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Bitesize tips from a business coach
Many businesses struggle with the disconnect they have between their knowledge and consistent implementation. Often, this is a lack of resource, good structure, or forward planning.
The challenge for many professionals, such as lawyers running their own business, is the need to wear the “lawyer” hat and the “business owner” hat. Whilst the priority is looking after clients, if they want to grow a sustainable business, they also need to work on the business. Two key business tips discussed here are Maintaining Business Liquidity and Key Performance Indicators.
Maintaining your business liquidity
Tracking and monitoring your business is much more than knowing how much your revenue was last year or even last month. If you do not have an up-to-date picture of the financial position of your business, you might find yourself in a difficult position with not enough cash in the bank, but there are things you can do to prevent issues with liquidity and help you monitor your business health more closely.
A vital tool in maintaining your business liquidity is the cashflow statement. When I work with clients, I insist that they have a cash flow forecast in place. They must forecast at least three months ahead so that they can see what is coming in and what is going out.
There are many ways that you can improve the cashflow position in your business. To keep your business afloat, you need to have more cash coming in than is going out. You can reduce the cash outgoings by talking to your creditors and asking for extensions. I suggested to one of my clients, that they ring HMRC to defer their PAYE and National Insurance contributions because the government was allowing deferrals during the pandemic. They agreed on a payment plan which helped their cashflow position.
Keeping track of your weekly or even daily cash position and having a forecast so you can plan for any period of cash shortage can mean that your company is more robust, especially when the business environment changes quickly.
Key Performance Indicators
Every business has two or three numbers that “drive” the business. These are called Key Performance Indicators (KPIs); quantifiable measurements that reflect the critical success factors of a business.
To monitor these numbers consistently, it is important to build a dashboard which will ensure that any changes in the numbers are not missed. In addition, sharing the KPIs with your employees is key to maintaining transparency with employees.
You can think of your KPI dashboard like a car’s dashboard. It gives you the vital information to keep the vehicle moving. You can monitor your speed, how much resource you are using, how hard you are working the engine. In the same way, your KPI dashboard can help you to track changes in your numbers before it creates a problem on your journey.
Sharing the KPIs across all teams brings transparency and it can encourage a bit of healthy competition between teams, to meet the KPIs.
As Warren Buffet said, “If you can’t read the scoreboard, you don’t know the score. If you don’t know the score, you can’t tell the winners from the losers.”
Falguni Desai – Business Growth Coach
Falguni Desai is a solicitor and a chartered secretary (FCIS) with 20 years’ experience in the legal sector. Since 2017, she has been working with SMEs to enhance their growth.
Published January 2023