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Improving Cash Flow Management With Innovative Strategies

Published: by lauramills
Improving Cash Flow Management With Innovative Strategies

Small and medium-sized enterprises (SMEs) operate in a competitive ever-changing market where maintaining a healthy cash flow is both a priority and a challenge. As most SMEs are constantly expanding their business, cash flow management is a constant challenge to the long-term success of their business.

However, with the right strategies, businesses can significantly enhance their cash flow management, ensuring stability and paving the way for smooth funding of their future growth. This blog explores practical advice on optimizing inventory, improving payment terms, and leveraging technology to bolster cash flow.

Optimising Inventory for Better Cash Flow

Inventory management plays a crucial role in cash flow optimization. Excess inventory ties up capital that could otherwise be used for growth initiatives, while too little inventory can lead to lost sales and unhappy customers. Here are innovative strategies to optimise inventory:

  • Just-in-Time (JIT) Inventory: If possible, adopt the JIT approach to reduce inventory costs by receiving goods only as they are needed in the production process, thus minimising inventory levels. Drop shipping: Consider drop shipping for certain products to eliminate the need to keep them in stock, as the supplier directly ships orders to customers.
  • Inventory Analysis: Optimise your inventory to prioritise items that are high volume, high-margin items for better cash flow and higher profitability. Ensure seasonal inventory items are carefully ordered and sold before the end of their season. This will minimise inventory holding costs and while ensuring you have the inventory your customers require.

Enhancing Payment Terms with Customers and Suppliers

Negotiating favourable payment terms with both customers and suppliers can significantly impact your cash flow. Here’s how:

  • Faster Customer Payments: Encourage quicker payments by setting up automated payment reminders, or using digital payment solutions that simplify the process for customers. Ensure a dedicated staff member is responsible for managing Customer Payments and follow up. Having consistent clear communication with Customers will minimise disputes and reduce delays in receiving payments.
  • Extended Supplier Terms: Negotiate longer payment terms with suppliers to keep cash in your business longer. This might include 30 or 60 day terms, giving you more time to sell inventory and collect receivables before payment is due.
  • Electronic Invoices and Payments: Transition to electronic invoicing and payment systems to reduce the time between billing and payment collection, speeding up cash inflows.

Leveraging Technology for Enhanced Cash Flow Management

Technology offers powerful tools for improving cash flow management, providing real-time insights and automating financial processes:

  • Cloud-Based Accounting Software: Implement cloud-based accounting solutions that offer up-to-date financial information, helping you make informed decisions quickly.
  • Automated Receivables and Payables: Use software that automates invoicing and bill payments, ensuring you manage receivables and payables efficiently, improving cash flow predictability.
  • Cash Flow Forecasting Tools: Utilise cash flow forecasting tools that integrate with your accounting software to predict future cash flow based on historical data and current trends.

Additional Strategies for Cash Flow Enhancement

  • Lease, Don’t Buy: Leasing equipment rather than purchasing it can free up cash for other uses, though it’s important to weigh the long-term cost implications.
  • Re-evaluate Operating Expenses: Regularly review and cut unnecessary operating expenses. Even small reductions can free up significant cash over time.
  • Increase Sales with Marketing: Invest in targeted marketing efforts to increase sales volume, focusing on high-margin products or services that contribute positively to cash flow.

Conclusion

Improving cash flow management is an ongoing process that requires attention to detail, strategic planning, and a willingness to adapt to new methods. By optimizing inventory management, enhancing payment terms, and leveraging technology, SMEs can create a robust framework for managing cash flow effectively. Implementing these strategies can not only stabilise cash flow but also fund your businesses ongoing growth and ensuring success in the competitive business environment.

 

Planning, forecasting and optimising cash flow is the lifeline of any thriving business. At The CFO Centre, our strategies and seasoned CFOs help SMEs improve their cash flow management, ensuring a healthier, more sustainable financial future. Whether it’s preparing a multi-year 3-way forecast (Cash Flow, Income Statement and Balance Sheet) for your Bank, refining payment terms, inventory management, or leveraging technology, we’re ready to assist. Connect with us to explore how our tailored cash flow solutions can benefit your business.

