I was talking with a client about the amount of business they were generating from their website. The key interface between the business and the customer is the contact form, that tells the business about what the customer needs, as well as a contact name, number and email.

A brief look at Google Analytics revealed some interesting statistics:

• In the last month, their website had received just under 6,000 hits, and
• In the same period, only 54 click through’s to the contact form had been generated by the website, meaning that
• Less than 1% of visits had resulted in a request for a contact.

This was pretty depressing, but it explained why the business felt that it wasn’t getting much benefit from the website.

By looking at each page, it became apparent that there was no obvious “call to action”. Even if the visitor was keen to make contact, it wasn’t clear how they should.

I’m no web-master, but I do understand the importance of making sure the link between you, your product, your “shop”, and your customer, is seamless.

When was the last time you asked someone to give you honest feedback about how easy you are to locate, find out about, and to buy from?

Things go wrong in business all the time. Key to your success in business is the ability to recognise when something has gone (or is about to go) wrong, and then to do something about it.

Thankfully most things that go wrong can be corrected.

But are there things that can go wrong that you can’t correct?

What is it that tips a business over the edge and into administration, or bankruptcy?

Top of the list has to be cashflow. No cash means no business.

Also up there is an inadequate capacity to deliver.

Perhaps the most difficult to deal with is a lack of confidence. It’s intangible. It’s not always something you know about, or can do something about.

Confidence is one thing you can create without spending a lot of money. Being positive can have a huge positive difference on you, your business, and your customers.

Talking over the MP expenses story with some friends, there seem to be two issues:
The rules for reclaiming expenses, and
The administration of the rules.

I believe that the rules are probably about right, possibly a bit generous, but basically right. The governing document makes it very clear what should, and should not, be claimed, and why.

However, I have major issues with the way in the rules were administered. Greed and maladministration have allowed MP’s to claim for items that do not fall within the rules they themselves set. Quite clearly, not only did some MP’s break their own rules, but the laws of the land as well.

This is not a modern problem, in AD130 Juvenal wrote, “Sed quis custodiet ipsos Custodes?” (But who will guard the guards themselves?).

There is no perfect system. But there is a compelling case for better independent scrutiny.

At a breakfast meeting this morning, the excellent speaker said that there were three things that were good at travelling globally:
Disease,
Information,
Money.

She was talking about the charity she worked for, but made a compelling case for the involvement of all businesses and individuals to get involved.

The world we live in is no longer restricted to those we live next to. Our next door neighbours now live across the globe.

Our success (individual and corporate) depends on the well being of those we live with. As we hope to be looked after when things don’t work out, it is our responsibility to look after those less fortunate than ourselves.

How do we know who to help?

The message is: find out who you can best help, and get involved…

What is working capital?  When accountants use it they are referring to “Net Current Assets” which are your companies short term assets less your short term liabilities.

To make this easy let’s assume that you have £1,000 of stock, you are owed £500 by your customers and you have £200 in the till.  This means that your short term assets are £1,700, unfortunately at the same time you have £1,000 of bills to pay, which are described as your Short Term Liabilities.

Therefore your working capital, or your Net Current Assets, are £1,700 less £1,000 = £700.

Naturally, you would assume that the more working capital you have in your company the safer your company is, but this is not always true. If too much of that working capital is in stock, it is dead money; which comes alive when sold and then can be used to buy new stock. 

Recently a large furniture retailer went into liquidation even though it had no major debts, because all its money was in furniture and no one was buying their furniture, this led to a major cash flow crisis and its eventual demise.

So you must look where your cash is and whether it is working for you. This is why before Christmas all the major retail chains were giving such big discounts, as it is no good having money in stock, if you don’t have cash to pay your staff and your regular bills.

The message is, if your stock isn’t selling, sell it at any price and use that money to buy stock that will sell.

A good management accountant is worth their weight in gold. Not because they will generate sales, or improve your PR, but because they will keep you focused on what is really important to the long term survival of your business.

It doesn’t matter whether you are a sole trader, have a turnover of £100k, £100M, or are the Chancellor of the Exchequer, the same principles apply:

• Create Key Performance Indicators that are relevant to, and understood by, all those involved – and don’t just focus on the financial KPI’s. Take advice on KPI’s, you need to be objective.
• Identify what KPI’s are leading indicators, and which are lagging indicators.
• Use qualitative and quantitative measures. Ask for suggestions, and not just from those within your organisation.
• Be aware of how KPI’s affect people, and how change makes them feel.
• Know the difference between making an investment, and incurring an expense.

When the world around you appears to be losing its way, make sure you have someone who is prepared to talk to you about the reality of your financial priorities.

I found myself despairing today, about the lack of interest in the Balance Sheet by some businesses. I believe it is the single most important piece of information every business needs. Why?

Look at it this way, as an individual, we tend to know how much we owe other people, how much we own, even how much we are owed. It’s nice to have sense of how much we are earning, but the bit that gives us the warm fuzzy feeling of stability – or the cold shivers of concern – is the detail of where we are financially right now.

That’s what the Balance Sheet is. It’s a snapshot of who owes you, who you owe, and what you own.

As a barometer of your organisation’s health, check out the Balance Sheet. And if you want an idea of what shape you are going to be in, then ask to see the Balance Sheet’s forecast position. It’s not rocket science, and could save you from some very unpleasant surprises.

Great question raised this morning at the Birmingham Social Media Cafe – “Do you value your time?”

It sparked an interesting debate about the perceived value of your time. Do you give it away freely? Do you calculate free-time in terms of lost opportunity? Is your time worth more or less to you than to your clients?

In a service sector, time is what I sell. If I am not charging for it then by default I am giving it away. How much can I afford to give away before I start to devalue it?

As ever, it’s a compromise. I need to give a bit away to “show what I’m selling”. The time that I choose to invest in networking needs to have some ROI.

I was reminded today that time spent with some people is priceless.

financial business support
Just had a really interesting chat about accounts packages (no, really!). It boiled down to compromise. There are a number of “must have’s”, including basic transaction recording, simple reporting for statutory purposes, and more complex reporting for management.

Unless you have £20,000 to spend, its unlikely you will get everything you need from a single piece of software. So how much functionality do you require your accounts system to have, and how much do you export to excel?

On one level, you spend as much as you can in order to get as much out of your accounts as possible, using excel to tidy up the presentation. On the other hand, you can get a simple accounts system that copes with the basic transactions (reconciling actual activity to the bank for example), and export key figures to excel to provide all your management information.

Both are compromises, but I suspect the latter could cost a fraction of the former. Its worth thinking about, and could save you a lot of money…

Recently my son appeared in a community production of Joseph And The Amazing Technicolor Dreamcoat. It was a great show, with all the drama and fun that being part of an amateur musical entails.

As I was reading HSBC’s January Economic Outlook report this morning, it struck me that leaders have an incredible capacity to forget the lessons taught to us by experiences in the past. Over the last few years we have all read, and talked, about bubbles bursting, and such levels of growth being unsustainable.

Joseph told Pharaoh how important it was to save during the years of plenty, as reserves would be needed when times turned rough. Pharaoh listened (and no doubt received conflicting advice from other experts), and decided to impose regulation that ensured his country would withstand the inevitable downturn in fortune.

Are today’s leaders willing to take the same kind of action as Pharaoh? They haven’t in the last few years…