Having looked at the numerous summaries of the budget, I am left feeling somewhat bemused.

The media has led us to expect a significant budget, responding to extraordinary economic circumstances. Having run the “what this means to you” calculator a couple of times I can’t see any dramatic change to my personal, or business, circumstances.

Perhaps the message is that the chancellor hasn’t got a wand to fix the problem. In fact, perhaps the problem is not tangible enough to fix. I have suspected that a good proportion of our current and future woes are self perpetuated, by the “ever ready to tell a bad story approach” of the media, and by our own insecurities.

If there is a way out of the hole we are in, perhaps the message is that it’s up to each of us to grasp opportunities as they come, and take control of our own destiny.

Cashflow is the heartbeat of every business. Books have been written on the subject – but what lies at the heart of the topic? Talking to a client today, we discussed cashflow in terms of certainty, which seemed to strike a chord, which made me want to share the conversation.

We saw two models of cashflow; the first is usually called the budget, and includes everything you hope will happen. The second (and possibly more important) is the real cashflow, and should only include figures where certainty is close to 10 out of 10.

Certainty of expenditure is pretty easy to plot, wages, rent, telephone bills, they all fall due with depressing regularity.

Certainty of income is far less simple. Not only should the value of the income be certain, so also should its timing. You may know you are expecting a cheque for £5,000, but when exactly will the funds clear your bank account?

When it comes to your cashflow, make sure you are dealing with certainty, not hope.

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.

I gave a presentation to a business-networking group this week on the subject of Social Media and Business.

Realising the audience was at best sceptical (with a couple of exceptions!), and at worst cynical, I used the following images.

• Plain website = shop window, hopefully directing you to the door in.
• Blogging on your website = shop front glass now removed, allowing you to talk to potential customers, and for them to talk back (for example by leaving comments).
• Social Media (such as Twitter, Facebook, and LinkedIn) = you have left your shop and are walking about sharing your ideas, and encouraging others to talk about them as well (not always with you present).

It is a bit blunt, but seemed to get the key messages over:

1. Social Media is not something that only happens online – it’s a mesh of physical meetings and online activities.
2. Ideas that are spread through groups of people are far more powerful than ideas delivered to individuals.
3. Real engagement is when people do things for you that you didn’t ask them to.
4. Learn to lose some control – in return for greater reach.

With thanks to Steve Bridger (http://www.stevebridger.com/) for his insights…

We have much to thank Donald Rumsfeld for. Although mocked for his listing of “what he knew he knew”, “what he knew he didn’t know”, etc, this analysis of your situation can often distinguish perception from reality.

Compiling a list of things that you know you know about your business might seem like a waste of time, but put it beside a list of things you don’t know about your business, and you might surprise yourself just how many things you suspect, but aren’t sure about.

If you aren’t sure about it, then you don’t know it.

And then ask yourself, what are you doing to find out?

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.

Spent a great afternoon today on a panel presenting to a group of aspiring film makers. I am always inspired by those who have creativity running through their veins. Something about art being the object of their day’s work, not the pursuit of profit.

My input was to help improve the participant’s business skills. Also on the panel were four (yes, four) lawyers.

Art is good, sustainable art is better; be led by your work, not by the corporate structure.

Thanks to The Producers Forum for organising a great session. http://www.producersforum.org.uk/about.asp

I have been wondering what I could “give away” to give you an idea of the kind of support I give to businesses.

The first thing that occurred to me was a simple excel spreadsheet that shows how the P&L links to the Balance Sheet, which links to the Cashflow, which links to the P&L. You get the idea – its a neat pro-forma.

Then there is my list of the various kinds of accountants that businesses use – there are more than you might immediately think. This is helpful because you need someone to look after all aspects of your business’s accounts and it’s easy to overlook something…

Then I have a list of accounting software packages I know, either through using them, or reviewing them, or simply on recommendation – handy when discussing potential changes.

I have a great contacts database, but that’s worth a little too much to just give away…

I keep wondering about a FAQ page for my website. Is there an accounts question you always wanted to know the answer to?

So at the moment I haven’t got anything to give away. Should I have something? Is what I do too intangible? Does a freebie make a website more attractive? What would you like?

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…

Recession. What is it? What does it mean? And most importantly, what does it mean to you?

The sales are in full swing, parties are loud and late, cars are travelling far and wide. Some days it feels like there are two worlds, the one we live in and the one we read about.

Losing a job is not fun – I know from personal experience – but take this out of the equation, and what else is happening? Food prices are down, fuel is just 86p a litre, variable mortgage rates are at an all time low. The spectre of recession might be based on little more than a perceived worsening of our world.

Perhaps the biggest thing we have to fear, is fear itself.