The Power of Budgeting: Building a Financial Roadmap for Success

Published: by lauramills
The Power of Budgeting: Building a Financial Roadmap for Success

Budgeting, often seen as a mere accounting exercise, is in fact one of the most powerful strategic tools at a business’s disposal. For SMEs, creating a comprehensive budget provides your business with visibility to achieve your goals and is not just about tracking expenses and revenues. This blog will dig into the essentials of effective budgeting, offering insights into cost management, revenue forecasting, and the critical aspect of risk planning.

Crafting a Comprehensive Budget

An effective budget is a reflection of your annual Strategic Plan and should outline your desired outcomes and key deliverables to achieve that Plan. A well-crafted budget should show the allocation of resources consistent with your plan and serve as a blueprint for business operations. The process begins with understanding your business’s financial status and objectives, then translating this knowledge into actionable financial strategies.

Before leaping straight into the budgeting exercise, at The CFO Centre we first take our clients through a review of the last twelve months in terms of what worked, what didn’t, any key learnings and any new opportunities. We get our clients to re-consider their Why? or in other words, their purpose for being in business and their personal goals, and how that translates into what the business needs to look like. With that clarity and a clear Plan, a meaningful budget can then be prepared.

Aligning with Business Goals

Start with your strategic goals, ideally, they should include a revenue target and a profit target to help shape your budget.

Expense Management

Prioritise Spending: Not all expenses offer the same return on investment. Prioritise spending on areas that directly contribute to growth or efficiency.

Review Regularly: Regular review of your expenses to reveal opportunities for cost savings or reallocation of funds to higher priority areas.

Revenue Forecasting

Analyse Historical Data: Data from your underlying systems such as inventory and sales can help set the expectations going forward. However, be sure not to simply “add x%” to last year’s sales result as the process requires more thought and analysis. Reviewing historical margins by product or service stream will assist with the strategic direction you wish to take. Promotions and New Product Development (NPD) may also impact your budgets.

Consider Market Conditions: Stay informed about market trends and economic conditions that could impact your business, adjusting your forecasts to reflect these realities. HOW?

Set Realistic Expectations: Budgets should be achievable. Prepare a realistic budget that your team believes can be achieved and you can hold them accountable to. Goals are set to be met.

Contingency Planning

Identify Risks: Spend time considering the risks your business may face, from market downturns to operational challenges, and consider these in your budgeting process.

Allocate Reserves: Set aside a portion of your budget as a contingency fund to cover unexpected expenses.

Flexible Planning: Ensure your budget allows for flexibility, adapting to changes in the business environment with minimal disruption to your operations. The impact of risks and opportunities can be shown separately as increases or decreases to the profit in your core budget. Often these are referred to as upside or downside risks or sensitivities that inform the business of the potential impact of say a higher sales volume or an increase in costs. Flexible planning is a useful risk management tool to help plan for risks so you can embrace them.

Engaging the Team

Involve key team members in the budgeting process. This not only provides insights from different areas of the business but also ensures commitment to achieving budget targets. Departmental budgets will be appropriate for certain businesses and ensure any KPI’s for staff are linked to areas they can directly influence.

Monitoring and Adjusting

A budget is not set in stone; it should be a living document that evolves. Your budget can provide you with insights into which levers to pull to achieve the outcomes you want. It’s an opportunity to look at pricing, volumes and your costs. Regular analysis and adjustment is necessary.

The Benefits of Well-Planned Budgeting

  • Clarity: A budget provides a clear picture of the expected financial position of the business and guides decision-making processes. It allows a business owner to work on the business as well as in the business.
  • Control: It puts you in control, allowing for proactive management of resources and expenses.
  • Confidence: With a solid budget in place, you can have confidence that your desired business outcomes are more likely to be realised.
  • Communication: A budget facilitates communication with stakeholders, from employees to investors, providing a transparent overview.

Conclusion

The power of budgeting lies in its ability to transform financial decision-making from a reactive to a proactive process. It helps you focus on the future by building a financial roadmap that aligns with your business goals, so you can navigate the complexities of the business landscape with confidence and agility. A sound budget will also inform you of your cash flow outlook and help with funding decisions essential for facilitating working capital and supporting business growth. Effective budgeting is not just about numbers; it’s about setting a vision for the future and laying down the financial foundations to turn that vision into reality.

