How to 10x your business over 4 years with a proactive approach to your accounting and finance

Learn how we helped one of our clients grow, attract funding, and dramatically increase the value of their business

?? How does your accountant help you grow your business??

?? How are you using your accounts and HMRC compliance paperwork to positively impact your business over the next 12 months or more?

?? And finally, what is your plan for growth over the next 6 months, 12 months or more?

These are some of the first questions we ask new clients, so that we can start identifying and implementing their bespoke plan for growth.

A myth about accountants and bookkeepers:

Accountants and bookkeepers are often seen as costs, with a focus on saving you money on your tax at the end of the year, but for my team and I that only scratches the surface.

For many of our clients, we provide a proactive approach to their accounting and finance, and utilise:

? Their bookkeeping & accounting, and

? My experience as an in-house financial director…?

…to help them grow their business.

In this article, I’ll look at how you can 10x your business over 4 years with a proactive approach to your accounting and finance.?

I’ll do that by highlighting how we helped one of our clients grow, attract funding, and dramatically increase the value of their business.

A technology business looking to grow

Many of our clients are founders or directors of early-stage creative and technology businesses who are looking to grow, and this client was no different.

When we initially had a conversation with one of the directors, they were seeking $1m of investment to help with the development of their technology.

?? Whether you are seeking investment, or looking to grow organically, a similar process for your growth will apply.

Do you recognise any of the following:

While the team were very passionate about what they were developing, they lacked the financial guidance needed to help them:

a) Focus on their profits and business growth strategy, and

b) Put a plan in place to attract the funding they needed.

They were hiring salespeople in different markets in order to attract users, but the overall team lacked financial direction because they were so focused on developing the technology.

Access to funding has become more challenging for many sectors over the past few years, so having a plan to attract the right funding is even more crucial now than it has ever been.

How quickly do your clients and customers pay?

During our initial conversations with one of the directors, we identified that there were some instances where they were struggling to get paid on time.

Late payments can not only impact your cash flow. If you are looking to attract investment it shows a lack of structure in the business.

One of the first things we helped them do was put a clear process in place to ensure they were paid more quickly.

Responding to trends is important, but also dangerous:

In business, particularly with creative and technology companies, it’s important to respond to trends in your market and in the economy.

However, pivoting too much can also end up being a distraction.

When we initially spoke to the directors of this technology business, it became clear to me that they were pivoting too regularly.

It’s not uncommon to hear that, whether it’s because of ideas that directors have, conversations they are having with peers, feedback from clients, or questions from investors. In this case, the questions from potential investors led the directors to pivot to please them.

With a clear understanding of the numbers, and a clear plan for growth though, they wouldn’t have needed to pivot as often. This is where we came in.

Getting to grips with their numbers:

It all starts with your bookkeeping- the numbers don’t lie.

By working closely with this technology business in a more proactive way, my team and I were able to:

?? Understand the different revenue streams that the business had, and

?? Discuss with them the best ways to present their sales projections, and show the growth levels and opportunities.

We were also able to identify the return on investment they were achieving with their marketing, for the various revenue streams within the business.

Providing that evidence enabled us to make a better case to investors, because the team were able to highlight the areas they would invest the money, and show the reasons behind their decisions

?? How is your existing accountant using your current financial position to improve your future one?

?? How profitable are each of the different revenue streams in your business?

?? How could you improve those numbers?

?? And if you don’t know how profitable they are, what could you do to understand that better?

A greater understanding of your numbers enables better decision-making:

With a better understanding of the numbers, the directors of this technology business- alongside our team- were able to put together a more robust plan for investors, and also make better decisions about future investment.

This helped them (and continues to help them) with the development of the technology, because they are able to put more of their resources (time, money and staff) into the revenue streams that are performing best.

This is all possible, and more, when you invest in a proactive approach to your accounting & finance:

Over the last four years we have supported this technology business, and continue to do so.

The headline results they have achieved include a 10x increase in their revenue, a much better understanding of their most profitable markets, and a balance sheet which now reflects that much better.

Our proactive approach over those four years has also supported them to achieve other things too.

• A 5x increase in investment:

When we initially started working with this business, they were looking to attract $1m of investment. It took them two years to attract that first round.

By the end of the fourth year in business though, with our support which made it easier to make the case for investment, they had managed to attract $5m.

That’s because early on, we started to show a key breakdown of the markets they needed to focus on, and then later they were able to show impressive sales growth in specific markets, based on the decisions they had made using our initial models.

If you’re looking to attract investment in a business that isn’t publicly traded, or you’re thinking about eventually selling your business, it’s important to remember that it’s not worth anything until someone actually commits their money to it- so you need to have a robust plan for growth.

And that plan for growth is important whether you’re seeking investment or looking to grow organically.

• More confidence:

With their bespoke plan for growth, and a constant understanding of their numbers, the directors now have a lot more confidence when they are in meetings with potential investors and others, and when discussing their proposition.

This means they don’t need to pivot as often, because more often than not they now have the answers to the questions the investors are asking.

Their understanding of their numbers, and their plan for growth, also means they are able to demonstrate the likely returns that will be achieved, based on where the investment will be utilised.

And again, whether you are seeking investment or looking to grow organically, the key point here is that a consistent and simple understanding of your numbers, along with a plan for growth, will help you achieve the goals you create for your business.

What can other tech or creative businesses learn from this client’s growth journey?

1) Having a proactive approach, and understanding your markets and revenue streams:

Having an accountant and a trusted advisor in your corner, that understands your business, is vitally important.

2) You need a detailed breakdown in order to build and implement your plan for growth:

Management accounts tell the entire story of the business for everyone- for you and for potential investors.

Numbers don’t lie, and they are integral to the success of your business in raising funds, expanding, growing and doing whatever you want to do.

By having a set of management accounts, you get a much more detailed breakdown of your sales, your growth markets, and where the opportunities lie.

This allows you to decide which areas of the business to invest more in (in terms of time, money and other resources such as staff).

It all starts with having accurate bookkeeping though, along with a complete understanding of every penny that’s going in and out of the business, and where it’s going and coming from.

?? On a scale of 1-10 (where 1 is ‘very unhappy’ and 10 is ‘over the moon’) how happy are you with your existing plan for growth? And what needs to happen to move that number closer to a 10?

After more than a decade working in the accounting and finance sector, including as an in-house financial director, I set up Positive Accountants in 2020.

When I first got involved in politics over a decade ago, it was to help my local community and society. Now, what drives our team at Positive Accountants is helping businesses grow, so that they can have a positive impact within their sector, the wider economy, and society.

To find out how we could help create your bespoke plan for growth, direct message me today.