Think like a bank when it comes to finance

Whether you?re setting up a coffee shop, or a florist with tycoon ambitions, a good finance team is a must-have. Regardless of how entrepreneurial or creative your business is, without a strong balance sheet and a beady eye on cashflow, success will be limited or short lived.

But how can a small business owner ensure in-house financial capabilities grow with the business? Does this mean taking money out of the business that could be used to drive and support growth? Fortunately, it doesn’t all come down to money or personal expertise as much as vision and sound business planning.  

Although most SMEs have a marketing plan and basic idea of profit and loss, setting up Key Performance Indicators (KPI) and finance functions from the start will provide a good indication of the business’ health. From business development to cashflow and supply chain management, these KPIs will create strategies that help you with inevitable obstacles ? from falling demand or rising costs to late payers.

Think big thoughts

Think tactically from the start! You want the flexibility and freedom to choose a solution that evolves with the business. One of the best ways of doing this is to adopt some big world thinking by asking ?what if?? and stress testing your business plan. Within large corporations, finance teams have a huge input in these tests.

John Chinery at K3 advises: ?Knowing and testing every stage of your business is vital as there will be a transition point when the organisation recognises that ?off the shelf? processes and systems no longer support the complexities of the operation. The instant benefit is that the business has a highly functional and flexible suite of business tools, which will allow you to prepare and take remedial action when issues arise.?

Plan for the unexpected

When it comes to expanding your offering, your finance team can help you assess the business case for new products, services or customers. Recent ACCA product innovation insight revealed that a lack of funding was the main reason for service failings. The survey suggests that companies with well-resourced finance functions, employing highly scalable cost-effective business intelligence, were the most successful.

Analysing business activity at the earliest opportunity can reveal significant benefits when making one-off capital investments. By employing business software with integrated CRM, business intelligence and financials platform ? like Sage 200 – SMEs will gain a greater understanding of customer loyalty, trigger points and help them invest to support customers trends which can drive growth.

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