September is here and back to school has hopefully gone well for all you parents who had little ones starting or older ones starting back! We had a junior infant starter in our house so there was great excitement as well as a few tears!
September is always a time of year to reassess goals and refocus as you get ready for the last quarter of the year which will hopefully set you up for a strong start to the new year. Our Workshop Event on 13th September is fast approaching and this event is a perfect opportunity for you to step out of your business for a few hours and to think. We are really excited to be able to use the event to share some insights that we have learned over the years from working with our clients. The old mantra of spending time “working on the business” is critical to the success of any business, no matter how small.
Last week we looked at some of the tax aspects that we will cover in the workshop and in our next blog we will look at some of the Business strategy aspects we will cover. In this blog I am going to look at the importance of Accounting to your business growth.
We have always found that those businesses that have recognised from an early stage the importance of monitoring the financial performance of their business have had the most success in being able to grow.
We will make everyone comfortable with the terminology that you might hear your Accountant using. Those boring terms that make your eyes start to glaze over……Understanding these terms will give you more confidence and will really help you have more meaningful conversations with your Accountants, suppliers, bankers and any other stakeholders.
Profit & loss Account
What are debtors, what are creditors? One is good and one is no so good!
Getting the Basics Right
I am often amazed at how little value some business owners place on their bookkeeping. In our experience, those businesses that have first class bookkeeping processes (either internally or with external help) are more successful. When this is viewed as an investment rather than an overhead it can start to really add to the information available to you when making business decisions. At a minimum you will be compliant and this in itself is worth value and saves on serious headaches when things go wrong.
You should view your bookkeeping process like the foundations of your home. It might look pretty for a while with poor foundations…..but it won’t last!
Running a business is stressful. It gets even more stressful when your compliance falls down. This could be a missed VAT or PAYE return or worse still a missed annual return with the Companies Registration Office! Missing the annual return date for small start-up companies is a total disaster as it means you lose your Audit Exemption. For even the most straightforward of businesses this could mean €’000’s of additional cost! This is money that could be used to grow the business. It also takes time and focus from the real mission.
We will explain the difference between Profit and Cashflow. It doesn’t matter how profitable you are, if you run out cash you will go out of business.
How can you help your business with cashflow? A good starting point is to ensure you invoice customers promptly and have agreed payment terms in place at order stage. Often when you start in business (especially with poor bookkeeping ) there can be delays in issuing sales invoices. Generally people won’t pay without an invoice. Make the process of how you raise invoices easy e.g. use an invoicing system. Make it easy for people to pay – incorporate links to payment portals. At a minimum ensure your bank details are clearly visible on the Invoice. This is just one of a few topics we will cover on cashflow.
How does “the Accounting” help you grow?
Imagine if you knew how much profit a particular customer generates for you? Or a particular business unit or a particular product or customer? A major challenge for all businesses is knowing whether a deal is good or bad for you when ALL the costs are included. Cost in this case has to include your own time. By knowing this information, or by at least having a process to give you a regular indicator of this, will help you make decisions about pricing strategy, customers to serve, where to focus your marketing investment etc.
Knowing how you are performing compared to budget on a monthly basis allows you to cut/control your costs if necessary. Failing happens..….the trick is to fail fast so you are not digging a hole! There is no point waiting until 9 months after the year end to find out it was all disaster!
Our primary objective is that you are more informed leaving our office than you were coming in. We hope to trigger your thought process and give you the confidence to start asking questions about how you currently operate and put in place targets to improve so that ultimately your business improves and results in more profit which will be more money in your pocket. The strategy aspects will deal with techniques to help you move from being “self-employed” to being a “Business Owner”. This might just allow you switch off the email at the weekend or even take a holiday knowing that your business is still running smoothly because you have set it up that way.