Archive: May 2015
Comments Off on When and how does a business need a Finance Director?
Some businesses we work with are eager and exciting fledglings. To a layperson, they appear limitless in their enthusiasm and energy. They believe their product or service will change the marketplace, but they haven’t yet become fully immersed in their sector. They haven’t yet had to deal with complicated contracts, market competition, public relations strategies or selling to the mainstream.
The fledgling stage of a business is exciting, albeit often messy in management. Founders and senior executives will often still be spending much of their time on business administration.
You must not hold your business back. At some point, your business and financial management practices must scale up. The founders and senior executives should be a company’s most valuable resource – but they might not have the skills or experience needed to help ensure your office and financial transactions run smoothly.
Their time should be focused on delivering what they’re best at. This means they shouldn’t be answering general enquiries, arranging transport or raising purchase orders and invoicing. Once your business can afford to, consider employing internal staff with the skills you need.
Smart Business Growth Tip #1: Employing An Office Manager/Bookkeeper
There are smart routes to growth. Combining roles within one staff member can help ensure you don’t bite off more overheads than your cash-flow can chew. Employing a skilled office manager with strong administrative skills adds many strings to your business’s bow.
If chosen right, they should start tidying your business processes. This way, they not only ensure your office runs smoothly: but your business does as a whole, leveraging in greater revenue and providing stronger stability.
It’s this process, where a business’s processes become more strategic, that a start-up metamorphoses into a serious business. Businesses should start focusing on supporting their staff to be more efficient, rather than allowing founders and senior executives to continue having free reign in changing processes and choosing what they put their efforts into.
However, a smart office manager will only help a business in the initial stages of tidying processes. As businesses blossom, they must search for a trusted financial director to take control of the financial management wheel.
Smart Business Growth Tip #2: Employing A Finance Director
It is not always necessary, and for many businesses, unaffordable, to employ a full time Finance Director. However whether you take on a part time FD, or place the responsibilities of financial management with an existing senior member of staff: your candidate should understand the needs of your operations, and how their actions can help or hinder business growth. In other words, your Finance Director needs to be operationally focused.
For fledgling businesses, core financial responsibilities often still lie with the founder. It’s difficult for them to let go of this responsibility: but let go of it they must, if they are to free-up their valuable time – and be able to spend it on developing and strengthening business operations.
In order to let go, they need a Finance Director (sometimes known as ‘Chief Financial Officer’) they can trust. Whilst some of this will be based on their character, and the strength of the relationship between the finance director and other senior business executives – much of it depends on their skill-sets.
A good Finance Director should provide your business:
Budgeting and planning: Finance Directors should know his or her numbers, not just for budgeting purposes: but for helping plan business development. It’s their job to ensure you’ve got enough income to cover your overheads now and into the future, by understanding the costs of acquiring new customers – and how they synchronise with the business growth costs of acquiring new assets and staff.
Leadership: They should not be afraid to challenge the chief executive, founders or other senior executives. Their role is to ensure decisions are informed by the best financial knowledge of the company. They can often ensure processes are developed and implemented across the whole or entire sectors of business, helping businesses stay efficient as they grow. Not only can they have great input in board meetings, but they can also help prepare them: providing financial information, analysis and recommendations.
Legal and HR: a great Finance Director shouldn’t just bring knowledge of financial processes and how they relate to your business. Ideally, they should have good knowledge of legal and HR protocols. This provides that efficient combined-role again, helping your business run smoothly and adding strengths to multiple areas of your operations under one hat.
Monitoring success: different businesses are suited to different monitoring metrics. If designed and established well, they’ll produce the most informative of analysis. For the strongest of foundations, finance directors should be highly skilled in monitoring, understanding what metrics best measure your business – and using them to inform all of their other actions.
Find out how your business could benefit from a SouthWestfd Finance Director resource.
Comments Off on ‘Understanding Your Accounts’ Part 3 – The future is in your hands!
