Many years ago I read a story, in which a traveller asks for help finding Dave’s Bar. The local man replies after some thought, “Well, I wouldn’t start from here”.

I have had a number of meetings recently in which the subject of how best to report on financial and business performance has been debated. Traditionally, detailed reports are presented giving chapter and verse on past activity, explaining why the results are what they were, and how the variance between budget and actual is accounted for.

All this is fine, but it leaves me asking the same question, “So what?” You know (I hope) where you want to go, so given where you are now (and it may not be where you wanted or expected to be), how are you going to get to Dave’s Bar?

I suggest that reports should spend no more than 20% on historical analysis, noting key events and any exceptional activities, and the remaining 80% on what you will be doing differently as a result of what has been learned, and what impact these changes will have on your forecast.

By reporting more on the future than the past, and incorporating lessons learnt as you go, you dramatically reduce the chances of being caught out.

This should spell the end of the traditional annual budget, and the start of regular reforecasting. Yes, it’s interesting to know how we got here, but of paramount importance is to know how we are going get from where we are now, to where we want to go, even if it’s only to Dave’s Bar.

Businesses need banks, and banks need businesses. But as a business owner, how do you decide which bank to trust your money with?

I have helped a number of organisations choose a bank – some for the first time, some because they wanted a change, and some because they needed to change!

There are many considerations to weigh up, including: cost, secondary services, knowledge of your business sector, location of branches, access to help. To me, the most important factor when deciding who to bank with is the Relationship Manager.

It is perhaps a little unfair to say that all banks are alike, however, there is generally very little between them in cost, in location, and in the general service they offer. To my mind therefore, the biggest difference between banks is in their staff.

When I needed to set up a bank account for my business, I walked down the high street in my home town, and walked into every bank. I asked the same question in each branch, “Please can I talk to someone about setting up a business bank account”. Within 30 seconds of walking in, I felt I knew how much the person I was talking to cared about me and my business.

I would not want anyone to think that choosing a bank is a decision to take lightly – particularly in today’s economic climate. Never forget who is the customer. As ever, more than numbers and statistics, it’s the people we do business with that matter, and I suggest that this includes your bank’s Relationship Manager.

A client of mine was thinking about starting a business, and asked me how big an overdraft she needed to ask her bank for. After talking through her plans, we agreed that the overdraft was a safety net, not a requirement and that, ideally, she ought not to make arrangements to borrow money she didn’t need.

I have been very lucky to work with a number of entrepreneurs and business owners. If I had to identify a common characteristic, it is a simple determination to succeed. Not necessarily financially, but in getting their product, service, or message, out there. It never seems to matter how much they have in the bank, their passion to succeed leads them to find innovative and often unusual ways to achieve their goals.

Passion really is a form of currency. To illustrate this, I can remember presenting to a bank for a significant loan to support a business. On paper, the business was in trouble. It was losing money, it was losing good staff, and it had issues with its governance. What it did have was a charismatic leader who conveyed a tangible sense of passion to succeed. Failure simply wasn’t an option. The bank was convinced, and the loan was granted.

If passion is a form of currency, then starting with little cash is no bar to success. The ideal combination is a sound business plan, presented with passion.

Nothing succeeds like a budgie with no teeth.

I have had a few meetings recently with people looking to start a business. Some of the businesses were start-ups, some were buy-outs.

As a freelance FD, I was asked if the idea stood a chance of succeeding financially.

What we very quickly got down to was not CAN they make a success of the idea, but do they WANT to make a success of the idea.

Without the will to succeed, it’s very unlikely you will succeed.

With a determination to succeed, even average ideas stand a good chance of making money.

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

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…

Financial Business Support
Many years ago I interviewed a bunch of characters for the post of Nightclub Manager. Failing to make a decision, the panel asked itself the following question, “If the interviewee was a nightclub, would I go to it?”. Suddenly the choice became easy.

It is very easy to forget the impact that the person has on the identity of the business. Every employee, from security on the front desk to the chair of the board, adds a key ingredient to your brand. In times of apparent doom and gloom, what kind of impression do you give the outside world?

A visitor to your business, whether by phone or in person, may well learn more about your company from the first point of contact in the first few minutes than in the whole of the meeting you have carefully planned.

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.