Growing Your Business – A Team Game25th July 2019
Growing your business is a team game. Your accountant is a key part of that team and should be helping you to grow your business.
Accurate financial statements and tax returns are both important, but they only tell a story of your business as it was – not where it could be going.
A good Accountant will help you to start getting a view of the road ahead.
We discuss business growth options with our clients in a straightforward manner so they can make sound decisions. We help them access reports that can easily be read and understood.
That’s why it is so beneficial for you to utilise the financial analysis and planning capabilities of your accountant. They are one of the few people outside your management team with knowledge of your business challenges and is in a position to help and support.
Here are 5 ways you can better use your accountant to grow your business:
Help you with the right key performance indicators for your business / sector
We start by helping our clients with a few key performance indicators (KPIs) that really matter to their business and build from there.
In manufacturing, reviewing your direct costs can identify opportunities to focus on more profitable products. In our service business, revenue per hour or billable hour realisation percentage is important to understand.
In every business, there are key performance indicators and in most cases your accountant has this knowledge and vocabulary from working with other clients. Your accountant can advise on methods to set up KPI reporting that enables you to see how they perform over time so you can make better decisions.
Understand cash flow projections.
This is a vital strategic tool, not only can an accountant provide a forecast, they can also identify potential opportunities and issues, allowing you to take action quickly.
We help our clients create financial reports right out of their accounting software to help plan for what KPIs they would need to understand in order to manage cash flow. It is important to know how expanding product lines, increased direct costs, adding employees or a new location can impact cash flow so you can mitigate risk.
By setting goals with our clients and helping them to monitor cash flow, we help them to test the financial impact of growth decisions.
Know the value of your business.
Understand the value of your business – even if you do not intend to sell.
The value of your business can be important for succession planning and can also help you with goal setting if you have a growth target to aim for.
Even if you think you are many years away from retirement or selling out, knowing the value of your business today is important so you can plan for the future you want to have.
This will help you maximise the value and eventual sale price of the business. Plus, you should have a few strategies to minimise your tax liability.
If there’s one thing you’re going to need to grow your business, it’s money. Money to invest in a bigger team, new premises, innovative technology, more stock.
If you require additional finance to fund your growth it is worth speaking to your accountant before you speak to anyone else as they can go through the options available to you
Management Accounts are a monthly or quarterly set of statements prepared by your accountant, showing you an up-to-date picture of your business finances.
They enable you to measure your ongoing performance against KPIs, and identify areas for improvement right across your business.
Typically, a set of management accounts will include a profit and loss account, balance sheet, cash flow statement and a short report. Together, these documents provide a wealth of data so much more insightful than a periodic check of your bank balance.
With specific industry knowledge, detailed understanding of the economy and access to all your financial data, there’s nobody better placed than your accountant to help you expand.
We can help you identify new markets, assess potential new revenue streams, evaluate and adapt the structure of your business and put a strategic plan in place – all with the benefit of past experience that’s directly relevant to your sector.