In this series of blogs ‘Understanding your accounts’, we’ve looked at whether your accounting numbers can be useful beyond mere compliance with tax and company filing rules. We’ve also reviewed a simple example of how a balance sheet works, and identified a couple of areas to help you manage your business.
In this final blog we build on these to see what ‘hidden data’ is in your accounts and how to turn it into management information to aid your decision-making in growing your business.
Consider the following questions:
- Do you categorise your sales income….. by product; geographical area; market sector; sales location? It may be a combination – but can you easily identify and allocate your sales into segments that are useful to you?
- Similarly, can you do the same for your costs….. raw materials, labour, distribution and other costs, to see segmented profitability?
- How long does each of your customers / clients take to pay you?
- How long do you have to pay your suppliers after they have delivered to you?
- Do you know when during the month / year you will come close to your last £1 in the bank?
- Do you know how much your business will be worth at the end of the year?
‘Why should I look at this level of detail?’
Being able to identify the detail will help you understand the true ‘cost and value drivers’ within your business and help you to take decisions about the future.
Have a look at:
- How profitable each product / area / sector / location is – including the timing of cashflows;
- Seeing if you covering your business overheads – and if all products / areas / sectors / sales locations are contributing at the same level;
- What action you may need to take now to mitigate a pinch on cash in the future.
Having a report at least once a month that identifies all of the above (+ more!), is an excellent tool to see where you have been, and more importantly to use it to see where you are going!
‘But how do I predict the future?’
You can’t of course. The usual investment disclaimer ‘the past is no guarantee for the future’ is true, but it is a good enough place to start with preparing forecasts. You know your business well and if you have a good understanding of the data described above, you can use it to estimate how each future month is most likely to turn out.
By focusing on the underlying detail, your forecasts will be much more tailored and predictable than sticking a ‘finger in the air’ to guess your sales and profitability. More importantly you will be able to identify and better understand the reasons why you exceeded, or missed your forecast.
Developing this critical skill will enable you to feel more confident in taking informed decisions to minimise poor future performance and to focus on maximising the right activities to grow your business.
Blog by Richard Colling SouthWestfd, Associate Director at SouthWestfd
Comments Off on Grant Masterclass, Plymouth | 2nd June
Granted Consultancy and SouthWestfd have joined forces to bring you this exclusive session where we aim to provide you with advice that will not only prepare you for grant fund applications but will assist with financial planning for business growth.
We will help you identify how grant funding could be applicable to your business, prepare for grant applications, ensure compliance before & after a grant award and assist with cash flow forecasting & financial planning. Everything discussed within the room will be kept confidential.
Topics covered at our session include:
- Grant scoping – what grants are available and applicable to you • Grant portfolio – what is needed in preparation for grant application
- Cash flow forecasting, preparation of financial accounts, P&L, balance sheet
- How to draw down grant awards
- Match fund planning
- Financial planning for future growth
- Case studies
Latest available grants – not publicly advertised
All those attending the Grant Application Masterclass you will be given details of the latest and relevant grants available to access in the Devon area, and as leading consultancy in this area, Granted Consultancy are often given prior notice of upcoming grants, giving you the opportunity to hear about them first.
Government funding available for consultancy fees
Both Granted Consultancy and SouthWestfd can help you with the grant scoping, grant portfolio, cash flow forecasting, financial planning and compliance. The advantages of working with either company means that your business will not only get fully prepared for a grant or fund application, but using their expertise in business and financial planning can only go towards improving your company’s overall growth.
You could be eligible to receive up to £3,000 worth of funding towards our consultation fees – we’ll tell you more on how to apply during the masterclass.
10 Minute Surgery
Want to have a one-to-one discussion about your business? Book into one of our 10 minute surgeries (first come first serve basis) after the main presentation. Register your interest in booking one of the 10 minute surgeries by emailing us.
Join us at 9am for registration and refreshments. The presentations will commence at 9.30am.
Spaces are limited so book your place now.