To the blog for small and medium sized business (SME) owners.

Thursday, December 21, 2006

Business Cash Flow

It is important that business owners not only understand the meaning and relevance of cash flow to their business, but also how the owner's daily actions impact the business cash flow within their organisation.

What is cashflow?

It can be simply defined as the net amount of cash generated and used by a business during a given period. The relevance of generating positive business cash flows is SOLVENCY!

It is unusual to find anyone in private or business life who sets out to be classed as insolvent, however, a lack of financial management and control may render the business to a period of uncertainty due to a shortfall in cash to meet current and future committments.

This situation is usually found in businesses where financial planning is not considered part of the core administrative work. The business may become reactionary to difficult situations rather than pro-active in avoiding damaging events - normally driven by a lack of liquidity (cash) in the business.

Such circumstances are often brought about by many small errors on the part of the business owner over a prolonged period rather than one single major event. This may result from a lack of understanding of the financial impact on the business of even 'minor' decisions; an inability to see the "big picture".

If the business owner does not have access to a full-time financial expertise, consideration should be given to employing a part-time Finance Director to help in planning and financial management of the business.

The cost of p/t finance director help may be insignificant compared to the cost of a failed business.

Tuesday, December 19, 2006

Revealed – How a Part-Time Finance Director Can Help You To Exit Your Business

Small and medium sized business owners will be required at some time to exit their business. It would be worthy of congratulations if all such exits were planned and the owner was able to maximize the value of the business.

Unfortunately on too few occasions is this the case.


All too often insufficient time is allowed for an orderly exit, and as a consequence the business value fails to meet the business owner’s expectations.

It is often found that seeking professional advice is delayed and the exit resembles a reactionary move rather than planned.

Immediately upon the business owner taking the decision to exit professional help should be recruited, including a qualified finance professional, if one is not already employed by the business.

In many instances the cost of a full-time Finance Director ( FD ) would be beyond the resources of a business, however, in such circumstances consideration should be given to appointing a part-time finance director to help prepare for the exit.

The benefits of recruiting a part-time finance director in an exit situation include:
• Cost containment – During the period leading up to exit the p/t Finance Director would be employed only as required to meet the business needs. This may for example be one/two days per week and cost considerably less than that of a full time equivalent.
• Taking responsibility for ensuring all systems and procedures satisfy the generally accepted standards. The p/t Finance Director would ensure that no corporate governance concerns exist that may risk the disposal of the business.
• Managing the finances of the business to generate profits and positive cash flows that would be attractive to potential buyers.
• Ensuring financial and management accounts are prepared regularly and that they form the basis of the decision making process.
• Working with the business owner on strategy and offering unbiased and independent opinions in relation to the sale.
• Training staff as necessary
• Providing the financial expertise when liaising with third parties including banks, solicitors, auditors, finance providers and other professionals associated with the exit.
• Assessing the strengths, weaknesses, opportunities and threats (SWOT) of the business and of its proposed strategies. As necessary take appropriate actions to ensure a controlled quality driven culture is evident to all prospective buyers.
• Being the person responsible for the collection, preparation and assembly of all financial records and other documentation required by the interested parties.
• Preparing forecasts and projections that may be requested, thus relieving the business owner of the onerous task.

Throughout the exit negotiations the import of good financial advice cannot be underestimated. At all times it will be important for the business owner and the part time finance director to demonstrate that control of the business does exist and that good results are derived from taking good business decisions and are manifest in a good set of financial numbers.

The appointment of a part time finance director will display that the business owner regards the p/t finance director’s input as key to the financial success of the business.

To avoid the disappointment of failing to realize the expected business value on exit, the business owner should prepare well in advance. Ideally at least two years, maybe longer, should be allowed for a planned exit, and an important aspect of this process may be the recruiting of a p/t finance director to support the business owner in:
• Preparing
• Administering
• Disposing

of the business in an efficient and cost effective manner.

Monday, December 18, 2006

P/t Finance Director

Are you a small or medium sized business owner who has engaged the services of a part-time finance director?

What were/are your experiences? Did the part time FD meet your expectations and did your business benefit from the appointment?

Please let us know your views. Email DAW Consulting

Saturday, December 16, 2006

Business Exit Strategy

There are several reasons why business owners wish to exit tyheir business. These include:

- retirement
- disillusioned
- business downturn
- new business opportunity sought etc.

Hoever, do you have an exit strategy in place, with a view to maximising the value of your business? Or are you just re-acting to events?

Much help is now available to you on business exit, mergers and acquisitions - remain in control and plan to realise more value for your business.

Consider the services of a part time finance director to help you develop your exit strategy and to ensure good financial management is exercised.

Friday, December 15, 2006

Improving Business Performance, Profitability and Cash Flow

In many cases it is possibe for a small business owner to continue in business with some success, but without ever reaching the success levels of peers and contemporaries. The business plateaus and for a while no major concerns arise.

There had been no pressure to aggressively improve the business and over time trading conditions invariably deteriorate and profitability falls.

How can the downturn be arrested and business performance improve? Or better how could the situation be avoided?

All businesses should remain focused on improving business performance, profitability and cashflow.

If you need professional advice in these matters contact DAW Consulting.

Improving Business Performance

All businesses should be focused on improving business performance, profitability and cash flow.



Tuesday, December 12, 2006

Discover How To Avoid Your Business Becoming Out of Control

Does your business need a part-time Finance Director, Manager or Mentor?

Have you considered why you may be losing control of your business? Has your comfort zone been breached? Are you expected to be involved in business matters that are not understood and are alien to you? Is your business suffering from cash flow difficulties or is it expanding rapidly and causing you to lose control?

These situations are not rare. Read More.

Thursday, December 07, 2006

The Benefits of a Part Time Finance Director

Situations arise when the business owner/entrepreneur requires the help of a finance professional.

The full-time cost of such an individual may be considered prohibitive, however, the benefits of a cost effective solution can be enjoyed whilst accessing the skills of a Finance Director. Consider engaging a part time Financial Director.

Wednesday, December 06, 2006

Part time Finance Director

The small business owner may not be able to afford the services of a full time finance professional, albeit the skills possessed by such an individual may be required within the business.

A cost effective alternative approach will be to employ a part-time FD to undertake work on a specific project or to add on-going financial expertise.

This option will afford the business the opportunity to acquire the Finance Director skills commensurate with the level demanded by the business. The FD may work as an employee or more likely on a contract basis. The latter method of engaging a Finance Director would satisfy any financial constraints within the business, fix the cost for the period of the contract but allow the business to gain the necessary financial skill so often lacking in small and medium sized businesses.

DAW Consulting will help you to fill the skill gaps in your business.

If you need help in cash management, accounting, planning, governance or setting an exit strategy then contact DAW Consulting for a FREE confidential meeting.

Monday, December 04, 2006

Business Exit

The business owner may desire to exit the business. However, it is often not realised that to prepare for exit may take up to three years. Strategy for exit will need to be developed, good financial controls should be implemented and the management skills enhanced to ensure a seemless transition to the new owner.

In addition the collection, indexing and presentation of all relevant documentation and data will be necessary and DAW Consulting can work with the business owner in undertaking this work.