That they’re not great at managing their finances, and they’re not as profitable as they’d like the world to believe.
When I go to visit new clients I often pull up at their lovely offices, see the fancy cars outside and think “clearly they’re doing really well – why on earth am I here? And what can I possibly tell them that they don’t already know”
But the reality inside often isn’t what you see on the outside.
The reason why is simple
No one ever gave them the blueprint and told them how to manage their finances.
I find that either finance is made overly complicated so that no-one understands, or it’s made too simple so the basics of information, control and visibility are missing. Either way we have a financial black hole of financial understanding.
So what IS the blueprint?
There are 5 key things that make up the blueprint of how to best manage and control your finances:
1) You, the business owner, need to understand your own finances. By all means delegate the “doing” to other people, but never abdicate the understanding of your own money.
2) Your book keeper needs to have solid financial skills so that you know for sure your figures are correct. Because most qualified finance staff tend to work in larger companies we have to work smarter to make sure our staff really know what they’re doing.
3) You have to have proper financial information – not just reports pulled from your accounting package. You need:
- To know your profit for the month and the profit forecast for the whole year including corporation tax and dividends
- A 13 week cash flow forecast (unless you’re really wedged)
- A weekly flash report that gives you full visibility of the next few months.
4) Knowledge is power – IF you use it! So you need to actually use this information – not just leave it sitting in your inbox or on your desk. Use it to get the facts, know your numbers, understand your trends and where your business is heading, so you can make the important decisions.
5) Finance isn’t an ad-hoc activity; make it routine and discipline in your business. That way you’ll always see problems coming in time to fix them.
Nothing takes the pressure off quite like knowing you’re in control of the money.[/vc_column_text][/vc_column][/vc_row]