With all the resources available right now, how can you ensure you’re making the right financial decisions for your business?
Catherine Young, Founder of Thinkroom, Gary Turner, Co-Founder of Xero, Lucy Mullins, Co-Founder of Stepladder and Richard Bearman, Managing Director for the British Business Bank, joined us for the first day of Elite Business on 11 March in the financial management panel, advising businesses on how to find the right source of finance to fit their financial needs and how to rise above the challenge when it comes to long-term financial health.
Having the financial skills to run your business is important, but understanding your commerciality and ability to raise profit is crucial. If you can understand both those key factors hand-in-hand while keeping to the core business, you will be able to see the fruit of your labour for years to come.
As we work with businesses, they don’t all have the financial smarts but it is important to get a partner or anybody that can help, Catherine Young, founder of Thinkroom explained. We always ask them, can you sell, can you do the books, do you understand them and lastly is your product right. And if you don’t have the financial smarts, get yourself surrounded very quickly by those who do and even if that means bringing in somebody junior to get into the business to work with you. But you have to have it for sure.
When it comes to managing your finances, businesses are often faced with the dilemma of whether to manage funds internally or to bring in help externally. With a rise in technology and accessibility to financial management tools, thousands of businesses are capable of managing their finances on their own. However, bringing in an accountant can prove extremely useful when it comes to strategy, planning and dealing with long-term financial concerns.
I think it depends on what the problem is you’re trying to solve, and what we’ve seen in the last ten years with more easily accessible and more affordable cloud tools… is that the running of the business, the making day to day financial decisions, getting the right insights has been democratised, Gary Turner, Co-Founder of Xero said. More people without the financial smarts now have access to incredible insights, dashboards and tools that help them run the business operationally. When it comes to questions about planning, strategy or how to deal with concerns around the pandemic then I would always advise businesses… You can’t hire all of the capabilities into your business, but you definitely have access to that in your local high street accountant or firm, and they’re not just there to do your tax returns and all the things they associate accountants with. We’ve seen accountants during the pandemic really step forward and provide that essential timely expertise to small businesses, so I think it depends on what you need the smarts to do.
Sometimes small businesses can feel overwhelmed about the funding options available to them. Businesses must make it a mission to understand their financial needs at the given time to find the right funding solution that will fit them. I think there is an element of having to persevere to understand what the offers are and what’s available to you, Richard Bearman, Managing Director for the British Business Bank said. I think there’s always a risk particularly with the smaller end of the business market that they can leap in and grab the first bit of funding that’s made available to them. So, I think it’s important to take the time to really understand what the options are. And yes, it can be difficult it can be complicated so seek support, find advisers that can help you, be it friends and family or more formal, but understand what the range is and then you can find the right bit of funding that matches your need at that time.
Financial literacy is important in a business, but what if finances aren’t your strong suit? What if you are better at dealing with clients or maybe, designing your product? It is essential to learn the basics of financial management, but bringing in business partners who are experts in that field will complement your skill set can give you great leverage with your business’ long-term financial growth.
“Get yourself a business partner that compliments your skillset, it is absolutely critical, Lucy Mullins, Co-Founder of Stepladder said. When I joined Stepladder, my business partner, Matt, was talking like a highly technical financial person and the customer was like, ‘What are you talking about?’ I came in and explained to the customer how it works. I think it’s finding that right skill early on and identifying it. Really know yourself and that’s absolutely the key piece of advice. What are your strengths and what can you not do before you think about taking a pound of anybody’s money.