Insight Associates provide outsourced accounting and Finance Director services to ambitious and growing businesses. We work as your only resource or with existing staff to give you complete financial support including monthly management accounts, high level financial advice, robust controls and financial systems, funding and business planning, payroll & compliance, VAT returns and statutory compliance.

Successful business leaders have all the information they need to make good decisions…Do You?

Wednesday, September 14, 2016

The Hidden Cash In Your Own Business


All businesses need money to invest and grow, but finding it can often be tricky.
 
Take the example of “Brian”. His company was at a critical phase. He was taking on so many new customers, he needed to hire more staff and buy them new equipment. And yet, money was still tight. He didn’t have his profit margins right quite yet.

The banks were unwilling to lend him more money.

Yet with a little bit of hard work he managed to come up with thousands of pounds – all of it interest-free.

How did he do it? Well, he realised a simple truth. The money he needed was sitting right under his nose, locked up in his own business.

Like all businesses, Brian’s company had a huge amount of money tied up in things such as property, equipment and slow moving stock. It was just about knowing where to look and how to free up the money.

Start by taking a look at your own business. Where might that hidden cash be hiding?
Do you have any property which is unused? Brian realised he had a lot of spare office space, so he started renting it out – giving himself a much needed source of additional income.

He also needed to upgrade to new, more sophisticated, IT systems. He paid for part of this by selling off his older equipment. This gave him a timely boost which meant he could afford the much-needed investment.


Do you have any old stock which has not been sold or is moving slowly? Why not sell this at cost? It will free up some much-needed funds.


Get in touch with any debtors who are slow to pay. Most companies have these – it’s one of the leading causes of small business failure. So chase late payments more effectively.


You might also encourage other customers to pay up more promptly by incentivising prompt payment plans. Give them a discount for fast settlement of a bill. From a cash flow point of view, you may well prefer to have a bit less money today than a bit more money in a month’s time.

Speak to your suppliers and try to negotiate more favourable payment terms. If you are a regular customer, they may well be willing to give you more time – allowing you to do more with the money.


As long as they trust the money is coming in at some point – and it doesn’t impact their own cash-flow too much – they will probably be willing to offer some flexibility.

Shopping around can also be surprisingly lucrative. Many businesses are paying well over the odds for basic bills such as energy and business insurance. Don’t accept the price your existing suppliers are offering – there’s almost certainly a better deal elsewhere.


Kill waste. Every business has it. Examine all your processes and make certain they are as efficient as possible. If you can make multiple small savings across the scope of your business they will add up in time to something quite significant.


A more effective pricing structure can also unlock more profits. Businesses in the UK miss out on millions of pounds’ worth of extra profits because their products and services are priced too low. Work out if there’s any wriggle room and if you could get away with charging a little more.


The point is this: Almost every business has money to be found somewhere, whether its unsold stock, unused property, equipment or infrastructure. Examining your business can not only unearth some of these hidden cash pockets, but they can also help you refine your business operations.


We can help you take a look at your business and unlock some of that hidden cash. To find out how, hit ‘reply’ and let’s chat.

Wednesday, September 07, 2016

How to Raise Cash For Your Business Without a Loan


You’re looking to raise cash for your business, fast. Perhaps there is a piece of equipment you need to buy, or you want to open another office.

But the thought of taking out a bank loan makes you squirm.

A decade on from the 2008 crisis, banks are still making it difficult for small businesses to secure finance. You know that you’re going to have to jump through hoops with your bank manager. Somehow, visiting their office feels like visiting the headmaster as a child: Daunting.

You also know that bank loans are risky. What happens if you have a couple of bad months, and can’t make your repayments?

Business is stressful enough without having the threat of a loan default hanging over your head.

Then there’s the expense…. Those interest rates make your eyes water.
So what are your other options?
 
