Ask the Experts

Do you have a burning question that you would like the answer to? Or maybe you’re looking for some advice to help your business? In each edition some questions will be shared and answered by some of The Business Bulletin experts.

Q. I’m struggling with debt at the moment, how can I best handle it?

A. The trick to solving a cash flow problem is to fully understand the options that are available (and those that are not!). This is the point at which, in all honesty, the harassed business manager is best advised to consult an expert who can provide a full picture of what the true options are.

The other thing to be considered is time. If you have a cash flow problem, time is most likely something you will not have a lot of, especially if you are being chased by creditors. Also, if a business manager has to spend their time trying to solve this difficult financial problem, it is taking them away from the other aspects of running the business. Not a good idea!

Peter Douglas - Business Finance Services

A. There are a number of things to consider if you are having problems paying your bills.

Firstly, it is best to communicate with people you owe money to and let them know you are having problems. There is nothing worse for someone who is owed money to be “ghosted” and not know what is going on.

Work with a creditor to look at payment options – maybe what you owe could be broken down into a payment plan that is affordable to you and acceptable to them so that they recover their money rather than potentially lose it.

Look at who owes you money. Start chasing your debtors (as I am sure there will be some overdue) and if they are struggling, then arrange payment plans with them.

Going forward, consider a cashflow forecast of money coming in and going out over the next 3, 6 or 12 months. This will enable you to see where there are any gaps of deficits in the future that you can better manage now and put plans in place so that you are not left in this predicament.

There are usually options open to you. The following sites will also provide useful guidance:

■ gov.uk/options-for-paying-offyour-debts

■ citizensadvice.org.uk/debtand-money

■ moneysavingexpert.com/loans/ debt-help-plan

If it is too overwhelming for you then seek advice from you accountant, bookkeeper, debt specialists or

possibly a business turnaround/ insolvency practitioner. Don’t sit on it – seek help and put something in place that helps you and protects you going forward.

Paul Green - The Business Community

Q. What finance KPIs (Key Performance Indicators) should I be measuring?

A. There are many KPI’s you can look at and turnover trends and profit margins are usually where you start but there are other KPI’s you can look at which will vary from business to business. For example if you ran a restaurant you could look at food costs or staff costs as percentage of sales to see if there is food wastage or too many chefs in the kitchen.

Roger Eddowes - Essendon Accounts & Tax

A. So many things you should look at but I would talk this through with a good local accountant or experienced business coach/mentor. Key KPIs from a finance perspective are:

■ turnover (total sales)

■ gross profit margin (are you selling tenners for a fiver?!)

■ net profit margin (how much are you spending for each pound you actually make)

■ net worth (the actual ‘on paper’ worth of the business)

James Blacklaws - JB Commercial Finance

A. There are many different KPIs to consider and some will be specific to your business and industry. Whatever you are looking at, be it a raw number, progress, percentage change or some other metric you will need to consider…

■ how you are going to measure them

■ are they leading or lagging measures? ■ what impact will these measures have on your business?

■ how often you are going to measure them?

■ what the targets are that you are trying to achieve?

Looking across the “pillars” of business, here are some typical KPIs to track:

■ Finance: turnover, profit, breakeven point, cashflow

■ Sales: leads, conversions, average sales value

■ Marketing: spend, return on investment, website visits

■ Operations: overheads, fixed/ variable costs

■ Resources: productivity, staff costs

The only other thing to be wary of is “paralysis by analysis” – that you are spending too much time and energy measuring too many things that it is not serving you or your business. It is about getting the balance right and focusing on what is “key” to your business. Hence the name!

Paul Green - The Business Community

Contributing experts

Peter Douglas - Business Finance Services

Roger Eddowes - Essendon Accounts & Tax

Paul Green - The Business Community

James Blacklaws - JB Commercial Finance

Got a question?

If you have a question – then email us and these experts will set about answering it for you. It can be on any business topic you like, be it finance, sales, marketing, operations, resources, strategy or personal development.

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