17th Jan 2012 / 3:07pm
If you aren't consciously underpinning your face to face networking activity with your on line presence you're presenting a disjointed image. That's fine if you work in a disjointed way - but if you don't then your networking needs to be joined up. To find out how to join up your face to face and on line networking come to the Chichester Chamber of Commerce and Industry networking breakfast at Vicars Hall at 07.30 on Friday 27th January where I'm giving a short presentation on joined up networking.
If you can't make it contact me about a separate session.
17th Jan 2012 / 2:58pm
‘Turnover is vanity, profit is sanity but cash is reality.’ This neat saying, known as the ‘Banker's Mantra,’ is everything a business needs to remember about financial control.
Here’s why. I’ll start with profit - the sanity. The reason for being in business is to make money, and profit is the measure of a business’s ability to make money .... or loss if it isn’t doing well.
Nothing in this life is ‘free’ so the Inland Revenue tax your sanity which is why some businesses may want to keep their reported profits to a minimum. However for the the purpose of this short blog I’m only focusing on operating profit, that is the profit earned from a business’s core business operations. It’s also known as EBIT - earnings before interest and tax.
As I’m blogging about profit and cash I’ll only mention vanity in so much as it’s all the revenue a business generates from its operations. As it’s the largest number in the profit and loss account it’s what companies can boast about
A business can’t focus on just profit and turnover alone because the process of generating revenue needs cash because:
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creating the products of services it sells
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getting these to market
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employing staff
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office facilities, office overheads
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purchasing assets such as computers
all need cash.
These costs happen in advance of the product being produced and sold so cash is an essential ingredient. It doesn’t matter where the cash comes from - whether it’s generated by the business or provided by investors or borrowed from the bank, but without cash a business cannot survive.
Some business owners and managers think that if they are in profit they should have cash and can’t understand when they don’t. It’s sometimes caused by them focusing on the P&L, which doesn’t show cash movement, rather than looking at the balance sheet and cash flow forecasts.
The reason that profit and cash aren’t the same thing is timing. There are two aspects to this. Firstly cash is needed to produce and sell a product or service, and secondly accounting conventions use the tax date of an invoice as the moment the profit is recorded, not the payment of the invoice. For the majority of businesses the cash received for payment of an invoice is not on the day it is raised. Consequently there needs to be a buffer of cash to carry on the business.
Taking this a stage further a company can be highly profitable on paper but because of the disparity between paying the cost of sales and overheads and receiving payment for invoices mean the company has no cash. If the cash outgoings are greater than the cash coming in the company may go into receivership. It’s called overtrading.
Profitability is a function of the company’s ability to maximise revenues from their cost base - namely their direct and indirect costs and assets. Having sufficient cash in the bank to continue the operations that generate profits is the proof of management’s ability to:
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minimise the amount of cash tied up in stock
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cost control
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minimise the time it takes for invoices to be paid - the debtors
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generate a greater margin than depositing the same money in the bank
So - to answer the question - is cash or profit more important and why - cash is the most important as the business cannot continue to carry on day to day operations in the current market without. Banks will foreclose on overdrafts.
However the end game for any business is both - as profits are the purpose of being in business and these can only be enjoyed by the business owners if there is sufficient cash to distribute the profits.
If you need help understanding your business finance give me a call on 020 3286 7224 or 07718 584811 or send an e-mail to sarah@sfmconsulting.co.uk.
6th Oct 2011 / 3:58pm
If you think, or say, 'I don't do numbers' and you run a business, or have management responsibilities, you can't be in control if you don't understand what numbers you need to measure and take notice of, and what they are telling you.
This autumn the Chichester Chamber of Commerce & Industry is running a series of workshops on management subjects and I’m delivering ‘Finance for Non-Financial People’. The aim of this workshop, on 23rd November, is to provide a general introduction to the finance function and increase the confidence and ability of non-financial managers and or staff to contribute positively when finance is being discussed and financial decisions are being made.
At the end of the workshop delegates will be able to:
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Understand basic financial terminology and concepts
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Navigate the main financial statements
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Assess the financial health of an organisation using simple ratios
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Prepare and manage financial budgets
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Understand the tools used in the decision making process for capital investment appraisals
I’m not an accountant and before I was pushed into studying the ACCA Certified Diploma in Accounting and Finance I too was scared by numbers and unable to interpret their meaning so I understand your plight.
If you can’t afford to risk making bad decisions, or fail to manage the financial health of your business, then this is the course for you.
Numbers are limited so to reserve a place book here.
If this date is not convenient for you please contact the Chamber of Commerce on office@chichestercci.org.uk as if there is sufficient demand the workshop will be repeated.
26th Sep 2011 / 6:20pm
It's often easier to get started with something new if someone shows you how - and social media is no exception.
On Monday 3rd October from 6.00-7.30pm I'm delivering a taster session for the Chichester Chamber of Commerce and Industry. It's a practical, hands-on session to help you get started with tweeting and blogging.
It's open to everyone and tickets are only £10 from www.chichestercci.org.uk
6th Sep 2011 / 4:53pm
Social media has the power to drive your brand and build your business in ways that have never before been possible. It affects your marketing and your people, and here is an opportunity to link both in a valuable two hour seminar given by Lizz Clarke of Logical Creative Marketing and Sarah Matthews of SFM Consulting.
Using social media effectively will require a focused partnership between your marketing team, your HR team, your IT and your social media experts - and will also require changes in your business.
The aim of the seminar is to help you avoid common pitfalls and learn how to enjoy the benefits of this effective marketing tool.
Seminars take place on:
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Thursday 22nd September - 7.00am for 7.30am at St John House, Worthy Lane, Wincester SO23 7AB
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Tuesday 27th September - 5.30pm for 6.00pm at Bourne Community College, Southbourne, Chichester PO10 8PJ
The seminars cost just £25 per person with all profits going to charity.
To reserve a place please e-mail sue@lcm.co.uk