 

The CFO Centre guides its clients all over the world with respect to strategic financial management, including the development of comprehensive budgets that align with their business goals. From expense management to revenue forecasting, our expertise ensures your financial planning is on track. Ready to build a financial roadmap for success? Reach out to discover how we can help.

Navigating Your Business Growth Journey: Where Does Your Company Stand?

Published: by lauramills
Navigating Your Business Growth Journey: Where Does Your Company Stand?

As the business landscape constantly evolves, understanding where your company stands on its business growth journey is crucial for shaping future strategies. In a recent business survey, we asked 264 participants to assess their business’s growth stage. The results provide valuable insights into the diverse stages businesses find themselves in. Let’s delve into these findings and explore the implications for businesses at various growth stages.

  1. Scaling: The Power of Momentum (54%)

With over half of the respondents indicating their businesses are currently scaling, it’s evident that many companies are experiencing significant growth and expansion. Scaling is an exciting phase that requires careful planning, resource allocation, and strategic decision-making. It’s essential for businesses in this stage to maintain their momentum while effectively managing risks and seizing new opportunities.

Insight: Scaling businesses should focus on streamlining operations, investing in scalable technologies, nurturing their workforce, and building strong customer relationships to sustain their growth trajectory. The CFO Centre can help by adding an experienced part-time CFO (Chief Financial Officer) resource to your team to help you plan and implement the right strategy for your growth goals.

  1. Market Leaders: Maintaining the Edge (18%)

Being a market leader is an accomplishment that comes with its own set of challenges. These businesses have successfully carved out a substantial share in their respective industries. However, complacency can be detrimental. Market leaders must continuously innovate, adapt to changing market dynamics, and stay ahead of the competition while nurturing their existing customer base.

Insight: Market leaders should embrace a culture of innovation, invest in research and development, explore new markets, and consistently deliver exceptional customer experiences to maintain their edge in an ever-evolving business environment. Our part-time CFOs could be the edge you need to set you apart from your competitors – find out how.

  1. Early Stage: Nurturing Potential (15%)

A significant number of respondents identified their businesses as being in the early stage. This stage is characterised by laying the groundwork for future growth. Early-stage businesses need to focus on refining their business models, building a strong foundation, attracting talent, securing funding, and establishing a solid customer base.

Insight: Early-stage businesses should prioritise market research, develop a compelling value proposition, build strategic partnerships, and leverage digital marketing tools to establish a strong foothold in their target markets.

  1. Preparing for Exit: Strategic Transitions (9%)

Some businesses indicated that they were preparing for an exit. This stage involves strategic decision-making regarding potential mergers, acquisitions, or divestments. It requires careful planning, financial analysis, and alignment with long-term objectives to ensure a smooth transition.

Insight: Businesses preparing for exit should seek expert advice, conduct comprehensive due diligence, optimise their financials to ensure the best possible price, and identify potential buyers or investors who align with their strategic vision.  The CFO Centre has helped countless businesses plan and execute profitable and smooth exits for our clients.  Hear from one of them here.

Conclusion:

Understanding where your business sits on its growth journey is crucial for making informed decisions and charting a path towards success. Whether you are scaling, a market leader, in the early stage, or preparing for exit, each growth stage presents unique opportunities and challenges. To gain deeper insights into your business’s growth journey, consider taking the Scale-up & Exit Business Assessment™ by The CFO Centre. Or contact us on 1300 447 740 to find out how we could add significant value to your business.

Our 6 Top Tips For Business Planning In 2024

Published: by lauramills
Our 6 Top Tips For Business Planning In 2024

When it comes to business planning, now is the perfect time to reflect on the year just gone and strategise for the year ahead.  The last few years have thrown many of us challenges and/or opportunities never seen before.  So how can your business go further or do better in 2024?

Below is a business planning checklist to help you when planning for the future:

  1. Know Where you Stand

Does your financial reporting provide you with an accurate and timely view of the financial performance of your business? These could contain:

  • Historic balance sheet, profit and loss and cash-flow together with a set of key performance indicators (KPIs) that the management team use to run the business on a day to day basis.
  • Rolling forecast balance sheet, profit and loss and cash-flow driven by the same KPIs. Even a static annual budget is better than no target at all.

