Big red cloud makes light weather of accounts and book keeping
Marc O'Dwyer's move to the cloud means he can offer customers a more affordable, user friendly and easily accessible service
THERE'S a popular saying in business: "Turnover is vanity, profit is sanity and cash is king." Many entrepreneurs, particularly in the early stages of business, often struggle to understand the difference between each. For some, even the very mention of accounts and book keeping is enough to cause their eyes to glaze over.
Many business owners shy away from accounts altogether, focusing instead on their core skills of production or sales, leaving it to their accountants to tell them at the end of the year whether or not they have made a profit or a loss.
In the fast moving and highly competitive marketplace where access to working capital is tighter than ever, having accurate and up-to-date accounts is not only good housekeeping, but critical to the success of any business.
Last week, I met one man who is working hard to make the accounting process easier and more manageable for small- and medium-sized business owners. The Big Red Cloud, which is part of The Big Red Book Company, was set up in 1993 by entrepreneur Marc O'Dwyer.
The company – located in Glenageary, Co Dublin – develops and distributes easy-to-use accounting and book keeping software systems. Recently, the company moved its software online to become part of what is now popularly referred to as 'the cloud'.
I am keen to understand what all this means for Marc's customers, and in particular what it means for the future of his own business.
"Traditionally, we developed software which companies used to manage their invoicing, purchases and VAT as well as producing full trading profit and loss and balance sheet accounts," Marc explains.
"We used to sell this software in the form of a CD that we sent out to customers in the post and which they then installed on PCs in their office. Today, however, customers no longer need a CD or even to have information stored on their own PCs. Instead, everything is stored on large computers called remote servers which are located in large shared data centres and effectively hosted in the cloud or on the internet.
"The advantage for our customers is that they can now log on and access their accounting information from any location via the internet on a 24/7 and 365-day basis using almost any device," Marc explains.
In addition, the move to cloud-based computer services means that clients are no longer required to spend money on expensive computers or software.
"Rather than paying upfront fees of €800 or €900 for a software package, the cloud-based service is now available at a modest monthly fee of €25 per month, per company," explains Marc. "In addition, the customer can be guaranteed that they are always getting the most up-to- date version and one which is totally virus free."
He stresses: "We really are focused on making it easier and more affordable for companies to keep on top of their accounting issues. Our customers are typically small and medium-sized companies. Many will have an annual turnover in the millions, with up to 20 or 30 staff, but many more are sole traders with only a few staff."
Where did the name for the company come from?
"It's taken from the traditional red ledger, used by book keepers, which was commonly known as the big red book," Marc explains.
While he has an aptitude for accounting, Marc is not an accountant. In fact, he studied marketing in the Dublin Institute of Technology before getting his first job in a bank. His real passion was sales, and so he soon left and took a job – first selling franking machines and then, later, computers and printers. Like many entrepreneurs, he quickly realised that he was making money for someone else and decided, instead, that he wanted to do it for himself.
In 1992, he set up Irish International Sales selling fax machines, photocopiers, PCs, and stationery. In 2000, he was approached by an accountancy firm that had developed an accounting software business but was now in financial difficulty. Marc took over the business, together with the 3,500 existing customers, and merged it with his existing business to create the Big Red Book Company.
Within six months, he had turned the business around, restructured the product pricing and grown it into a profitable operation. Today the company has more than 35,000 customers and an annual turnover of more than €1.5m. He now employs 25 staff between his Dublin and international teams.
The success of the company's growth has not been without its challenges though.
"Sometimes challenges can be opportunities in disguise," explains Marc.
"When we took over the software business, most of that company's sales team left. I took a fresh look at the sales process and decided to create a series of tutorial videos which helped educate, encourage and incentivise customers to purchase the software online, without the need for interaction with a sales person. While it was a more light-touch sales process, it was more efficient – and we got a much stronger conversion rate."
The result was that he saved the company a quarter of a million euro in salaries while, at the same time, driving increased sales.
He also benefited greatly from the increased exposure the company received when it was featured on the popular TV show, The Apprentice.
For Marc, the light bulb moment occurred when, in 2009, he was attending an Enterprise Ireland seminar on cloud computing. He immediately realised that his Big Red Book services were ideally placed to be made available via the cloud.
Not having the capability in-house, he partnered with a software development company to get it launched – but just as they were about to complete the work, the company went bust.
"It was a difficult time for us," explains Marc. "But we dusted ourselves down and made a key strategic decision to hire our own development team." Less than a year later, the new cloud-based version was launched.
With the combined features of ease of use, increased accessibility and the now more affordable nature of the service, it became an instant hit with existing customers as well as attracting a large number of new customers to the business.
"Having an accounting package is one of the key services you need when you are starting a new business," explains Marc.
He is happy that he is playing his part in helping to make it easier for new businesses to get set up by offering them a cost-effective accounting solution.
Because his product is ideally suitable for English- speaking countries where British and Irish accounting rules apply, Marc has taken the company from a position where 98 per cent of his customers were Irish-based businesses to one where he now has customers in more than 16 countries including the UK, France, India, Pakistan, the Philippines, Oman, New Zealand, and the USA.
Marc is under no illusion but that it was the power of the internet that provided the opportunity for the Big Red Cloud business model.
"Many businesses, like ours, have emerged because the internet created a level playing field that allows us to compete in a global marketplace," he tells me.
Since making the switch to a cloud-based service, the company has also managed to retain its annual turnover – which is a significant achievement considering that the cost of its new product has reduced dramatically from €900 a year to €25 a month.
In a strategic move to keep turnover up, he now offers customers incentives and reductions to pay annually or for up to three years in advance. It's a smart strategy that has helped him generate the cash flow required to sustain and grow the business.
Marc is excited about the future. He has just agreed a deal with the Institute of Certified Book Keepers in the UK to use the Big Red Cloud as the platform to train all new book keepers in computerised accounting.
"It will mean greater exposure to the UK market, where 38,000 new businesses are set up every month," explains Marc excitedly. He is also in discussions with potential partners in New Zealand, South Africa and Australia.
It's an exciting time for the entrepreneur. He is currently fundraising to help support his expansion plans and believes he can grow the company to revenues of €100m.
"Why not?" he says. "Other companies in the world are doing it – so why not an Irish company like us?"
Why not indeed.
Marc is no stranger to competition. A committed fitness enthusiast, he is currently training for his second Iron Man competition, having represented Ireland at two European and two world championships. "I get some of my best ideas when I am training," he tells me. "It gives me great energy and the clarity that helps keep me focused on achieving my goals."
Marc O'Dwyer is a very focused and committed entrepreneur. There is intensity in all he does. He is someone who has not been afraid to take the risk of going out on his own.
Coming from a non-accounting background, he has been able to bring a fresh and simplified approach to accounting and has used his strength and skills as a sales and marketing professional to help grow both his brand and his business.
Sales are the life blood of every organisation. Marc O'Dwyer recognises that and he is now definitely playing to his strengths.
As a result too, more small business owners will now be able to clearly understand the difference between turnover and profit and eventually figure out why cash flow wins every time.