Luckily, you do have alternative sources of finance. Here are some you should consider, before taking out a bank loan:

Finance Lease or Hire Purchase: Do you need money to buy equipment? If so, a hire purchase arrangement might be the best option. This is in many ways a loan, but you’re borrowing the money from the company which sells you the equipment, rather than the bank. Your loan is tied to a specific product. And at the end of your payment term, you own it.

Many people take this option with a car, paying monthly instalments to the company until they own it outright. You can do the same thing with equipment.

The downside is that this can be more expensive over the longer term than buying it outright, but there’s less immediate impact on your cash flow.

Operating lease: This is a slight twist on leasing. At the end of the deal you give the equipment back. This is a good idea of you only want it for a short time, or it’s the kind of equipment which goes out of date quickly, such as IT. You can then organise a new operating lease agreement – it’s a cost-effective way to always have latest technology available.

With these deals you should always read the small-print carefully. What happens if your circumstances change? Do you have any flexibility to get out of the lease agreement? Never assume things will be alright – being stuck in an inflexible arrangement can be difficult.

Peer-to-peer lending: If the banks aren’t willing to lend, perhaps the crowd might do it. Peer-to-peer lending is growing, with companies such as Crowd Cube offering private individuals the chance to give loans to businesses.

Each business is given a credit rating based on the level of risk. This can be more affordable, but as with ‘regular’ business loans, you will still have to make interest payments.

Lending the money yourself: You might be able to invest your own cash in the business. If you decide to do this, you need to protect yourself in case things go wrong.

Set up the loan in much the same way as you would any other loan – that means taking security, arranging interest and a payment plan, just as any other lenders would do.

Friends and family might also be willing to help out with a loan. Again, set this up with all the professionalism and due process you would any other form of loan.  You need to protect them too.

All these have their pros and cons – the decision depends on the exact circumstances of your business. But there is another option: to find the cash hidden within your company.  Every company has some – I’ll tell you how to find it in my next Blog!

In the meanwhile, if you’re ambitious for your company but are not sure exactly how to finance its growth, let’s talk. We can help you organise your finances in the way that makes most sense.

Wednesday, August 31, 2016

Do I Really Need That Business Loan?


“William” owns a small company which runs hunting, climbing and fishing trips in Scotland.
It’s still early days, but so far things are going pretty well. The trouble is, his business is very seasonal and sometimes cash is tight.

What are his options?

Like many business owners, “William” assumes that he’ll have to take out a bank loan. After all, he knows his business will come back – he just needs the cash-flow to survive this difficult time.

But in reality, a bank loan wouldn’t be appropriate in this (fictional) scenario, nor would he get one.

A bank loan is something that every business owner should think about very carefully.

Yes, a loan provides much needed capital, but it also comes with risk and cost.

There’s the chance you might struggle to make repayments, and land your business in serious trouble.  Interest rates can be a drag on your business when the money does come in; your loan can end up being very expensive. There’s also the difficulty involved in securing a loan. They’re not given so easily nowadays, and it will take a lot of time and effort on your part to arrange.

Reality is that loans have weakened, or destroyed, many a business – and you should think long and hard before you take one.

So in what scenarios should you apply for a bank loan? And when might you be granted one?

Here are some key considerations:
  • Are your needs short- or long-term? Do you need the money for something which will have a long-term impact on your business – namely something which can help it grow and thrive?
    If so a loan might well be a good idea.
    However, if like “William” you only need it for the next few months to cover a short-term gap, it’s not worth the risk, nor will you want to pay the interest over the long-term. You’d be better off with an overdraft.
    The rule of thumb is: Get long-term funding for long-term needs, and short-term funding for short-term needs.
  • Are the costs justified? You must always make a business case for a loan, but the first person you must convince is yourself. You need to prove that you have a really good reason for taking on so much risk and paying so much interest. For example, let’s say you’re investing in equipment. Is the benefit it will give your business enough to justify the expense? If you can make the case to yourself, you’ll have a better chance of making the case to a lender – and getting a more favourable deal.
  • What if the worst happens? You know the old saying: Plan for the worst, hope for the best. What happens if – for some reason – you can’t pay it back? You’ll be asked for security or collateral – think about whether this is something you can afford to lose. Sometimes the lender will ask for the equipment you’re buying, but some people will make a personal guarantee against another asset such as their home. Think long and hard before you do this.
These are just three short questions to ask yourself before you make any further commitments. There are many alternatives to loans – and I’ll explore those in my next blog.

