style – you’ll see the style they think the role demands. By employing Extended DISC, you can see who the true person is early on instead of discovering too late that they’re not the right fit for the job.  Recruiting the wrong person can be a costly mistake for business owners not only in monetary terms but also in terms of the time invested in the onboarding, training and removing of employees who are not the right fit.

Six tips for better business results

Titman offered female founders the following tips to help them generate better results for their businesses:

  1. Take time to educate yourself on business financials so you can truly understand your numbers. Regularly review and monitor your Profit and Loss statement and Balance Sheet.
  2. Have a tool for managing your cash flow, a simple spreadsheet will do. Make it part of your weekly process to review, track and forecast.
  3. Identify the revenue channels in your business and break them down into realistic targets based on income generating activities. It is much easier for you and your team to focus on the activity that will ultimately generate the revenue target for the month.
  4. Ensure you have a commercially viable pricing model. Understand the total cost of delivering your product or service and ensure there is enough mark up on your cost to achieve a net profit (after all operating expenses).
  5. Set a realistic budget for your business. This can be by calendar year or financial year, and review it every three months.
  6. Pay yourself a market based salary for the time you spend in your business. You must create a viable business model that generates a profit after paying your salary.  This represents the reward or return on investment for the ‘risk’ that you take as a business owner.

The next Brisbane Acceler8 Academy program will start in July 2017, with the inaugural Sydney and Melbourne programs commencing in August 2017.