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, 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.

Wednesday, July 27, 2016

Should You Fire That Employee?


“£8,000 is just too much. He’ll have to stay.”

A few months ago, a business owner mentioned to me that he was extremely unhappy with one of his small team. A relatively new hire, this employee had passed their six-month probation period, but floundered quite soon afterwards.


The business owner wanted him out, but according to HR, it was going to cost up to £8,000, including legal advice.


That was five months of his salary. Tempting as it was to cut him loose, financially it just didn’t make sense.


Or did it?


This business owner was making a common mistake, believing that “costs” mean “extra expenses” – that is, spend that you hadn’t initially accounted for.


But in fact, spending your money on the wrong things is a cost. Someone doing the wrong thing on behalf of your company is a cost.


Keeping on an employee who – for whatever reason – is wrong for the job is a cost.
Take this junior employee. The company was aware that they were spending money on overtime payments to other employees as a direct result of his under-performance. But the hidden costs were even greater.


He’d been a dead weight carried by his team for over a year. It had demotivated them, and dragged down the efficiency of the whole department. The manager was investing a huge amount of time in keeping the employee on track, and it was putting her under strain.


The knock-on effect of a bad employee is huge, and that’s before you get onto the risk of them causing costly mistakes.


And because he wasn’t delivering the value the company was paying him for, the money they were spending on him in the first place was a complete waste.

I understand why the cost of getting rid of an employee can seem intimidating, but you need to weigh up the cost of firing them with all the costs of keeping them on. In my experience, getting rid of a bad apple pays for itself within a few months – even if you believe that the hidden costs are on the low side.


Ultimately, after long deliberation, this business owner did get rid of their under-performing employee. When I saw him recently, he told me he had no regrets.


“Not only has the atmosphere in the office changed for the better, everything’s getting done faster and with less mistakes. He was holding us back.


“It was worth every penny.”

Wednesday, July 20, 2016

Are You Offering Your Employees The Right Benefits>


Are Your Employee Benefits a Waste of Money?

“I don’t believe in Christmas bonuses.”

As you can imagine, that goes down like a lead balloon when I’m talking to people about coming to work for me. But in fact, I use it as a way to lighten the mood during interviews, because it’s not that I don’t like benefits – far from it.


It’s that I only like benefits which are both valued by employees and directly help the employer, because they motivate their staff or help grow the company.


In too many cases, I find that companies do not spend their money wisely, by offering benefits which answer neither of those criteria.


I’ll never forget a gentleman I used to know, who in the early 1980s had a company car. At the time, this was a benefit companies loved offering, because they were very tax efficient.
Well, this senior manager didn’t even have a driving licence, and it was his wife who used the company car. He came to work on the train each day…..


While that’s lovely for the family, it’s a waste of money for the company.

Similarly, many companies stock up on food and drink in their kitchens which never gets eaten. They think they’re offering a ‘benefit’, but if it’s not something employees really want, it’s not money well spent.


And then there’s those Christmas bonuses. I find that because they’re automatic and expected, employees tend to undervalue them, and they do n
othing to motivate anyone to work any harder or increase their loyalty to the company.

So what benefits work best? I believe in performance-based rewards. Employees will work harder for your company if the result is tied to a financial bonus or additional leave. They will also appreciate the benefit more if they have earned it.


I do like Christmas parties (proving I’m no Scrooge!). The value staff place on fun, team-building events tends to be much higher than their actual cost (like a lot of benefits other than cash), and the morale boost is good for everyone involved.


It can be a case of weighing up what employees value versus what benefits the company. For example, private health care is good for companies because it gets a sick employee back to work quicker. But on the other side, it may not be hugely valued by employees because they may never take advantage of it, and never expect to.


One way to avoid that, and make sure benefits answer both of my criteria, is to have a benefit pool. People choose what they’d like from a menu, up to a certain value. Life insurance will appeal to some and gym membership to others. Because they’re things employees really want, it’s money well spent….


…So everyone wins.

Wednesday, July 13, 2016

How Much Will That New Employee Really Cost?


Do You Really Need That New Employee

Things were going well for our client, which sold computer hardware. So well in fact, that they were having trouble keeping up with their rapidly growing sales.

Each time an order came in, a staff member would jot it down on a piece of paper, which was then placed on an in-tray to be processed later. If they went home early, or if the orders came in even thicker and faster than usual, the little pile of papers piled up on their desk.

The rest of the team regularly had to field enquiries from disgruntled customers, wondering why their order had never turned up – and sift through a mountain of handwritten scribbles, trying to decipher which order was which.

The business owner concluded that the staff member in charge of taking orders could not handle the extra volume, and became convinced that they needed to take on an additional pair of hands.

It’s the same conclusion many growing companies come to, when their workload increases.

But today I want to urge you to think carefully before you make that new hire. Can you really afford it? And is there a better solution?


Very often, companies under-estimate how much a new employee is really going to cost them.

Beyond the headline salary (together with National Insurance, pension obligations and payroll administration) you’ve got to add in all the recruitment costs – the advertising and agency fees, as well as the time invested by you and/or others in the company. Then you have to supply IT equipment, desk space, and no doubt a string of benefits, from free coffee to private healthcare.


There are hidden costs to absorbing that new worker, too. Every new employee needs to be inducted and trained. It’s estimated that it takes an average of 23 weeks before an employee gets up to full speed – and much longer for more complex roles.

And remember, you still have to pay this person when they’re not being productive – enjoying their holiday entitlement, at home sick, or wasting time at work (let’s face it, even people who own their own business waste some time at work – or at least I do).

Plus of course, you still have to pay them when you’re having a slack month. In fact, with no compulsory retirement age, I think of taking on a staff member as a lifetime commitment. What will that 30-year-old employee cost over time?

And let’s not start on the risks to your business if you hire the wrong person.

Now, this doesn’t mean that hiring is always the wrong decision – clearly that’s not the case! But before you start the search process, I suggest you examine whether your processes can be improved first.

When a business is growing fast, it is often wedded to ways of working which may have been adequate when it was smaller – but are completely inefficient when it expands.

Take the company I told you about earlier. They really didn’t need more hands – they needed to optimise the way they handled orders. Once we put into place Exchequer, the financial software I told you about last week, their worker simply had to key the orders directly into the system, so they got processed immediately, no details were lost, and the orders were filled much faster and more efficiently.

It was about the system, not the manpower.

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
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