In the meanwhile, if you want your business to grow fast, but need help finding the money to do so, let’s talk. There may be plenty of options you’ve never even considered.


Wednesday, August 24, 2016

What Will Your Business Look Like When It’s Done?


Confession time.

When I established Insight Associates, now nearly 25 years ago, I had a pretty clear idea of what it was going to look like today.

I knew approximately how many employees I was going to have. I knew what turnover we were going to reach. I knew what my role was going to be, over two decades later.

Incredibly prescient?

Some kind of prophet?

Sadly not.

The boring truth is that I had a very particular vision of what kind of business I was going to build.

And then I went ahead and built it.

Insight Associates looks the way it does today not by accident, but by design.

And that’s how you should build your business, too.

It all boils down to a question you need to be asking right from the start: “What will my business look like when it’s finished?”

In my last blog I talked about the three life-stages of a business: Infancy, adolescence and maturity.

You need to decide at the outset which of these stages your company will be at when it’s “done”.

Do you want to be a small firm with just five or six employees in one office, or do you want to grow into a much larger £10m company with 50 employees, several branches and an international presence?

As the CEO, do you want to be hands-on, or to sit back and take a more strategic view? Are you starting a business because you want a comfortable income, or are you looking to create an organisation which can go on without you?

There’s no right or wrong answer, but if you don’t already have those answers, you need to think about them – fast.

You see, that will allow you to lay the foundations accordingly.

It’s like building a shed. You start off by putting small concrete foundations in place – that’s fine - but it’s no good then trying to build a skyscraper on top of it.

If you want a lifestyle business, you’ll be able to get away with simple systems and infrastructure. If you aim to build a much larger company, you’ll need to put in the right processes, technology and people from an early stage.

When it comes to the financial side of things, a bigger company needs more effective financial management. This means thinking about who’s doing your accounting, what kind of information they’re giving you, how useful it is, how you handle your invoicing, how you ensure your cash flow is smooth and so on, very early on.

If you want to become a big company, start acting like one!

So what will your business look like when it’s finished?

If you’re aiming for a business that grows well beyond £1-£2 million, we can help you put in place the financial management you need to get there.

Wednesday, August 17, 2016

Is Your Business An Infant – Or An Adult?


If you’re like most business owners, the holiday period has been rather stressful.

Taking the family away was wonderful. But you had to spend an equal amount of time – if not more – working like a dog, to make sure all loose ends were tied up in the office before you went away.

You burnt the midnight oil to finish off several important projects…. Held extra meetings to give your staff everything they need to forge ahead without you…. 

And even then, you spent some of your holiday on the phone to the office.

Lying on that deck chair, exhausted, you couldn’t help but fantasise about how your business is going to look in five years’ time – when you can get up and go on holiday at just a moment’s notice, confident that everything will run like clockwork without you. Your wonderful staff will take care of everything.

Heck, they won’t even notice you’re gone.

Of course, that doesn’t have to be a fantasy. Many businesses work just that way, and yours can too – if you take it through a period of transition.

You see, there are three key business stages. The first, in which the business is highly dependent on the owner, is called “infancy”. Many business owners are perfectly happy to stay at that stage, because they enjoy the work and get a nice income.

Others want to reach the other end of the spectrum, a “mature” business which functions well without the owner. Indeed, they’re not dependent on any one member of staff. People come, people go, and the work still gets done.

This is a business which can be sold, because its value isn’t tied up with any individual. It’s inherent in the business.

In between, just as in our own lifecycles, you have that awkward, messy, exhilarating stage called “adolescence”.

