3 Finance Mistakes I Made While Building My Brand: Lessons from Jason Wong
July 31, 2023
July 31, 2023
Serial entrepreneur Jason Wong gives his top financial tips for ecommerce brands and explains how AI and automated bookkeeping helped him get accurate real-time financials
As the founder of several multi-million dollar consumer brands such as Doe Lashes, Holy Meme Bible, and consultant to numerous Fortune 500 companies on building efficient ecommerce infrastructure for their portfolio brands, Jason Wong knows what he’s talking about!
On his blog, Jason shares the top 3 financial mistakes he made while building his Shopify brands and how AI ecommerce bookkeeping helped turn these around.
In the past, Jason thought he could just use generic bookkeeping software to cover his bookkeeping needs. This was a huge mistake, believing that numbers could just be an afterthought.
He quickly learned that obsessing over his profit and loss (P&L) statement could have saved him from making costly mistakes. Here's why:
1) You're probably making less than you actually are
Many ecommerce brands overestimate their revenue, forgetting to account for the refunds, exchanges, discounts, sales tax, and shipping revenue that can eat into their bottom line.
It's important to remember that these seemingly small amounts can add up and have a significant impact on your finances. Always focus on net revenue, not gross.
2) Many people don't accurately calculate their cost of goods sold (COGS)
Quantities and freight methods change with every purchase order, and most people aren't accounting for these fluctuations to average out the COGS. If you have storage in multiple countries, there are also tariffs to consider when calculating your COGS.
3) Many ecommerce operators have no concept of their real-time cash flow
Scaling too fast without keeping a real-time pulse on cash flow can be dangerous, as inventory and hiring expenses can quickly add up. On the other hand, scaling too slowly can leave you without backup cash if things don't go according to plan.
Cash flow challenges can quickly spiral out of control, leaving you scrambling to find financing and potentially getting stuck in a cycle of revolving debt. Many brands only realize they have a cash flow issue when it's already too late.
This is often due to two big issues: books are not closed in real-time, usually only once a month, so problems are realized too late. Additionally, many brands don't have a full grasp on their costs without jumping through hoops.
How AI ecommerce bookkeeping improves your financials
Jason started seeing lots of ecommerce brands talk about Finaloop on Twitter and, after speaking with Ronak Shah from Obvi, a friend and long-time Finaloop user, decided to try it out.
Finaloop is a real-time accounting platform that uses AI and machine-learning technology, plus a team of ecommerce finance experts, bookkeepers, and accountants so you get the best of both worlds.
Finaloop connects to every data source you would use to do your books and reconciles all your data sources in real-time, providing a level of accuracy that is hard to match. The team of ecommerce finance experts are there to review your books, identify opportunities, and answer any questions you have.
After connecting, Jason got completely accurate data in 24 hours. He immediately broke up with his bookkeeper and finally had the real data he needed to better manage his sales, COGS, and cash flow as well as every other aspect of his finances.
We are a technology company providing automated end-to-end accounting service to ecommerce businesses. Our system connects to your apps, syncs all your data, and reconciles your books in real-time, replacing your bookkeeper. We offer reconciled books available 24/7, tax-saving insights, and a single place for all your financial data.
*The information provided on this website does not, and is not intended to, constitute legal advice. All information, content, and materials available on this site are for general informational purposes only. Readers are advised to consult with their attorney or accountant with any questions or concerns.*
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