Using The Language Of Business
Planning for your future ...
POSTED BY JONATHAN VOWLES ON 12/04/2016 @ 8:00AM
Some people spend more time planning their holidays than they do their finances, yet your business and your assets determine whether you can retire comfortably (or at all), pay for your kids' university fees, buy a house, and protect your family from an unexpected mishap or your own death ...
Finance and numbers are often referred to as the language of business.
copyright: scanrail / 123rf stock photo
Monitoring and controlling the financial performance of your business (or your family) is of paramount importance, and regular management information is vital to know what is happening in your business. Equally, planning for the future, for the continued success of your business, is obviously important.
"So why do so many business
owners not plan?"
I think that the answer is simply that most people are comfortable not planning, which means that they are not doing the best for themselves or their families. It might be that there are lots of good intentions out there in the business world, or that people are 'going to get round to it' someday, but simply don't. Whatever the answer, most people aren't planning and even fewer are planning regularly.
Finance and numbers are often referred to as the language of business. Numbers are factual things, but the interpretation of numbers and understanding of what particular numbers mean is what's really important here. This interpretation, and subsequent understanding, leads every business owner to a better understanding of their business.
"All of which wraps up into the importance of knowing your numbers!"
If you know where you are now, and have a dream or a goal of where you want to be, then your plan is just a way to move from here to there. The real trick is to break that plan down into manageable steps.
For example, if your business plan is to have sales of £1m, but you are currently on £200k sales, then your plan of activities is to get more sales and keep your customers happy, Simples!
But how do you achieve that? What is the first thing to do? You need to have a plan that is a series of small and achievable steps. But simply going out and getting loads of customers won't work! You need to have the ability to service and resource those customers.
Whilst a sales and marketing plan is often an important part of planning, you also need to review your processes and procedures so that they will cope with five times as many customers than you have now. Are all of your systems scalable? You also need to think about cash flow and the impact of growth on your bank balance as it won't all be positive!
"All this planning is interconnected and complicated even for a small business!"
So knowing your numbers is important. Planning what you want your numbers to be is just as important, but often you need a little bit of help with this. Help to get you into planning mode, help to provide the numbers or the interpretation of the numbers ... and that is where your friendly chartered accountant comes in handy.
Until next time ...
More about Jonathan Vowles ...
I've been an accountant in and for business since 1987 and have a wide experience of consultancy, audit, accounts, taxation and wealth planning work from individuals and small businesses to multinational corporations and charities.
My eclectic interests in growing and developing business span a number of areas, which can be summarised as strategic business advice and tax saving advice.
I have worked with the Chamber of Commerce to deliver courses for people about starting up in business and have lectured about tax for a major accountancy practice and for Milton Keynes College.
I relax by reading fiction and by getting away from the office in a campervan.
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