It’s typically associated with companies turning over £1-£10 million. It’s the period when you make a deliberate decision to break with infancy, and equip your business to function well as an “adult”, and go out into the world without you.

You decide need to learn to let go, and allow other people to do the jobs you did right at the beginning – so that you can concentrate on the really important, strategic decisions.

You need to put in rock-solid systems, so that everything’s done exactly the right way – the way you want it to be done – no matter who’s doing the job. You need to ensure the right technology, approaches and high standards are in place, and professionalise. 

This applies in every area: Marketing, service delivery, customer service….
Finances, too.

You see, an infant business can stumble along while you do some of the bookkeeping yourself, take financial decisions without really referring to your financial reports, and put up with basic or old-fashioned accountancy software.

But can you imagine the owner of a £10 million company doing any of those things?

No. Experts manage their money day-to-day, using industry-standard accountancy software, delivering reliable financial reports, forecasting and planning. The owner uses all that information to take important financial decisions about the future of the business, based on real data – not intuition.

Their financial management is professional. 

The secret is that you don’t have to wait until you’re a £10 million company to have all those things.

In fact, if you ever want to reach maturity, you need to put them in place now. It’s part of the journey of getting you there.

If that’s your vision, hit ‘reply’ and let’s talk. We can professionalise your financial management, and help your business grow.

Wednesday, August 10, 2016

What to read this summer


A bit of a change of pace today… It’s the dog days of summer, after all (at least allegedly - I have a feeling many business owners are as busy as ever).

But if you are lucky enough to be able to take a break in sunnier climes, and have a few hours to yourself, I have some reading material for you.

These are some of the business books I consider absolutely critical reading for any serious business owner.

While they aren’t all, strictly speaking, finance-related, I believe that building your business strategically and building a business that is well-run financially go hand-in-hand.

They’re also all pretty good reads (OK, perhaps not as good as the latest blockbuster, but certainly very accessible…).

Enjoy!

  1. The E-Myth Revisited: Why Most Small Businesses Don’t Work and What To Do About It by Michael E Gerber. 
    One of the great misconceptions is that businesses are created by entrepreneurs when in fact most are created by technicians – people who love what they do, and want to build a business around it. The problem is just because you have the skills and experience to do a particular job, doesn’t mean you are any good at running a business.
    Gerber advocates building your company as if you were creating a franchise - in other words, a business model which can be repackaged and sold on without needing you, its founder. By creating processes and systems which even the most unqualified employee can follow, you will create a well-polished, professional business that will run just the way you want - and can scale quickly.

    It’s brilliant advice, which reflects exactly what I believe you need to do with your financial management as well (and in fact, I’m going to delve into this more deeply in next week’s email).
    If you read one thing this summer, make it this.
  2. Stickier Marketing: How to Win Customers In the Digital Age by Grant Leboff.

    My Bible for how to market your business in the Internet era.

    Leboff argues that the concept of the Unique Selling Proposition is ancient history when every idea and everything you say about your company can be copied almost instantly by the competition.

    What differentiates you, he says, is not what you do – but how you do it (and who for).

    Can you give your fans and followers online a unique experience? What emotions are they going to associate with you? How can your marketing get your prospects involved, instead of simply talking to them?

    Leboff does a terrific job of explaining why the Internet has changed marketing and giving really practical, solid examples of how companies of all sizes can adjust.
  3. Start With Why: How Great Leaders Inspire Everyone To Take Action by Simon Sinek.

    You know what your business does. But can you articulate why you do it? That is, not just to make money – but what your business’s higher purpose is?

    Sinek argues that your business won’t truly flourish and be exceptional unless you, your employees and clients understand why it exists. This is what inspires. This is what gives a leader charisma and the ability to inspire change - not the mechanics of what you do.
    Sinek is, in effect, providing a different answer to Leboff’s question: “How do we differentiate our companies in today’s day and age?”

    This one appeals to me personally, because part of our own work is to help customers figure out what they really want to achieve with their business, and give them the financial tools to do so.