  1. Analyse

Have you analysed all of your products or service offerings and identified those that should be invested in and those which should be scaled back to improve the performance of the business?

  1. Review Costs

Have you reviewed all of your costs and identified all of those costs where alternative suppliers can be identified and current deals can be renegotiated? This helps to minimise your cost base and refine your negotiation skills.  Are there possible savings from systems and/or process streamlining?

  1. Review Customers

Have you reviewed all your customers and identified the good ones form the bad ones i.e. those that take ages to pay and/or beat you down on price etc.? It may be time to let the bad ones go and focus on the ones you want.

  1. Assess Risk

Have you assessed all of the obvious risks in your business and made sure that you have a contingency plan in place to avoid those with the highest likelihood and most significant impact?

  1. Your Personal Goals

Take the time to really reflect on why you started the business, are those goals still the same today and are you getting closer to achieving them?

 

Plan:

Once you have considered the above, you are ready to start planning.  A clear operational plan for the future of the business, which shows you the steps required to implement that plan is the best road to success.  If you do not have this it will be impossible to identify opportunities that arise next year that fit your plan for the business.

Most of our clients have been through this process with our guidance and as a result many are now looking to exploit the opportunities, to expand their markets and recruit key staff to help drive their businesses forward in 2023.

To get your business in the best shape for 2024, contact The CFO Centre on 1300 447 740.

The CFO Centre is dedicated to helping businesses meet their strategic objectives. Find out how it works by watching this short video on our website –  https://www.cfocentre.com/au/how-it-works/

 

Top 7 Advantages of a Part Time CFO

Published: by lauramills
Top 7 Advantages of a Part Time CFO

A part time CFO is the ideal solution for SME businesses looking to scale, who can’t afford or don’t need a full time resource. One of our clients recently said “it’s the best money I’ve ever spent”.

That’s because a part-time CFO will provide your company with the high-level financial expertise necessary to increase profit, improve cash flow and scale up, for a fraction of the cost of a full-time CFO.

Here are the top seven advantages you can expect when you hire a part-time CFO.

1.   Increased Profit

The number one thing most business owners want!  Having a part time CFO on your team, with their years of commercial experience across many industries, they can increase profits of most businesses by tweaking the levers every business has to increase profit.  For this reason alone, it’s worth considering a part time CFO.

2.    Strategic advice

Your part-time CFO will provide you with strategic analysis and support on every financial aspect of your business. A report from the Financial Executives Research Foundation (FERF) found CFOs play key roles in not only managing a company’s finances but also in setting broader strategic goals and establishing and achieving financial and non-financial milestones.  What’s more, part time CFOs can highlight potential threats or risks of which you and your team may be unaware or perhaps don’t know how to deal with.

3.    Flexibility

You can use the services of your part time CFO for what you need, when you need it. That could be for a variety of different financial functions or a specific project. This means you and your CFO can tailor the role to suit your company’s needs at any time.

4.    Multiple industry experience

Although you can choose to work with part time CFOs who have direct experience in your given industry, you can also opt to work with those that have experience across multiple industries. The advantage will be that your CFO will provide you with access to networks and multi-layered insights that you might not otherwise have.

5.    Sounding board

Running a company can often be a lonely and stressful experience for CEOs, according to The CFO Centre’s Chairman Colin Mills in his book ‘Scaling Up How to Take Your Business to the Next Level Without Losing Control and Running Out of Cash’.  He’s seen first-hand what pressure does to business owners.

“I’ve sat in sales meetings with entrepreneurs who had literally been brought to tears by stress and frustration and the feeling that it’s all too much.”

That’s where a part-time CFO can help. He or she can act as an independent sounding board for the over-burdened, stressed-out business owner. With their ‘big business’ experience, it’s more than likely CFOs can provide solutions to what can seem like overwhelming problems to the CEOs of growing businesses.

6.    Access to a national and international network

If you choose a part-time CFO from an organisation like The CFO Centre, you’ll benefit from the expertise from all the CFOs in its worldwide network. That’s hundreds of years of experience in every aspect of finance—all for a fraction of the cost of employing a single full-time CFO.

