The Business Barrier No One Talks About
A potential client approaches you. They want to hire you for a project which will boost your revenue by a significant percentage.
This would be such a coup. Not only are they a prestigious company, you could really use some extra revenue right now. You want to grow fast, but that means hiring more staff, and you have to fund that somehow.
You can’t wait to sign that contract, and try to push it through quickly.
Of course, if you looked a little closer, the warning signs are there just beneath the surface.
This company has a reputation for paying late, and recently has been experiencing some financial difficulties. None of this is a secret – you could find it out with a quick Google search.
But you don’t do that. Or maybe you’ve even heard some of the rumours, but you blow them off, because they’re a big company and you really have your heart set on hiring those new employees. You want the company to reach a certain turnover by your 50th birthday, and this fits into the plan…
Over the last few weeks, we’ve been talking about how important it is to do due diligence on your clients, to ensure they really will help you build your business – not destroy it.
One of the biggest barriers is something that is rarely talked about in business.
As company owner, you are emotionally attached to your business.
You founded it, you pour your heart and soul into it daily. Watching your fledgling business grow into a serious organisation is a source of enormous pride. Your own hopes and dreams are caught up in its success. You feel a sense of affection for your staff members – they’re practically family. In some cases, they might actually be family!
Under those circumstances, it’s difficult to be really objective about tough business decisions.
It can be equally difficult to acknowledge when things aren’t quite right in your business – for example, when there are underlying cash flow issues that indicate you’re in financial trouble. I’ve seen too many owners in total denial, insisting that everything’s ok because “there’s cash in the bank”.
Usually they’re not (just) financially ignorant – they can’t bear to face the truth.
So how can you nevertheless make sure that you take the right financial decisions for your business?
Every business owner needs a dispassionate, objective adviser, who will help them face difficult truths.
You need a candid friend you trust, who will ask, “Why are you doing that? Have you thought about X?”
…And importantly, be able to say: “I don’t agree with you.”
In my office, I have associate directors Shirley Hoy and Simon Hammond, who understand our business perfectly. I know I can rely on them to remove my rose-tinted glasses.
We fulfil that role for many of our own clients, in turn.
As outsourced finance directors, that’s an essential part of our job. Managing your business financially goes far beyond writing up good management accounts and ensuring payments are processed in time.
It’s about making sure that a company takes sensible financial decisions. That you take the right steps to build your company’s financial future, even if it involves giving up a division you personally built… Firing someone you care for, or who has been loyal to your company for many years, because they are no longer performing… Or turning down a seemingly lucrative contract, because it’s too good to be true.
Taking professional, objective financial advice is the mark of a company owner who wants to run a mature business – one that is capable of growing far beyond £1 million or £2 million. That’s when you put strategy and fact at the heart of your decision-making process.
In smaller businesses, by contrast, decisions often come down to the feelings and whims of one individual (the owner) – and this often a major reason why they get stuck.
Break out of that cycle.
Talk to me today about how we can help you make better financial decisions – and let’s get your company growing to £3 million, £4 million, £10 million – and more.
