Gradually – then suddenly

A light green background with a butterfly emerging from a chrysalis

When’s the right time to upgrade your financial management?

When I look back on my kids’ adolescence, it’s all a blur.

One moment they were in primary school, learning to read and write, asking to be taken to the park and begging for sleepovers with their friends.

The next moment they were submitting their university applications, thinking about their careers and making their first forays into the world of dating.

There was no specific moment when I realised they were all grown up. It happened gradually – then suddenly.

The same is true for most businesses.

If you’ve been reading my emails for a while, you’ll have heard me talk about the shift your company undergoes from infancy to adolescence.

When it’s still very young, it operates in an ad hoc way, without proper systems. Instead, it’s very dependent on a few key people who know the business inside out and who make it work.

But at a certain point, this way of working causes trouble. There are too many clients, too many transactions, too big sums of money to manage on the hoof. Your growing company requires a more grown-up, more professional way of doing things.

How do you know when you’ve moved from one stage to the next?

Understanding this transition is important, because it requires a change in your operations. You need to start working in a more organised way, putting more processes in place so you can build a business that works at scale.

That includes for your accounting, which can be an important point of failure if you’re not careful.

But it’s not always easy to tell. And sometimes I do get prospective clients asking me, “How do we know when it’s time to upgrade our financial management?”

In my emails, I often say this happens when you hit £1 million turnover. It’s a convenient marker and very often, it does happen around that point.

But there’s no hard-and-fast rule. You can have a £1m company that has 30 employees, while another company with that same turnover is still run by the original founder and a tiny team.

You won’t hear this from me very often, but the best guide actually isn’t your numbers. It’s a feeling that you’ve lost control…

That the way you used to manage your company isn’t right any more…

That important tasks are getting lost in the shuffle, and perhaps clients are being let down.

When it comes to your finances, you probably feel that you’re not sure about your real financial picture. Are you profitable overall? Are some parts of your business more profitable than others? You might have a gut feeling, but you don’t have the numbers to back it up.

That makes it really hard to make financially astute decisions.

And your finances are likely disorganised, too. You don’t receive your accounts on time. You’re not sure of the status of certain invoices. Perhaps you’ve even received a financial shock, like an unexpected tax bill.

More and more, you wish that things were done ‘properly’.

Most business owners can’t point to a single incident where this realisation dawns on them. Just like your kids growing up, it happens gradually – then suddenly. (Actually it was Ernest Hemingway who originally said this about going bankrupt, but I find that it applies to all the scenarios I’ve just described!)

So if you, too, have started to worry that the way you used to manage your finances just doesn’t work anymore, let’s talk.

At Insight Associates, we work with companies entering the ‘adolescence’ stage, creating a finance department that is fit-for-purpose for your growing company.

We install robust financial systems and process in your business, so your cash is managed efficiently and effectively.

We help you understand your financial position, so you’re no longer in the dark.

And then we work together to use those numbers to make better financial decisions for your business – so you can maximise your profitability, and eventually move from ‘adolescence’ to a grown up, scalable company.

== > Click here to find out more about our Outsourced Financial Management service

Then email garry@insightassociates.co.uk or call us on 01279 647 447 to get in touch, and talk to us about how we can help you.

Warmly,

Garry

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In this blog archive our Managing Director, Garry Mumford simplifies all things financial and shares with us a lifetime of practical financial business advice.

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