In this edition of FinanciElle “Statements”, I got the opportunity to interview Gillian Eadie, the Co-Founder and Managing Director of Memory Foundation. Memory Foundation develops neurogames, books and clinically-trialed brain and memory training courses to assist the over 50 age group maintain brain resilience, confidence and productivity into older age. Many Foundation activities are Not for Profit while the main business activity is focused on training BrainFit coaches to conduct group brain training classes.
Paolina: What has been your hardest experience dealing with your business and finance and what did you learn?
Gillian: The hardest experience dealing with our business has been establishing a consistent system of recording income and expenditures, receipts, and invoices in a timely manner, and not realizing how time-consuming that was going to be for one person.
I have learned much about the importance of cash-flow and the need to keep monitoring outgoings. For the past year, I have been using Xero (online accounting system) and that has been magic in terms of seeing where we are on a day-to-day and month-to-month basis.
We are still not fully conversant with everything the system has to offer. E.g. what do all the available reports mean? Which ones matter? Which ones do I need to be keeping an eye on! Which ones will give me a red alert?
Although I and my sister (both founders of the Memory Foundation) are highly qualified in our respective fields of education and psychology, business financial literacy has been a challenge.
Paolina: What advice do you wish you had gotten about finance when you were first starting your business?
Gillian: Although my career in education involved understanding financial reports at a macro level, I had never actually organized business records from scratch. We found out that it involves much more than balancing a personal chequebook. (When they still existed!)
Firstly, we needed financial advice alongside us from an accountant who understood and was aligned to our small business. After a very expensive and disappointing year with a large accounting firm (who then overlooked submitting our tax returns!), we have tried to go it alone, with tax returns being generated by a chartered accountant at the end of the year. This is not the best and I am sure there could have been ways to improve on our income over the years.
In retrospect, at the very beginning, we needed a basic, step-by-step, colloquial language explanation of the accounting system, based on our company’s own likely business needs.
Understanding pricing and costs would also have been good knowledge to have. Memory Foundation products and services are mostly virtual and online so it has been a process of trial and error to establish pricing – personal time and effort have mostly not been included.
Paolina: What topics would you want to learn more about when it comes to finance and your business and why?
- How to structure the business for tax efficiency. I am sure that we overpaid on our taxes this year because we did not correctly categorize some of our expenses. As a start-up, the business has grown without the two founders paying themselves. I would like advice about that versus the desirability of building equity in the company.
- What the varying accounting categories mean, and which ones really matter in the day-to-day recording of money-in, money-out. I have wasted quite a lot of time trying to find out the definitions of some concepts (e.g. I am embarrassed to say, equity!), only to be faced with more bewildering technical terms in the definition explanations. An example is when transferring money from a chequing account to a savings account, what do you call it? (I eventually found out the money goes into a Suspense account.)
- Which reports are the important ones on a daily, monthly and annual basis? And why.
Gillian Eadie formerly held leadership roles in education and is MD of the Memory Foundation while her sister, Dr Allison Lamont, is an internationally-recognized memory expert and co-founder.