SMEs need effective foundations

Every so often, most accountants experience a client that starts a business in a great flurry! Turnover climbs quite quickly and then unfortunately things go wrong.

The challenge for accountants is being able to communicate the perils of fast-growing business to their clients, without discouraging them from pursuing their business vision. Perils such as running out of money because too much is tied up in working capital, or spending too much money on facilities and assets that are not really required.

A good place to start is by having a conversation with your client about the “lifecycles of companies” and to encourage them to plan the four (4) key strategies to running a business:

1. People

2. Strategy

3. Execution

4. Cash

Companies must be able to attract and retain talent – this is the People issue. This requires the implementation of a system that clearly defines the job description and introduces a range of accountable items and KPIs that apply to each individual position.

Strategies are very important – they need to be thought out in a team environment and documented into the Business Plan, then interpreted as a “financial document” via the “Predictive Accounting Reports” comprising Budgets, Key Drivers, Cash Flow Forecasts and Projected Balance Sheets.

Execution requires delegation of responsibility and implementation of a “rhythm of meetings” throughout the organisation.

Cash is very important because, as a company grows, it requires more and more cash. Normally because of a blowout in the investment in working capital, capital expenditure etc. This can generate a need for more funding via loan funds or raising capital.

ESS BIZTOOLS has developed a range of product packages to assist Accountants and Bookkeepers to assist in the implementation of “Foundations” that will contribute to the success of the business.

Want to know more? Contact our Managing Director, Peter Towers, on 1800 232 088 or .