We have all heard the phrase ‘Cash is King’. It is unlikely today that controlling your cash position alone will be sufficient to prepare your business for the future. However, it is a vital first step.

Many business owners and managers find that the day-to-day challenges of running a business may get in the way of effective cash planning.   But as cash flow planning can be extremely useful, we have set out below a few thoughts and tips to help get you started.

The Benefits of Accurate and Timely Cash Flow Information

It allows you to:

• See at a glance if you are on target to fund current operations and planned future growth.
• Avail of opportunities to use surplus cash or manage seasonal fluctuations as well as being prepared for potential problems.
• Be well positioned to see immediately the potential effect to your ‘bottom line’ cash of changes in selling prices, quantities sold, costs of purchases staff costs or other expenses.
• A cash flow forecast can allow you to make informed management decisions , particularly useful in today’s competitive environment.
• Be better prepared for meeting the bank manager or other funders.

Potential ways to Improve Your Cash Flow

In very simple terms, your cash balance can be improved by:

• finding ways for your customers to pay quicker,
• negotiating better credit terms with your suppliers
• ensuring you are not holding excessive stock.
• reviewing your tax costs to ensure you are availing of all allowances and payment options
• ensuring you are receiving all eligible external funding
• accessing non traditional funding options

A Final Word

In today’s market, cash may no longer be King but cash management is still a vital process in any successful business.  You should continually seek ways to improve your cash flow in order to maintain your current operations and grow your business.

While making cash flow improvements, do remember to consider other implications such as the effect on customer and supplier relationships.

If you would like help preparing a cash flow projection which you can then update yourself, or to discuss, in more detail, ways to improve your particular cash flow, contact us.

Many businesses, particularly in the early stages of growth, focus their attention on the financial side of the business -  increasing sales, controlling costs, implementing cash flow management systems and aiming to increase levels of profitability.   These are of course important.

However, as the business grows and improves in sophistication, a broader perspective is needed to give the business an edge over its competitors.
Concentrating on exclusively financial matters will be insufficient to ultimately achieve ambitious business goals.  Below are some examples of how you can benefit from taking a broader perspective.

Key Focus Areas for Growing Businesses

• employees – they can be your greatest source of innovation but often do not have the training, particularly in SMEs,  to allow them to make a worthwhile contribution to business improvement.

• customers – communicate with and listen to your customers.  A greater customer focus has been shown to result in an increase in sales and profitability.

• suppliers  -  potential strategic, as opposed to merely operational,  benefits can be achieved from working with suppliers.

• systems and processes – the SME can benefit significantly from having an  appropriate support system to allow them to develop and manage their business.

Achieving the Benefits of looking at business ‘Beyond the Finances’

Some of the benefits of taking a broader perspective on your business can be facilitated by:

• use of a performance measurement tool such as the balanced scorecard (developed by Kaplan and Norton)
• following a continuous improvement path, perhaps with the aim of achieving a top European Excellence quality award (EFQM)
• employing staff who can bring key expertise not currently available in your team.
• engage non executive directors to your Board, bringing knowledge and challenging your existing direction
• engaging an experienced business improvement consultant to give a a ‘cold eyes’  review and improvement action plan tailored to your business

A Final Word

As a business grows and owners agree to embrace the assistance of others, the organisation will undergo significant change which will not be welcomed by all.   It is by embracing changes and continually innovating and responding to internal and external changes that the business can continue to grow and outperform others in their sector.

If you would like help in making business improvements where finances is only part of the solution, we would be happy to help. Contact us for more details of how we can help you get the most from your employees, customers, suppliers or systems.

While most business owners would agree that business growth is desirable, those who have achieved significant growth will acknowledge that managing the growth is an integral part of the process and can be challenging.

A number of research studies indicate that performance measurement systems have an important role to play in this growth management. It has been found that growth orientated owner managers hold a higher proportion of performance measures than non growth businesses.

If you are in a phase of business growth, you may wish to consider the benefits of using effective performance measures.

Benefits of Performance Measurement for Managing Business Growth

• monitor your past performance
• compare your performance with your competitors and others
• track and develop customer relationships -  customer orientation has a significant and positive impact on sales growth and profitability
• anticipate changes and respond accordingly – vital in today’s market
• reduce business risk
• achieve significant financial savings
• link your long term strategy to operational performance

Ways to Improve the Effectiveness of Performance Measurement

• choose a limited number of measures
• select a mix of qualitative and quantitative measures
• have targets for your measures
• review your measures regularly as your business and the external environment changes
• measure “the right things”
• avoid excessive measurement

A Final Word

Top management commitment is a major factor influencing the success of performance measurement systems. Businesses in the SME sector are likely to have more limited resources and can benefit from external expertise to implement performance measurement systems. It has been found that such systems play a key role in supporting managerial growth in SMEs.

If you would like help designing or implementing an appropriate set of performance measures for your business, with tips for reviewing your measures on an ongoing basis, contact us.