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Saving the business world, one business at a time

Date Posted: 27 Jun 2013

After a successful career in business banking  spanning over 20 years I became increasingly frustrated by the politics of a post credit crunch world. Having enjoyed working closely with small business from start-ups through to those with several million turnover, I wanted to continue this association but in a way that was more satisfying. I had seen many business struggle due to poor Cashflow which was often a result of minimal time being spent working on the business because the owner was too busy at the rock face. More and more financial information was being sought by lender and in a timelier manner than a historical set of annual figures.

I decided that the best way to move forward would be to build upon my years of experience with the addition of externally recognised bookkeeping qualifications and go try save the business world one business at a time.

So what do businesses need saving from and how do I help?

Between 2000 and 2011 Total Individual Insolvencies per 10000 people in South Somerset rose from 4.9 to 27.6 many of whom were business related. If the owners of each of the businesses were asked why they would come up with the usual list of reasons which I will touch upon later but 99.9% of them have one similarity and that is they failed primarily due to the owner, manager or management team.

I joked last time that much of my time recently has been invested trying to save businesses from the business owner themselves. Yes the usual suspects are factors in the difficulties faced by a business but the buck always stops somewhere and it’s with the decisions the business owner made.

Historic research has shown that when a business fails and the owner is asked 40% blame operational issues and 24% strategic problems. When the Official Receiver was asked regarding the same cases they blamed operational management i.e. the owners 71% of the time.

Prevention is always better than cure and the first way to avoid failure is to do something early not too late. Get your advisors in to fill knowledge gaps early rather than make rash or poor decisions based solely on gut feel. Sadly in many situations its only when the stuff hits the fan, that help is sought. Around the room we have many who can help Accountants, Bankers, Coaches, and Solicitors and yes a bookkeeper.

The first thing I do is get to know my client. Only when I understand the individual quirks of the sector, the structure and the owner can I start to build a support mechanism that will help steer the business to safety and beyond. Cash is still most definitely King and by successful Cashflow management the liquidity of a business can improve and many of the other risky decisions a business makes can be overcome. I provide a business with tools to manage Cashflow.

Sales Ledger work or Debtor control to ensure timely collection of money owed.

Purchase ledger work or Credit control to ensure your bills are paid at a time that is most beneficial to the business without detriment to its own credit foot print.

Management figures to allow a business to gauge its success.

Cashflow Forecast & Business plans. To monitor the success against plans and budgets so that the business is travelling the way the owner wants it to rather than just adrift on its own steam.

VAT returns work to ensure that a business is not surprised by the HMRC drain on cash.

Liaison with Bankers or Accountants as necessary.

Not all of the above are required by all businesses but an element of these is. I look to give practical advice and guidance and after every regular interaction I provide a report to the business owner on areas of concern or success so that these can be focused on before they become a concern or a profit opportunity is lost.

Now lest look at the usual suspects given of why businesses fail and what can be done to help?

The Bank pulled the plug ----          Up to date Management Information (early discussions with  Banker)

A customer has gone bad --- Better Debtor Control to get invoices out and paid before they have gone stale.

Tax man is after me---           VAT return work & MI

My accounts were put on stop –Credit Control & Managements

Competition killed me ---      Business plan, poor market research or Ability to adapt.

Took on too big a contract ---        Cashflow planning.

Not enough cash in the business   -MI

Regular up-to-date management information can highlight many cash related issues. – Losses made, Drawings not covered by profits, insufficient capital to start with, insufficient capital to grow, Gross profit margins being squeezed, overhead growth, stock levels growing, suppliers not paid, customers not paying. The list goes on.

The key to management information is not producing it but interpreting and using it which is why I like to focus on practical solutions. I don’t produce drawer fillers or spam emails. Only practical information that can help keep a business on track or get it on track if it has already veered

Understanding how a business works and then providing timely figures that enable the business to know exactly how well it is doing has never been more important.

That is why you need Lee Chapman Bookkeeping Services. Helping your business start, grow, thrive.

Author

Lee Chapman Lee Chapman Bookkeeping Services
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