Financial Mastery‌ Neale Lewis
A Commercial, Profitable, Enterprise That Works Without YOU!
Results
Synergy Team Leverage Niche Mastery
M A Owner’s Personal S Growth and /or New Businesses S WITHOUT I YOU!!!! A Well Oiled V Machine E Structure for Growth
That Works R
E Efficiency S Profitable U Predictable Cash L Flow T S Commercial Eliminate Chaos 3
Understanding The Numbers…
Leads to:
Greater confidence in decisions
Better business decisions
Logic-based implications of choices
Greater awareness of abilities
Proper examination of issues
Effective billing, collecting & paying
Improved Cash Flow
B A L A N C E S H E E T
The Balance Sheet Assets are what you own Liabilities are what you owe ASSETS – reflect what you pay for something! • Current Assets are things that are easily converted to CASH, and include things like Bank Accounts, Debtors etc. • Fixed Assets are all the things that have a longer life span and are not easily converted to CASH, like machinery, Vehicles etc.
The Income Statement‌
R-E=P Revenue (Sales) Expenses Profit (Income)
Measures the financial performance of the business over a certain period of time
Here’s how it works… Total Income/Sales Cost of Sales = Gross Profit Overheads = Net Profit / (loss)
What is COS or COGS? • Cost of Sales OR Cost of Goods Sold • These costs are ONLY incurred when you make a sale… • This could be the cost of a Product, Delivery, Installation • For example, if you use contractors that ONLY get paid when installing your widgets, then this would be a COS.
The Different Margins ...
Some Products/Services May Be Impacting Gross Margin – Make Sure These Are Right First
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Setting Revenue Goals ‌
Choose the profit you wish to create in your business, then set a revenue goal based on your margins ‌
Budgeting for Profit… What is a BUDGET? • A budget is essentially a Target/Goal for the Business • Usually people will aim for a certain Revenue figure, and not really know why • Effective budgeting is about making sure you make the amount of PROFIT from your business you need/want What would be in a BUDGET? • You need to budget for Sales, COGS, Overheads and PROFIT • Usually you would budget for the Year and break it down into the months
Profit vs Cash Flow Profit does not equal cash – Why? Debtor Days Buying stock Vat & Provision for Tax
Manage the cash gap Collect Cash majority of time Change trading terms Have efficient invoice system in place Monitor debtors/creditors Consistent follow up Pay your bills on last day of terms
Revenue – are Sales increasing? Profits – are they making money? Flow – do they have enough cash in the business? Equity – is the business gaining or losing value? There are other measurements in tracking “Vital Signs” The nature of your client’s business will determine which factors should be monitored…
• A retailer or wholesaler is concerned with stock turnover and product sales • A legal firm is interested in billable hours per employee/ partner per month • A manufacturer is concerned with units produced, gross profit per unit sold
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Your books are up to date (including your budget)
Everything is entered into your accounting software and reconciled each month
You look at your P&L on a MONTHLY basis
2
You need to be reviewing your P&L on a monthly basis
You have your Accountant or Bookkeeper check your numbers
3
It’s a good idea to have your numbers checked & Verified Use an Accountancy software package: Sage Line 50 / Quickbooks
Pay by Standing Order
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Introduce new payment terms
Debtors 5
Stagger Payments
6 Allow Customer to Pay up front 7 Embrace PayPal as another option to make payment very easy 8
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Pay suppliers later 13 Keep Cashflow forecasts up to date 14 Understand the company’s cashflow position and cashflow forecast 15 Reduce overheads in the business 16
Introduce early Settlement Discounts 9 Dump “D” Clients 17 Ensure that you have Prompt Billing 10 Run a credit check on all new clients Systems in place to chase down Debtors 11
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BusinessRICH
Intensive two-day workshop for serious business owners 13th and 14th June 2009 • • • • • • • • • • • • •
Successful entrepreneurship and wealth creation Managing cash-flow to accelerate growth The '5 Ways' to increase business profits Writing successful ads that make you money Selling made simple Building a referral based business Strategic and loyalty marketing that works Making customer service profitable Understanding your financial statements to make sound business decisions Creating and leading championship teams Building your business to run without you Managing your time to make more money And so much more!