Finance
 

(10 Topics)

For many small business owners, their business represents the major part of their financial capital. It needs to generate sufficient income on a continuing basis to cover the whole gamut of personal life events such as buying a house and educating children. And finally the owner may be relying on it to provide the major source of their retirement financing as well.

But no one knows what the future holds. For too many SMEs what the future could hold is problems with one of several business life events, such as inability to continue meeting the cost of debts, loss of a key person, withdrawal of the owner because of illness or disability, and ineffective estate planning.

In these circumstances what can be done to protect the income stream from the business and maintain its market value? Financial planners have a wide range of products to assist business owners mange these critical situations. This BGR discusses several of them. It also promotes the use of a range of professional input to put together the most suitable financial plan for a business and promotes the use of a business coach or adviser to assist the business in improving its income generating capacity over time.

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2.    Getting the Best Valuation on Your Business

Why should a business owner in with no intention of immediately selling be interested in valuing their business?

Because understanding the factors that determine the value of their business will pay tangible dividends by focusing on ways to increase the firm's short and long-term profitability.

There is no time like the present to begin to understand what a business valuation is, under what circumstances a valuation is customarily completed, and why it needs to be done with professional advice.

And when the process is complete the business owner can make some rock solid decisions -what their true net worth is, how much a banker will be likely to lend them, how much buy-sell insurance is needed, how much tax their heirs will owe, how to divide assets among heirs, and what someone will realistically pay for the business if it is to be sold.

This BGR covers the reasons why businesses should have a current valuation, the common methods used to compile valuations, and what a business owner can do to improve the financials of their business and improve their valuation figure.   

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3.    Grooming Your Business for Sale

A business is only worth what the highest bidder will pay, so it will need to be operating at its best when it’s time to sell. The messier a business is, the less confidence a buyer will have and the easier it will be for them to talk down the price.

The goal of grooming a business for sale is to present the business in a highly marketable way, which will attract prospective purchasers, while at the same time maximizing the selling price. A program of grooming in the months, or preferably years, before sale could ultimately pay for itself several times over in a better final sales price.

This BGR discusses a number of specific techniques for grooming a business but also makes a strong argument that the advice of both accountants and business advisers is an essential ingredient to maximize the opportunities for improving the final sale price.

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4.      Improving And Protecting Your Credit Rating

Credit reporting agencies track the creditworthiness of businesses to help suppliers and lenders make decisions about which companies to do business with. These agencies collect data for reports from banks, retailers, government records, and other sources.

Potential suppliers and financial institutions may use a company’s credit rating to determine how likely you are to pay their debts. The strength of a credit rating can impact the payment terms that vendors grant, interest rates that banks apply business loans, in fact whether a loan will be forthcoming at all.

But there can be errors in these records. Or a business can be operating credit in a way that gives them a worse credit rating than necessary.

Keeping a credit report in tip-top shape is smart for business. This BGR explains how credit rating works and offers practical advice on how to protect and improve a business’ credit rating. It also offers smart guidelines for protecting itself from providing credit to other poor risk firms.

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5. Key Performance Indicators - Tools For Business Performance Management

Key Performance Indicators (KPIs) are the measure of a business' success at achieving its operational and financial goals. When KPIs move in the right direction you know your business is operating successfully. When they move in the wrong way you have a warning that something isn't going according to plan.

But what are KPIs? How do you decide which you need to track? How do you go about putting a KPI system in place in the business? How do KPIs relate to benchmarking?

This BGR has the answers and demonstrates how KPIs can be used to benefit any business.

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6.  Managing Your Accounts Receivable
 

Credit can make or break a small business because of the direct and substantial impact it has on cash flow. So dealing with receivables to maintain cash flow is an important part of managing the small business.

This BGR covers two main areas associated with receivables management:

1. Setting up a credit policy and associated KPIs and tracking them for effective management.
2. Dealing with overdue receivables.

The section on dealing with overdue accounts includes a structured way of pursuing them, from initial reminder to legal action, with practical tips on how to handle the process.

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7.     Managing Your Cash Flow for Improved Results

Cash flow is a key indicator of a business’ financial health. Knowing how to maintain a healthy cash flow is essential to a successful business.

However, managing cash flow is one of the most difficult challenges facing owners of small and medium-sized businesses and an unplanned drop can put them out of business even as demand for their products or services is growing, or as they are about to turn the corner of a downturn.

Properly cash flow management is a matter of both good overall planning and effective use of cash flow strategies. This seminar explains the importance of cash flow management, the need to develop cash flow forecasts that track the inflows and outflows of cash and the reasons why they should be regularly updated.

Attendees will receive with a slide set handout, action plan and spreadsheet examples on CD to begin refining internal cash flow management processes within their own businesses.

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8.   Playing the Numbers Game - Managing by Financial Ratios

While many small businesses are run by entrepreneurs who are highly skilled in the technical aspects of their business they are rarely overly savvy in financial matters. And yet financial ratios are valuable tools for understanding and monitoring the performance of a business.

Ratios provide insight into every financial element of a business, from its profitability to the effectiveness of its accounts receivable department.

Ratio analysis can be used to chart a business’ progress, uncover trends and point to potential problem areas. An owner who understands that financial statements are essential for directing and controlling a business will more likely take them seriously – and be more likely to be open to advisory work based on the figures.

Many different financial ratios are used for different management purposes. Some very few are used for illustrative purposes in the presentation – the overall emphasis is on pointing out how they can be used to improve management practices and encouraging collaboration from an accountant/advisor rather than on learning formulas.

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To have a strong and successful business it is necessary to have a clear understanding of the financial impact that basic business decisions may have.

Many of those decisions have to do with costs – usually in an attempt to reduce them. But these actions are often ad hoc and not based on any appreciation of consequences.

This presentation shows how to analyze costs into components, how to use gross profit margin and contribution margin to monitor their effect on profitability, how to use ABC costing to establish the true costs of production and some strategies for minimizing costs.

It should open up opportunities to promote some of your traditional accounting services such as Income Statements and Cash Flow Forecasts as well as some consulting in the areas of Activity Based Costing analysis and CPV analysis.

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10.     Starting Up A Business

This topic is a must for anyone who may be considering starting up his or her own business.

Starting and running a small business can be tough. You are subject to high levels of mental stress. You have to deal with uncertainty and anxiety and, if you make mistakes you have to accept the consequences. And there is no guarantee you will even succeed. But if you are suited to running a business, you may find that it is one of the most exciting and rewarding things you do in your life.

This topic includes a series of self-assessment questionnaires to help you to identify whether you have the necessary characteristics to be a small business owner.

Other areas covered are:

• Franchising
• Your Unique Business Concept
• Competitive Advantage
• Researching Your Market
• Analyzing Your Costs
• Preparing a Business Plan
• Start up Funding

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