The one piece of advice Xero's Trent Innes gives small business owners to ensure they survive

Trent Innes is a hero at Xero.

An accountant with more than 20 years of experience, he first joined the cloud-based accounting platform’s Melbourne HQ in 2013 as National Sales Director, then in January 2016, became Xero Australia & Asia Managing Director, just a decade after its genesis on an apartment dining room table in Wellington, New Zealand.

Innes is number 3 on the Kochie’s Business Builders Power List, chosen by readers as one of the most influential people in Australia and New Zealand business.

When Xero held its IPO on the NZ stock exchange in June 2007, market analysts used to joke about it being the first company named after its revenue. Nowadays the joke’s on them. Xero shares are worth around AU$60 – the business moved to a sole ASX listing in 2018 having first listed in Australia in 2012 – with a market cap of around $8.47 billion.

Xero is now the 56th largest company on the ASX

The accounting platform is used in more 180 countries by 1.8 million paying subscribers and integrates with 700-plus add-on apps. In four years, subscriber numbers and revenue have quadrupled, with the latter sitting at $552 million in 2019.

Innes has been lauded along the way as the IT and Telecommunications Executive of the Year and CEO Magazine’s 2017 Managing Director of the Year.

As a passionate advocate for technology, combined with a strong focus on people, he’s been at the core of Xero’s success in software-as-a-service.

He cites winning Canstar Blue’s award for ‘Most Satisfied Customers Award for Small Business Accounting Software’ four years in a row (2015-18) as among his proudest achievements, alongside the 2017 launch of Xero Small Business Insights, which harnessed the data gathered by the platform to deliver a truly accurate snapshot of the health of the small business sector. Those insights have helped shape thinking on Australia’s small business economy.

But most small business owners approach doing the books with the same relish as going to the dentist. So when KBB sat down with Innes to talk about his career and the joys of accounting, we wanted to ask him what excited him about the profession and how he passes on that enthusiasm to others?

A design-oriented approach

The secret sauce in Xero, Innes explained, is that from the start, when Rod Drury and Craig Walker sat down at that kitchen table 13 years ago to write Xero’s first code, their approach was design-oriented.

“One of our first employees was a designer and the intent behind that was to make accounting as fun as it could be,” he said.

“It’s super-important that small business owners are across their numbers. We know that the number one reason for failure among small businesses is running out of cash. Even if a small business owner doesn’t like doing their accounting or bookkeeping, the reality is that they have to do it and our mission is to make it as painless as possible.”

The times have suited Xero, with technology having a profound impact on the accounting industry over the past decade. It’s worth remembering the iPhone, now a key part of the platform’s ease of use, from lodging expenses to making payments, only appeared in 2007, the same time Xero first went public.

“Over the past 10 years, we’ve seen the proliferation of mobile technology. We’ve also seen the advent of cloud. And what the cloud has allowed us to do is democratise technology,” Innes said.

“I’d argue that, today, small business actually has better access to technology than what big business has. The biggest changes we’ve seen include the ability to work anywhere at anytime and on any device.

“It allows accountants and bookkeepers to be connected in real time with their small business clients, and more engaged with their client’s business than they have ever been and the ability to offer advice when it’s needed.

“It’s transformed the accounting industry and it’s taken away the need to do mundane tasks such as data and number crunching, freeing them up to do important things such as advisory.”

The next wave on its way

And the next wave is on its way thanks to AI and machine learning. Innes believes that will take things to the next level for small business owners.

“We can use AI and machine learning to predict what someone’s next move will be to take away some of the mundane tasks like document scanning and content ingestion. It will also be helpful in harnessing the power of big data,” he said.

Innovation is a big part of Xero’s approach to accounting, but Innes points out it’s not just about harnessing the power of technology, it’s also about listening to people and what they need.

“There are a number of different facets to innovation. There is the embracing of technology trends, such as AI and machine learning, cloud computing and mobile – and how you leverage them,” he said.

“There is taking feedback from our customers. And, of course, there’s releasing things that no one necessarily asked for, but they’re wowed when something comes out and they think ‘how come I never thought of that?’.”

The biggest pain point for business owners and what to do about it

But there’s also a simple truth all small business owners have faced since time immemorial: their number one pain point is cash flow. And, says Innes, that relates to late payments, access to capital and whether or not someone can hire their next employee.

“Xero is helping small business owners by providing a dashboard where they can securely access their cash flow position in real time via our direct bank feeds,” he said.

“We also know that if a small business owner embraces digitisation and sends out invoices digitally, using online payment services, they’re likely to get paid much faster,” Innes said.

“In Australia, invoices created on the Xero platform with an attached payment service are paid an average 55% sooner than invoices without. That’s the difference between a 22-day wait and a 12-day wait.”

One of the MD’s favourite part of his job is going out to meet with small business owners and how it fills him with admiration for their resilience. His advice to them is simple.

“Cash flow is the number one thing you need to be across,” Innes said.

He admits he always amazed by the diverse range of skills and experience across the small business sector

“It really is the backbone of the economy. What I get surprised about is, regardless of how many times they get knocked down, and with how hard things seem to be made for them, they keep getting up and they keep having a go and they build amazing businesses,” he said.

“I admire their resilience. People go into businesses for a number of different reasons – from the extreme of following a passion or a dream, right through to necessity, but they all approach it with gusto.”

Compliance burden

And with the Xero Small Business Insights taking the pulse of the sector, Innes is pleased to see the government making improvements to that make life easier for businesspeople, including digitisation. The Xero boss says he’s impressed by the feedback they’ve taken on board, but one glaring problem remains.

“The burden of compliance is still far too high for business overall, but especially for small business,” he said.

“On average, small business owners are spending about 10 hours per week on compliance, which they’re often doing at night or over the weekend. This takes them away from the reason they got into business in the first place. “

Conscious of that government burden, Innes is focused on how to make using Xero easier and faster to use, also branching out into education.

“We’ve revamped our app marketplace making it easier for small business owners and their advisors to identify apps they can use to help run their business,” he said.

“We’ve introduced Xero Central Learning featuring live and online courses, and webinars and events where you can learn all about Xero and how to get the most out of it.

“We also very recently announced a new partnership with the payments platform Stripe to enable new payments experiences that are more seamless and efficient for small business owners and their advisors around the world.”

The annual Xerocon conference is on in Brisbane in September and Innes says “stay tuned for some exciting announcements to come out of that”.

In the meantime, the thing that gets him excited about heading into the office each day is Xero’s remarkable growth and the potential it demonstrates for others.

“We’ve proven that you can grow a global tech company in this part of the world,” he said.

“Xero is a great example and we need more companies like Xero so that the next generation of workers has cool and amazing jobs to go to.”

Trent Innes is number 3 on the KBB Power List as voted by KBB readers.

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