    If you don't have time to read the book, make sure you watch Sinek's popular TED talk on the same subject.
  4. The Beermat Entrepreneur: What You Really Need to Know To Turn a Good Idea Into a Great Business by Mike Southon and Chris West.

    How do you grow a company, from the moment you think of setting one up, until you sell it?

    Southon and West argue that entrepreneurs are mavericks who love a good idea, but find it hard to see them through (if the entrepreneur was in charge of running the back office, they joke, you’d come into work to find an advanced phone system, but no milk in the fridge…).

    If you want to grow your business, you need to surround yourself with key people in key areas such as sales, production, technical and – of course! – finance. They can build the right team for you and create the processes you need to make your business a success.

    They set out the stages of business growth clearly, and give every entrepreneur a really practical map for building a business that works. Invaluable.
Which business books do you recommend? I’d love to hear your favourites too – please drop me a line.
 

 

Monday, August 08, 2016

How We Transformed Our Financial Management




CASE STUDY

Three years ago, we answered a call from a business owner whose in-house accountant was leaving after several years.
While he had generally done a good job, there was one detail that was niggling at the business owner: He had recently told them they were making a small loss.  
“I knew what was happening in my own business, and my intuitive sense was that it was profitable,” says the business owner.

That was when we came on board, and quickly discovered that his intuition was correct. The company was turning a small profit.

What had happened was typical for very fast-growing companies (since this one had started in the owner’s own bedroom, it had grown to 10 or 12 employees, and a turnover of nearly £1 million). They outgrow the financial people and systems that suit them early on.

“This was a trigger to professionalise our financial management,” says the business owner.
If this story rings a bell it’s because I’ve actually told it in a previous email, but I’m repeating it now because so often, people ask me: “What do you actually do? How are you different to an accountancy firm?”

So today, for a change, I’d like to tell you what happened next, when they hired us as their outsourced finance department. While I can’t reveal the name of the company or its owner, I recently reached out to him to hear his perspective.

For the first few months, we worked with what they had in place, in order to gain an in-depth understanding of their business and financial situation.
Then it was time for change….

First, we put in place a new set of processes to manage their accounts more effectively. We took responsibility for the numbers, and started using our market-leading accountancy software to make sure they got clear financial reports.
“We were taken back by the financial information we suddenly received,” the business owner told me. “It was fast, it was accurate, and I understood it.
“For the first time, we really knew how we were performing, what was profitable and which of our products were selling.”

We worked with them to use this information to make decisions about what products to develop, what to scale back and where to allocate resources.
“We became a lot more strategic, and I had a lot more confidence in the decisions we were making – and the numbers they were based on.”

In hindsight, he said, “We didn’t have enough financial information to make good decisions with our accountant.”

But that was just the beginning. With the basics in place, we could help them use the financial information we were generating to take much larger decisions about the direction of their business.
 “The result has been that we’ve taken several large steps which we would never have been able to take otherwise. Our accountant would never have known about any of those options.”

In the three years since we’ve worked together, this company has doubled its turnover to over £2 million and grown its workforce, too.
“Now we can plan ahead,” he said. “You challenge us on how we manage our financial affairs. And what I get as a business owner is an overall sense of having a steady hand on the rudder.

“This is way beyond the relationship we’d have with an accountant. It’s added enormous value to our business.”
We give the same service to many other companies who have ambitious growth goals, and who need their financial management to evolve in tandem.

If that sounds like you – or a company you know – and you want to find out more, please get in touch and let’s chat. We’d love to help you get really reliable financial information – and use it to grow strategically, too.

Insight Associates, Insight House, Riverside Business Park, Stoney Common Road, Stansted Mountfitchet, Essex, CM24 8PL, UK
Tel: +44 (0)1279 647447 Fax: +44 (0)1279 814512
Insight Associates is a trading name of Financial Catalysts Limited. Registered in England and Wales Number: 5670047. Registered Office as above. Disclaimer | Cookies