Perhaps it’s a myth, but I’ve heard there’s an army exercise where recruits are driven miles from their base, dropped off in the middle of the night – and expected to make their own way back.
When the cadets open their eyes, they are disorientated. They have no idea where they are, or which direction they came from.
Every move they make is a guess.
It’s very difficult to navigate their way to safety, when they don’t even know their starting point.
The same is true for your business’s finances.
Over the past few weeks, we’ve been talking about the steps you need to take in order to strengthen your financial position as the economic crisis worsens. This includes understanding the biggest financial risks you face, mapping out what could go wrong and plugging any obvious gaps, and building up an emergency “war chest”.
But it’s difficult to do any of this planning for the future, without a detailed, accurate picture of where your business stands today.
The knowledge you need includes: Are you profitable, and if so, how profitable? Are certain parts of your business performing better than others? What are your debts? What are your expenses? How long does it take clients to pay you? What does your cashflow look like? And more.
Imagine trying to forecast what your financial situation might be in 3 months’ time without any of this information. Or trying to figure out where you’re most at risk.
It would be impossible – no better than a guess. Yet too many business owners skip this step because they have a general idea of how their business is doing (although it’s often inaccurate!), or are just in a rush to take action. It’s the biggest mistake.
Similarly, any measures you take to protect your business might be completely wrong, if you don’t understand your financial situation well enough.
For example, heading into an economic crisis, you might think you need to cut expenses. But a closer look at your accounts might reveal a much bigger and more immediate problem: Customers are taking longer than ever to pay, and you might run out of money within six weeks.
If you don’t address that issue right away, you’re inadvertently putting your business at risk.
When new clients approach us, they often have similar concerns: “I base my decisions on my gut instinct. I’m tired of working that way, I need real numbers…” “I’m not sure my numbers are accurate, so I take decisions in the dark. I feel like I’m gambling…”
“I’m the CEO but I don’t feel in control. I don’t understand where we stand financially…”
They have realised that you can’t make confident decisions about where to lead your company without clear, current financial data…
…at least not when your business has hit £1 million or £2 million, and is more complex than it used to be.
Now much more so, in times of financial crisis – when the external environment is a lot less predictable and you’re under additional pressure.
If you feel the same, we can help.
The first step when we work together is to make sure that you have accurate, timely, in-depth financial information about your business – and that you understand it, too.
You will never be sent sheets of numbers and be left to work out what it all means by yourself. Not only do we present your financial information in accessible formats that suit you, but we work with you, as your partner, to ensure it’s all clear.
Then we help you use that financial information to make the best possible decisions for the future of your business, so you can lead your company confidently through good times – and bad.
To find out more about how we can work together, get in touch today by email or calling us on 01279 647 447.
Warmly,
Garry
