The essential financial systems you need for your business to thrive and survive

People start businesses because of their technical skills but often don't have the financial skills to build a successful business. So you've either got to master those skills yourself or bring in the experts who have them.



Financial Plan

It is very easy when you start up in business to become so focused on sales that you neglect the control systems that must be in place and run parallel to sales generation. You need to have a financial plan. What happens if….? If it doesn’t work at what point do you get out to avoid losing all of your capital? You need to plan for various options and stick to the plan.

A financial plan encompasses the financial systems and tools to keep your business out of trouble, to survive and thrive! You need the control and monitoring systems in place so that, for example, if you have the opportunity for a large order that you can finance purchasing the stock to make and deliver that order, that your cash flow is sufficient to pay your wages until the invoices are settled. You need up to date financial figures to hand. You need accurate cash flow forecasts. You need credit control systems. You need to measure your performance against goals and targets. 

Wood and Disney will make sure that you have those control systems in place and that you know and understand how to use them and leverage the technology and systems to build a strong business on launching and the first year. Wood and Disney identify your key performance indicators for each area of your business and check that you are getting real time, accurate and reliable data.



What financial systems make up a good financial plan?

• You need a budget and a cash flow forecast so you know where you're going.

• Each budget should be broken down into 12 monthly targets.

• Break each of those 12 monthly targets down into the 20 working day targets. If you get one bill per month simply divide it into 20 because you need to know your daily costs.

• Only focus on hitting that daily target, whether that's to hit a sales goal or a profit goal. At the very least you must breakeven.

• You need a set of monthly Management Accounts so you can compare your progress to the plan.

• Always know your debtor, stock, creditor and cash position.

• Understand how long your cash is tied up for between placing the order for stock and eventually getting your cash in.

• Everything changes so quickly so have quarterly reviews where you make material changes to the plan if you absolutely need to.

• You need SALES, PROFIT and CASH. Focusing just on sales will inevitably lead to failure.

• Get sales invoices OUT as fast as possible. “While the tears of gratitude are still wet in your customers’ eyes”.

• Get money IN as fast as possible. Customers must accept your terms and not impose theirs on to you. You are not a bank.

• Cash to your business is like blood in your body. Keep it flowing.

• Don't spend it before you earn it. Many small businesses struggle due to their owners’ demands for personal gratification. They want to project an image of success before they've got there.

• Be disciplined.

People setup businesses because they want freedom, options and choices.

The reality is that in order to build a successful business, you have far fewer choices than you think.