Peanuts or Millions?19th June 2019
Friends of mine moved into an old house, which had been repeatedly extended.
It sounds great, right? They certainly had lots of room.
The problem was that nothing in the house made sense.
For example, the garage had been turned into a utility room…. But there was no internal entrance. You had to step outside to do the washing.
And yes, the dining room was now much longer. But the room was so long it created a tunnel effect. It just didn’t look right.
Because the house had been extended at different times, no one had ever considered how it functioned as a whole.
They had to hire an architect to take a fresh look at the entire space, and sort out the mess.
Businesses sometimes develop that way too.
If you’ve read my last few articles, you know that in order to create a valuable business that someone else will pay for, you have to build effective SYSTEMS…
…The kind of systems that enable your business to operate smoothly and efficiently….
….without you, the owner, having to be present and involved.
The problem is that most business owners are too busy trying to acquire customers and to expand, to pay much attention to systems.
They just let their companies evolve organically….
….Never thinking about those systems until late in the game.
Before you know it, you have two accounting platforms that don’t talk to each other…..
No one is sure how much money is coming in next month, because there is no cash flow forecast….
And there are a string of expenses that have never been properly logged, because a secretary is keeping a manual record - somewhere. (Hmmm, is that why the accounts don’t quite add up?)
It’s a stressful mess.
And that’s just on the financial side. The lack of systems in marketing, customer service and other areas of the business is just as damaging.
If you don’t fix this, one day you’ll be sitting across the table from a potential buyer, wondering why they want to pay peanuts for your company, instead of the millions you believe it is worth.
But where do you start?
You might have very little idea what systems you need in place. And very little capacity to implement them, even if you do.
So just like my friends had to call in an architect to get a fresh view of their house, you may need help from an outside expert.
We help you build all the systems you need to manage the financial side of your business.
Those are the very first systems you need to sort out - after all, you are in the business of making money (I hope)!
We do it in three steps:
In Step 1, we help you piece together a thorough, strategic vision of the kind of business you want to build. (It’s like an architect’s blueprint.)
Your personal goals are just as important as those of your business.
So we’ll talk about issues like the type of work you enjoy, the hours you want to work and your exit plan, as well as issues like your ideal customers and dream team – and so much more!
In Step 2, we put in place the financial infrastructure you need to carry out your vision.
You cannot create the business you want, unless your cash is properly managed.
So we make sure you are on a world-class accounting platform…
That every invoice, bill and expense is logged and dealt with in a timely manner….
That every line in your accounts is accurate…
And that you have regular cash flow forecasts, and useful monthly management accounts….
…All the financial systems, really, that a much larger company would take for granted (and that a buyer for your company will expect in place, one day, too).
Finally, in Step 3, we help you use the financial information we generate to make better business decisions.
That way, you can build the company you designed in Step 1 even faster, and with more confidence.
As financial directors, we don’t “just” handle your accounts, like a bookkeeper or accountant might.
We actively help you build value:
Subjective value – a business you love…
…And real, objective value – a business that one day, someone will be willing to pay significant sums to acquire.
PS. There is, in fact, a 4th step to the process… It’s actually key to the whole thing…. But I’ll tell you about it next time!