Your accounts are like baking a cake... and I don’t mean cooking the books!

Baking a cake involves certain ground rules and reading the recipe involves knowledge of the different sections that make up the recipe, and also knowledge of how to interpret them. We all know how to follow a recipe and I am quite sure that most of us can bake a half decent cake.

So why is it so many people glaze over when you mention the no no word "Double-entry"?

My guess is that baking a cake is something we all grew up with as opposed to lessons on how to handle finances.

I was certainly never taught disciplines like budgeting or bookkeeping at school and reading my company accounts is something I have had to master later in life as a small business owner. I do believe that the key word here is "master", that is, learning the rules that apply in order to be able to read the recipe, or in this case my company accounts.

If you're the type of person that glazes over at the mere mention of the subject matter, then learning this stuff is really not that hard. I didn't necessarily say that the subject matter was exiting but the information that is held in your accounts is so vital to running a successful business.

I learnt a lot from doing the bookkeeping myself early on in our business. I thought I was quite good at understanding accounts beforehand but there is no substitute for hands-on experience. I took a few Sage courses, asked advice from professionals and made sure that our Sage installation was kept up to date.

Looking at the information in our accounts on a monthly basis is something we have done from day one and I do believe that that has steered us clear of disaster many times. Like many others I have had to carry out the unpleasant duties that go with running a business, like getting rid of staff. I do believe I have been able to do this in a timely and responsible manner due to the fact that I knew what was coming.

Knowing the financial state of my business and constantly measuring against budget puts me in a position of power, where I can focus my efforts where they are needed most.

I am a visual person. Looking at graphs rather than numbers is much easier for me to get my head around. We have developed the software package Profit Manager which plugs into the company Sage database and present information to non-accountants in a user-friendly manner.

There is a free community version available, which I hand on heart believe can help many businesses out there. Knowledge about the state and financial health of your company is such a fantastic tool.

Visit http://www.profitmanager.co.uk/ for more information.

Andrew Neville
Business owner
Neville & Rowe Ltd

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10 Tips On How To Stay Profitable Throughout The Recession

1. Stay positive – believe in your products, company and staff and above all believe in yourself and your abilities. The recession is nothing more than a business cycle and things will get better.



2. Identify all the associated costs. You may be the most fantastic sales person in the world, but if all your costs are spiralling out of control, no matter how hard you sell, your bottom line will never amount to much.



3. Research all the inexpensive ways you can market your business. There are loads of tips and advice available on-line, pick those that sound most suitable to your business and try them out 4 to 5 times to assess how successful they have been. When a business is strapped for cash, marketing comes out of the budget when in fact lowering other expenses would be better. Examples of low cost marketing are: Network on-line and off-line, sending articles to local relevant publications (letters section are often a good idea and free), start blogging.



4. Gain an understanding of you company accounts. If this is a weak area then reading up on the subject may be a good idea. You can also download Profit Manager for free which will present your accounts to you in a user friendly manner both in numbers and graphs.



5. Review your price structure – giving something away for free is becoming an ever increasing way of marketing, especially if your product is sold over the Internet. Your products might also be perceived as inferior quality if they are priced too low so now could be a good time to put the price up and review periodically.



6. Reassess your product mix and analyse your costs. If you use Sage as your Accounting package then download Profit Manager for free to help you in this process.



7. Stay focused – don’t flitter from task to task. Follow through and complete your tasks.



8. Don’t look at offers that are too good to be true– they rarely are.



9. When things are going well, put some money aside – remember it’s not what you earn, it’s what you keep.



10. Ask for advice/support. Places like your local business link branch or council are great resources and they are free. At times like these, these organisations have a wealth of information at hand on anything from funding through to finding some inexpensive staffing or training solutions.

Debbie Neville
Business owner
Neville & Rowe Ltd
http://www.nevilleandrowe.co.uk/

sage forecast
business budget plan
business cash flow plan
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The Secret To Running A Successful Small Business

Isn’t it great to be a small business owner? I know of no other job that is more challenging or rewarding than being the director and owner of Neville & Rowe (http://www.profitmanager.co.uk/).

But if we are all so passionate about running our businesses, why do so many businesses fail?

Apart from the obvious reason that there was never any demand for the product or service in the first place, I believe there is a very simple reason that boils down to the lack of funds, that is, they ran out of money.

Have you ever heard the phrase “It’s not what you earn, it’s what you keep”?

If the sales figures are phenomenal but the direct expenses and overheads are equally large then the profit just evaporates. Equally so, if cash is going out faster than cash is coming in, then funds will eventually run out. Hardly rocket science, but this is what happens to most failing businesses. Nobody took the time to keep an eye on the profitability and cash flow in the business and eventually they ran out cash.

So why would nobody keep an eye on such a crucial area? Are people just lazy or do they just not want to know?

I don’t think so. I’m a small business owner and I know what happens to my day. From selling our products and services, to tending to our customers, to administrative tasks, to tending to staff, etc, etc, etc. There is never enough time in the day to cram everything in, let alone time for trying to dissect an income statement and a balance sheet!

I need to know now what’s going on in my business. Are we on target compared to budget and do our cash flow projections hold?

I literally spend 5 minutes a month answering these questions and I don’t have a team of financial experts around me. I have one bookkeeper on a monthly basis and a software package called Profit Manager that retails at around £130.

I know months in advance whether I should start negotiating with my bank for a new loan. I know exactly where we are overspending and where we should be cost cutting. I know exactly what products and services we as a business should be focusing on.

Profit Manager works in conjunction with Sage 50 Accounts and Sage Instant Accounts to view the status of the business and forecast future trends using a combination of budgets, cash flow figures and what-if scenarios.

Visit http://www.profitmanager.co.uk/ for free download, full details, screen shots and video tour of Profit Manager.

Don’t let your business fail just because you didn’t have access to the right tools. Work smarter with Profit Manager. Download Profit Manager.

Andrew Neville
Business owner
Neville & Rowe Ltd
http://www.nevilleandrowe.co.uk/

sage forecast
business budget plan
business cash flow plan
download business software
download management software