Keeping your business's finances in check

I have stressed in my previous blogs, that being on top of your business’s finances is perhaps the most important thing you can offer to your company. A good business will always have an owner who is aware of their current financial situation, the costs involved with the business, and – importantly – what the future financial situation of their business is likely to be.  It’s not just small businesses that struggle with this; recent high-profile cases have shown that even huge companies like Tesco and Patisserie Valerie sometimes have a poor idea of what’s really going on with their accounts.  If you feel as though the numbers in your business are always one step ahead of you, this blog will help you to ‘sharpen your saw’, as poor knowledge over numbers can be catastrophic.

How well do you know your company’s numbers?

What was your company’s turnover last year? How much of an increase/decrease was this on the previous financial year? What are the margins for your products and services? Do you know the value of your business? If you struggle to answer any of these questions, then it might be time to start changing the way you manage your company’s finances before it is too late.

So often I see skilled business owners, with thriving businesses, who still have a poor grasp on the everyday numbers involved with their businesses. Why is this? Well, usually, I notice that many good businesses are founded by specialists with a genuine passion and knowledge in their given field. Whilst this expertise will help your business in many ways, you have to understand the financial numbers within your business as well.  I can’t stress how important this is; numbers are the language of business, it’s how you keep score, so you need to know what they are and what they mean.  Without this knowledge you can’t make informed decisions about your business.

As a business grows, you should be able to plug your own skills gaps by hiring a team who complement your skills and experience; this could start with a part-time bookkeeper, moving on to an accountant and then a financial director to take over the day-to-day management and strategic planning of business finances.  Even so, you still need that understanding so you can interpret the information your advisors give you. However, even this doesn’t guarantee that your company will be on top of its numbers, as recent high-profile cases of accounting ‘black holes’ illustrate.

Tesco’s financial ‘black hole’

As the UK’s biggest supermarket, you could be forgiven for assuming that Tesco would be the last company to lose control of its books. However, alleged financial irregularities left the firm with what prosecutors claim could have been a black hole of up to £600 million.  Some staff quit over what has been called illegal practices, and two former senior executives are currently being tried for fraud and false accounting.

Patisserie Valerie

keeping on top of your business finances

A similar situation occurred in the financial department of Patisserie Valerie. The firm recently won its court case against HMRC who were investigating an unpaid tax bill of £1.14 million. Whilst the company successfully fought off HMRC’s winding up petition in the High Court, the company clearly had a poor grasp of its finances, as another – arguably more serious – scandal continues. Trading in its shares were suspended and the finance chief arrested after accounting irregularities that were potentially fraudulent left a £40-million hole in its bank account; alarmingly, the chairman is having to invest his own money – as much as £20 million – to help the company to survive.

Gourmet Burger Kitchen

Have you ever tried one of this firm’s burgers? Well I have, and they are delicious. Unfortunately, their finances of late have not been so tasty. Losses of millions of pounds have forced the burger chain to announce the closure of 17 restaurants in a bid to cut costs to stay afloat.  It’s the latest in a long line of casual dining casualties – including Jamie’s Italian, Prezzo and Gaucho –  all of whom have faced unsustainable overheads in the face of dwindling consumer confidence.

So, how can I avoid a fate like Tesco’s, Patisserie Valerie and GBK for my company?

If you are worried that your company’s finances are not quite as tight as they could be, don’t fret! I have got a few simple ways that could dramatically transform the organisation of your finances.

Software packages – These days you don’t have to have millions to have a decent grasp on your finances. Everyday packages such as QuickBooks and Xero can help everyone to keep their books in check. For a reasonable subscription, you can become a much more competent bookkeeper – trust me, the price is small in relation to the changes it’ll bring to your company.

Accountant – If you’re not yet at the stage of having an in-house accounts team, an outsourced bookkeeper or accountant (or both) will help you keep on top of your company finances, often in conjunction with a suitable software package. Just because you are the owner, doesn’t mean you have to be a Jack-of-all-trades; it’s okay to outsource to someone who has more subject knowledge than you!  This is especially true when it comes to dealing with HMRC.

The problem I have with accountants, however, is that they can sometimes be backwards looking, focusing on your past financial performance. You therefore, might like to consider my final way of looking after your numbers.

Forecasting expert – such as an expert business coach or financial director may be better equipped to look forwards (as well as back) in regard to your financial situation. They will also look at the non-financial numbers in your business, which often provide a much earlier indication of the state of your business, such as looking at your pipeline and conversion rates etc.  The overall result: very robust forecasting for your business.

Keeping on top of your business numbers is essential for any business owner.  The recent headlines about leading UK firms shows you how badly it can go wrong, but preventative steps can make sure you don’t follow their fate.

My clients benefit from a whole range of supporting materials to help them in all areas of their business*. 

If you’d like to know more about the business areas in which I can help you, call 01732 453 464.

Value Builder exclusive offer
Value Builder is an extraordinarily powerful tool to give business owners the insights they need to meet their business and personal goals, so I am personally committed to making it available to entrepreneurs in Kent, Sussex and Surrey, in the area indicated in the map.
Value Builder normally costs business owners £500.  However, I am delighted to offer it to selected businesses free of charge – and I am also pleased to offer the follow up 90-minute 121 consultation to go through your results at my expense.
Why?  Well, I want businesses to have the very best chance to grow and develop, delivering the results business owners and their families deserve.
Secondly, I want to see businesses thrive and recruit additional team members to further grow the business and help to boost the local economy.
The full list of towns where I can provide this service is below, but if you don’t see your location, give me a call or drop me an email I will let you know if I can help you.  If I can’t, I’ll put you in touch with one of my colleagues who helps businesses in your area.

To apply for your FREE Value Builder report and business strategy review

Call 01732 453 464

Or email julianweekes@actioncoach.com

I help business owners in the following towns:
Brighton & Hove
Hailsham
Lingfield
Seaford
Bromley
Hastings
Maidstone
Sevenoaks
Cranbrook
Haywards Heath
Newhaven
Sittingbourne
Crawley
Heathfield
Orpington
Tenterden
Crowborough
Hildenborough
Oxted
Tonbridge
Dorking
Horam
Paddock Wood
Tunbridge Wells
Eastbourne
Horley
Redhill
Uckfield
East Grinstead
Horsham
Robertsbridge
Wadhurst
Edenbridge
Kings Hill
Rotherfield
Worthing
Goudhurst
Lewes
Rye
Don’t see your location in the list? Drop me a line and I’ll let you know if I can help you – or put you in touch with one who my colleagues who works with business owners in your area.
*My clients benefit from supporting material and coaching in the following business areas:
Sales & marketing
          Lead generation
Sales process
Business planning
          Time management
Finance, understanding the numbers
USP & POD (Unique Selling Point and Points Of Difference)
          Systems
Team / Team dynamics
Recruitment / DISC / personality profiling
          Leadership
Business growth
Strategies for profit
          Succession planning
Exit strategies

Looking for support in one of these key business areas?

Call 01732 453 464

Or email julianweekes@actioncoach.com