SMEs who use management accounts to inform their business decisions grow 28% above their respective market average, according to research by London accountant, Accounts and Legal.
The news comes following in-depth research carried out by the firm’s MBA-qualified business consultant, Louis Lines, which compared 150 of the firm’s clients who had management accounts to those who did not.
In a movement to create greater value for small businesses, Accounts and Legal have launched a business coaching package specifically designed to give business owners an in-depth, data-driven understanding of their business, which will ultimately help them make well-informed decisions and optimise their company’s growth.
Get in touch with us today to discuss how Louis’ services can help propel your business and get you ahead of your competitors.
Management accounting used to be about delivering data tables and summarising what they said about the historical performance of the organisation.
Traditionally, it was an isolated role, and management accountants often spent more time with spreadsheets than they did interacting with colleagues.
In times gone by the role was synonymous with limited contact with senior leadership and the management accountant was largely employed to source and deliver the numbers, leaving others to interpret and act on them.
Fast-forward to today, and the role has been totally transformed.
Management accounts is something our accountants specialise in. The highly-qualified team deploy the latest cloud accounting software to give each client the optimum insight and understanding of their business, ultimately unlocking each enterprises’ true potential.
Our new business coaching service will focus on the three pillars which are present in any successful business, regardless of their size - planning, forecasting, and management accounts.
Regardless of a business’ size or success, there is no owner who has the solution to every challenge that comes their way.
Sometimes, having the knowledge and grasp of the bigger picture to seek external help - and who to get that help from - is the best solution available.
We’ve found that small businesses who work with a business coach see a 46% increase in their profit margin, on average.
As 42% of businesses currently don’t work with a business coach, the above statistic tells us there is a huge opportunity for our clients to gain a significant lead over their competitors.
Our business coach will challenge you to think differently, stretching your goals.
Absolutely, you can and should have high expectations for your business, but to bounce your strategy off someone who’s walked this road before - pointing out potential pitfalls, areas you need to improve - this is invaluable to your business’ progression.
The business plan is like a map that will guide your business towards success. For example, if a ship leaves the harbour without an understanding of which direction to take, it will never reach its destination. The same theory goes for your business and the goals you set.
As someone with a unique, proven expertise for strategy, Louis will push you harder while also keeping your approach on course.
If a business runs out of cash and is not able to obtain new finance, it will become insolvent. Therefore, it is a poor excuse for management to claim that they didn’t see a cash flow crisis coming.
In business, “cash is king”. Cash flow is the life-blood of all businesses – particularly start-ups and small enterprises. As a result, it is essential that management forecast what is going to happen to cash flow to make sure the business has enough to survive.
This is where our business coach comes in.
In carrying out financial forecasting for your business, you will get a rolling forecast of your cash flow, which means you're always going to be up to date on your cash position.
Keeping a close eye on your cash position means that you will have the opportunity to sort out any issues in good time. An unexpected crisis position with your cash flow is a sign of poor management.
Overheads should be relatively easy to predict over a three-month time frame. You will know the cost of rent, rates, insurance etc. For most businesses, staff wages are also pretty fixed over this kind of timescale too.
You can also use your rolling cash flow to answer “what if?" questions.
For example, what would happen if you got an unexpected large order, or your key supplier suddenly wanted payment on delivery rather than allowing 30 days credit?
You can also model the impact if you change your payment terms. For example, if you wanted to take less of a deposit on payment upfront.
By getting into the discipline of updating your cash flow each week, you will have a much better grasp on how your business works and which operational areas drain cash from the business.
Targeting these areas will help liquidity and solvency of your business and allow you to sleep better at night.