Karen Murphy, from the Ōmokoroa Barber Shop, has been in business for over 20 years. She has owned three barbershops and worked with two accountants prior to contracting our accounting services. In this article, we explore how Ōmokoroa Accounting contributed to the Omokoroa Barbershop's business journey, navigating challenges, and facilitating transformative phases.

The Challenge

When Karen came to us, she was mainly dealing with cash and recorded all her transactions in a book and on spreadsheets. It was a time-consuming process, often involving weeks of painful paperwork at financial year-end. 

She had already worked with two previous accountants. Her first accountant was a good accountant, however, he was older and spreadsheets were his generation. He had since retired. Karen’s second accountant relationship was not working, so she decided to shift to us. 

Ten years later, we have navigated some pivotal challenges alongside Karen and her business, including COVID-19, paying GST, implementing Xero, and setting up EFTPOS. Our approach has always been to provide a proactive accounting service, that doesn’t just tick the bookkeeping boxes but provides her with positive support and financial advice. 

Our Approach

Paying GST

A pivotal moment in Karen’s small business journey was when she began earning over the $60,000 threshold and was required to pay GST. Karen says, “The business grew, and I was earning more. The other two accountants never had a reason to push it forward. They just did the books at year-end, and that was it. Diane could see what was coming. I really wasn’t prepared for GST, but she literally held my hand through it all.”

When Karen started paying GST, she had to factor this into her prices. This meant passing the price increase on to her customers. 

“You know what it’s like. You put your prices up, and everyone holla’s at you.” In response, we reminded Karen that it was a positive thing that she was now paying GST because it meant her business was growing. 

We often recommend to our clients to charge GST right from the outset of setting up their business, especially if you’re a business-to-customer (B2C) business. This is so that when you start earning over $60,000, you don’t have to upset your customers with a price increase or absorb this cost yourself (which means you’re now making less of a profit). 

However, remember that once you register for GST (even if it’s voluntary and you’re earning under the $60,000 threshold) the money is no longer yours. We suggest having a separate bank account for GST, and when you get paid, transfer that money into that account to ensure you don’t get caught out at tax time.

Making business easier with EFTPOS

Traditionally, barbershops have always taken cash payments. However, we suggested that Karen move to an EFTPOS payment system which she says, “She’s never been more thankful”. Karen used to send her clients to the supermarket to get cash out, however, she no longer faces this issue. 

EFTPOS can make for better cash flow, faster accounting and transactions, and more potential, happier customers. These days, not everyone carries cash. Providing a ‘cash only’ service can be a barrier to clients using your service. 

Navigating COVID-19

COVID-19 was challenging for many small businesses. For Karen, she faced the particular challenge that her lease was running out and she, therefore, had to make the decision of whether she would like to continue her barbershop business. Customers weren’t coming in the door, and she had to manage the needs of her staff. 

Karen says, “It was a nightmare! Over COVID my barbershop was in a slump. Diane was the one who kept me going. She pointed me in the right direction.” 

Karen credits Diane with always providing supportive advice. “There are times when you’re in business you get yourself in a downward spiral,” she says, “But she’s always there, she’ll pick me up, and I just continue on ‘head down, ass up’ and keep going.”

During this time, we provided many of our clients with practical strategic planning and financial advice, including where to get business funding support. However, beyond the numbers, we acted as a stabilising force during a challenging period, by providing reassurance and helping them to stay focused on their long-term goals during times of uncertainty. 

Implementing Xero

Before Xero, Karen always did her accounting on a spreadsheet. “I used to have my little book with a pen and paper and write it all down. Diane got me onto Xero.”

Her first accountant was a good accountant, but he was older, and spreadsheets were his generation. Xero helps automate tasks that take up a lot of time, from reconciling bank transactions to sending invoice reminders. It also makes it easier for your accountant to process your year-end financials and run profit and loss reports so we can provide you with clear financial advice for your long-term goals. 

Thanks to Karen Murphy from Ōmokoroa Barbershop, who allowed us to share her journey with us for this case study. Karen has been a client of Ōmokoroa Accounting for 10 years. 

Are you ready to grow your business? Partner with Ōmokoroa Accounting for proactive accounting strategies and support. Contact us today!