Controlling Finance

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Controlling Finance
Andy Berrow Regional Manager Business Link
London
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Agenda

• The importance of planning, forecasting and cash
  flow
• How to evaluate the status of your business
• Developing a long-term action plan
• Problems that can be avoided

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What is finance used for?
Rent / rates
Plant machinery
Heat, light power
Raw materials
Interest
Wages
Finished goods
Debtors
Transport
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Working Capital Cycle

• Overdraft
• Factoring

Rent / rates
Heat, light power
Raw materials
Interest
Wages
Finished goods
Debtors
Transport
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Assets

• Loans
• Asset Finance

Plant machinery
Motor Vehicles
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Forecasting
Cash

Profit
This is VERY important to understand WHY
? Businesses do not fail because they do not make
a profit They fail because they run out of CASH
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How is your business doing?

• What to measure
• When to take action

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What to measure?

• Against your plan
• Against your expectations
• Against your competition

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What to measure? against plan

• You need regular actual figures
• Ideally monthly accounts
• Sales
• Wages
• Pipeline enquiries
• Other costs
• Profit

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What to measure? against expectation

• You need regular actual figures
• What is owed to you (debtors)
• What you owe (creditors)
• How much cash you have (bank reconciliation)

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Long Term Business Plans
The purpose of strategic planning is to set your
overall goals for your business and to develop a
plan to achieve them. It involves stepping back
from your day-to-day operations and asking where
your business is headed and what its priorities
should be.
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The three key elements of strategic planning

• Where is your business now?
• Where do you want to take it?
• What do you need to do to get there?

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Tools

• SWOT
• strengths - attributes of the business that can
  help in achieving the objective
• weaknesses - attributes of the business that
  could be obstacles to achieving the objective
• opportunities - external factors that could be
  helpful to achieving the objective
• threats - external factors that could be
  obstacles to achieving the objective

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Tools

• PESTLE
• political - eg changes to taxation, trading
  relationships or grant support for businesses
• economic - eg interest rates, inflation and
  changes in consumer demand
• social - eg demographic trends or changing
  lifestyle patterns
• technological - eg the emergence of competing
  technologies, or productivity-improving equipment
  for your business
• legal - eg changes to employment law, or to the
  way your sector is regulated
• environmental - eg changing expectations of
  customers, regulators and employees on
  sustainable development

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The Plan

• Analysis of internal drivers - corresponding, for
  example, to the strengths and weaknesses of a
  SWOT (strengths, weaknesses, opportunities and
  threats) analysis.
• Analysis of external drivers - this should cover
  factors such as market structure, demand levels
  and cost pressures, all of which correspond to
  the opportunities and threats elements of a SWOT
  analysis.
• Vision statement - a concise summary of where you
  see your business in five to ten years' time.
• Top-level objectives - these are the major goals
  that need to be achieved in order for your vision
  for the business to be realised. These might
  include attracting a new type of customer,
  developing new products and services, or securing
  new sources of finance.
• Implementation - this involves setting out the
  key actions (with desired outcomes and deadlines)
  that will need to be completed to attain your
  top-level objectives.
• Resourcing - a summary of the implications your
  proposed strategy will have for the resources
  your business needs. This will reflect financing
  requirements, as well as factors such as staffing
  levels, premises and equipment

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Problems that can be avoided

• Running out of cash
• Chase up what you are owed!
• Dont pay up until you need to
• Running out of customers
• Look after the ones you have
• Know what makes you different

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Questions?