7.    Enjoy life through your business, sooner

With the help of a part time CFO, your business will start delivering on what’s really important to you so you get to live the life you choose (eg. more time with family, more time on rather than in your business).

To discover how the CFO Centre will help your company, please call us on 1300 447 740, contact us or watch our short video How it Works.

Photo by Headway on Unsplash

The Ultimate Guide To Strategic Planning

Published: by lauramills
The Ultimate Guide To Strategic Planning

The Importance of Strategic Planning

Strategic Planning is the key to the success of any business, no matter its size or age. The strategic plan sets out:

  • the company’s direction and priorities;
  • its main operating and financial targets,
  • the actions it will take to achieve those objectives,
  • the new initiatives and investments planned, and
  • their impact on performance.

Some SME owners keep plans in their head, but a formal plan is an extremely valuable tool for managing and growing a business, as it: 

  • clearly communicates the company’s priorities
  • ensures all key staff are working towards common goals
  • sets the focus on key objectives
  • delegates actions and accountabilities amongst employees
  • ensures that decisions made will benefit the long-term company goals
  • highlights strengths and weaknesses.
Failing to plan is like planning to fail

Not spending quality time on strategic planning usually leads to a chaotic working environment. Our clients often talk about ‘not feeling in control’ and ‘not really knowing what is coming around the next corner’. When the plan is weak, business owners tend to operate without the same sense of conviction as those who allocate time and expertise to the planning process. Our CFOs often find that their clients have done some good planning and strategic thinking but need a devil’s advocate to ask the right questions and help to steer the ship in the right direction.

4 Mistakes Business Owners Can Make

  1. They don’t have a plan at all
  2. They don’t have a formal plan, it’s in their head which is difficult to share with others
  3. They don’t have an implementation timetable attached to their plan
  4. They don’t have a mechanism in place to conduct regular reviews

Without a comprehensive, up-to-date strategic plan and an implementation timetable, companies may be missing out on opportunities for growth and not realising their full potential. A formal plan can be an extremely valuable tool for managing and growing a business, as it allows a company to recognise its strengths and weaknesses. 

The Importance of Reviewing Your Plan 

Strategic Planning is integral to business success, however a plan is only useful if it is reviewed regularly to ensure it meets the current and future needs of the business.  It’s vital business owners regularly review their financial strategy to ensure they have the right funding in place to meet the needs of their business, at its current stage of the business lifecycle. 

Most CEOs simply don’t have the time to spend on quality strategic thinking and to document and communicate that thinking in a way which allows the whole business to buy into the vision. Harder still is managing and implementing the business plan. Significant strategic course corrections are commonplace in fast-growing companies. These should therefore, be embraced. The tricky part though is in managing regular change. That requires a combination of time and specialist knowledge. 

There is an art and science to effective strategic planning. Getting it right brings a real sense of clarity and direction to a business – this is where an experienced part-time CFO can make a significant contribution. 

Creating Your Plan

Step 1: Analysis

1.  Analysis of Existing Situation – Organisational Philosophy & Mission & Value

  • Does it reflect what you stand for?
  • Do your people understand its true meaning?
  • Does it make it clear as to how you have to compete and against whom?
  • Is it simply written? Is it clear and unambiguous?  Is it believable and realistic?
  • Does it motivate people? Does it attract pride or cynicism?
  • Does it give us some indication of what we should be doing and how we should be doing it?
  • Do all the constituent parts fit and hang together?
  • “Identity Pyramid” – do you have clarity around all the issues?

2. Internal Appraisal of Company
  • SWOT analysis – revisit previous analysis & ensure it is complete & current
  • Distinguish between endowments and core competencies
  • Assess and audit core capabilities.
  • Gauge fit between external environment and core capabilities
  • Identify fit between customer requirements and core capabilities

Having identified what you perceive to be your competences ask yourself the following questions:

  • Will this give us any source of long term sustainable competitive advantage? Clarify the how? (ie. how relevant is it to the needs of our customers (actual and potential)).
  • Do customers (broadly) agree with our findings (ie. the market place)?
  • Can competitors (present/future) emulate or do better? Do they share our perception?
  • How was this list of core competences arrived at (eg. Training, innovation etc)?
  • Any weaknesses/shortfall still? If so, what further investments will be required?
  • Is there any impact on the strategic balance sheet (ie. Intangible and human assets)?
  • Can it be levered, onto other applications and/or markets?
  • What happens next?
3. Competitive Analysis
  • What is the current process for this task?
  • The Positioning Statement (competitive positioning) – refer below
  • Scan present competitive position but focus also on future competition.
  • Do you really know your competitors strategy?
  • Understand changing face of competition
  • Who could be a future competitor?
  • Is your strategy and your competitors becoming more alike or more divergent?
  • What is the most radical thing that your competitor(s) could do?

4.Value Proposition
  • Consider or revisit the current Unique Sales Proposition within your Marketing plan & ensure it is complete and up-to-date.
  • Do you know why your customers buy from you and not you competitor(s)?
  • Have you asked them?
  • How can you improve customer experience?
5. Environmental & Industry Analysis
  • Consider legal, social, political, economic, technological, markets, labour position, society, pressure groups, and any other environmental issue.
  • Assess potential impact of any change(s) and consider timing implications.
  • Conduct intensive industry analysis.
  • What is the long-term viability of the industry as a whole?
  • What could change the industry dynamics?
  • What is the nature of current industry changes i.e. radical, creative, intermediate or progressive?
  • What could be the impact on your strategy and source of competitive advantage of such changes?
  • Five years or so from now how will the industry leaders look and act?

Step 2: Strategic Thinking

1. Identify Strategic Alternatives

  • All options to be examined – growth, acquisitions, alliances, JV’s, innovation.
  • Upside and downside risks identified

2. Strategy Evaluation & Selection

  • Clear choice to be made
  • How will we compete?
  • Evaluate impact of each option
  • Will it give unique competitive advantage?
  • Can it last? Can it be sustained?
  • Will it differentiate us from our competitors?
  • Can it be converted easily into a set of business objectives / KPI’s?
  • How will competitors react?
  • Easy to implement?
  • Contingencies in place?
  • What about the next wave?
  • Is it consistent with customer requirements and industry changes?
  • Will it create shareholder value?
  • Is it financially viable?

Step 3: Implementation

1. Matching Strategy & Organisational Structure 

  • Do we have the necessary resources?
  • Is there a logical fit?
  • Is current structure adequate? Assess extent of change. Do not ignore culture effect.
  • What about the organisation’s values?
  • Is strategy personalised enough? Assess flexibility and robustness.

2. Allocation of Resources & Responsibilities

  • Planning, Plans, budgets, controls, appraisals etc….. all to be consistent with strategy
  • Strategy well translated into clear objectives
  • Priorities and constraints identified
  • Time horizons clearly laid out
  • Management information systems to dovetail strategic choice

3. Regular Reviews & Adjustments

  • Planning, plans, budgets, controls, appraisals etc…all to be consistent with strategy

Strategic Planning – How a CFO Will Guide You

Under The Spotlight – The CFO as a Strategist

Photo by Rohan Makhecha on Unsplash

Numbers Matter. What’s The Most Important Number In The Universe?

Published: by lauramills
Numbers Matter. What’s The Most Important Number In The Universe?

Numbers matter.

Our mathematical universe is constructed of numbers.

Some we can see. Most we can’t.

From the speed of light to the parabolic curve of a free-kick in football, maths underpins the laws of the universe.

We can also deconstruct our entire lives in numbers.

The average human lives for around 80 years – or 28,385 days.

Most of us will spend 33 years in bed. That’s 12,045 days. For those who hit snooze when the alarm goes off in the morning, it might be closer to 34 years…

You’ll likely spend around 13 years and 2 months (4,821 days) at work. Hopefully, doing something you love.

And 11 years and 4 months (4,731 days) staring at a screen.

That doesn’t leave a huge amount of time for the things that really matter in life…

Spending quality time with family is remarkably, although perhaps unsurprisingly, a very small part of our modern day lives. We’re down to just 38 minutes a week or 104 days in our life time.

That one makes you think.

When it comes to socialising, there’s a little improvement – we’re up to 1 year and 3 days. Again, it’s not a lot, is it?

In business, it seems like we focus constantly on the numbers…

…Leads, opportunities, wins.

Year on year growth.

Cash flow, profit, valuation.

But how often do we put these numbers into context?

How often do we ask ourselves ‘what is the number that really matters to me?’

When we ask entrepreneurs this question, they often find it hard to answer.

It’s an unusual question and causes an interruption in our conditioned daily thought pattern.

One entrepreneur said the number that really mattered to them was ‘6’ as it represented the number of weeks they spent each year skiing, because they had designed their business to support their lifestyle.

Another said ‘13’ to denote the $13m asking price for their business which meant they could retire early and never worry about money again.

The numbers that appear on your P&L and balance sheet matter, but when was the last time you stopped and asked yourself ‘what is the number that really matters to me?’

It’s a powerful question and invariably creates an energetic shift which can fuel a new trajectory for your business and indeed your life.

If you’re struggling to answer that question, contact us as we’d love to help.

Do You Have The Capabilities And Capacity For Scaling Your Business?

Published: by lauramills
Do You Have The Capabilities And Capacity For Scaling Your Business?

Scaling your business

Scaling your business depends on two factors: your company’s capability and its capacity to deal with growth.

To scale up your business, your company must be capable of dealing with a growing amount of work or sales and of doing it cost-effectively.

You need to know that your company can achieve exponential growth without costs rising uncontrollably as a result. It’s vital too, that performance doesn’t suffer as your company scales up.

You also need to be sure that your business systems, employees, and infrastructure can accommodate growth. For instance, if you get a sudden surge in orders, will your company be able to cope? Will you be still able to manufacture and deliver products or services on time? Do you have enough employees to deal with a surge in work or sales?

Scaling a business requires careful planning and some funding. To be successful, you’ll need to have the right systems, processes, technology, staff, finance, and even partners in place.

1. Identify process gaps

Audit your business processes (core processes, support processes, and management processes) to find their strengths and weaknesses. Find the process gaps and address them before you start to scale up.

Keep the processes simple and straightforward. Complex processes slow things down and hinder progress.

2. Boost sales

Decide what your company needs to do to increase sales. How many new customers will you need to meet your scaled-up goals?

Create a sales growth forecast that details the number of new clients you need, the orders, and the revenue you want to generate.

Examine your existing sales structure and decide if it can generate more sales. Can you increase your flow of leads? Do you need to offer different products or services? Is there an untapped market? Do you have a marketing system to track and manage leads? Is your sales team capable of following up and closing more leads?

Make sure you have enough staff to cope with an increase in sales. If you don’t have enough staff, consider hiring new employees, outsourcing tasks, or finding partners that may be able to handle functions more efficiently than your company.

3. Forecast costs

Once you’ve done the sales growth forecast, create an expense forecast that includes the new technology, employees, infrastructure and systems you’ll need to be able to handle the new sales orders. The more detailed your cost estimates, the more realistic your plan will be for scaling your business.

4. Get funding

If you need to hire more staff, install new technology, add facilities or equipment, and create new reporting systems, you’ll need funds. Consider how you will fund the company’s growth.

5. Make delighting customers a priority

To reach your sales forecasts, your company will need loyal customers. You’ll win their loyalty by delivering outstanding products or services and customer service every time you interact with them.

6. Invest in technology

Invest in technology that will automate tasks. Automation will bring costs down and make production more efficient.

Ensure that your systems are integrated and work smoothly together.

7. Risk management

Every growth opportunity comes with inherent risks. You should identify potential financial pitfalls, ensuring that the company takes calculated risks. Evaluating contracts, overseeing compliance, managing debts, and setting up internal controls help to safeguard assets.

8. Ask for help

Don’t be afraid to ask for help from experts who have experience in scaling up companies.  In an interview, Apple’s co-founder, Steve Jobs, said, “I’ve never found anybody who didn’t want to help me when I’ve asked them for help. – I just asked.”

A solid strategic plan is also essential when scaling your business to align your financial goals with the operational objectives. Failing to plan is planning to fail.

In today’s dynamic business environment, scaling a business requires more than just a great idea or product; it demands strategic financial oversight. For many small and medium-sized enterprises (SMEs), the expense of a full-time Chief Financial Officer (CFO) can be prohibitive. Enter the part-time CFO, an innovative solution to meet this challenge.