How Simple Financial Choices Can Turn Your Business Around

Today I’d like to share a personal story about my previous business.

Around 2004, I hired the services of two friends, Shane and Andrew, to assist me with the fledgling digital agency started by myself and Mike Perk.

Back then, we had only a few clients and one employee. Our primary job was creating websites. To pick up the slack, Shane assisted with design and Andrew helped out on dev work.

Pretty soon, the agency ran into cashflow problems. We couldn’t pay our suppliers, including Shane and Andrew. Then, one morning, my two friends visited me in our studio in Zonnebloem, which was just down the road from the old Ferrari garage on Roeland Street, Cape Town. My friends knew that I was doing all the accounts myself. Andrew asked me to create a statement for a client that owed us a substantial amount of money (and for whom Shane and Andrew had completed a substantial amount of work).

I opened up Excel on my laptop, hacked the numbers and produced a statement. It took me around 15 minutes. Andrew opened up an accounting package on his laptop and did the same task. It took him around 15 seconds.

“Yours is wrong,” said Andrew, with a fairly concerned look on his face.

That day, Shane and Andrew gently wrested control of our agency’s accounts from me. Their message to me was essentially, “go forth, do what you’re good at and leave the rest to us”. It was a mutually beneficial agreement.

For the next six months, I focused on sales, networking and growing the business. Andrew made sure invoices and statements were being sent on time. Shane took over some of the heavy-lifting in the studio.

Thinking back, those six months were likely the highest growth months I’ve ever experienced, in relative terms.

Lesson. Learned.

With Shane and Andrew’s help, Mike and I turned the agency around from being technically bankrupt to being profitable and healthy. The biggest impact was made by ensuring our accounts were run smoothly and money came in when it was supposed to.

The impact on me personally was that I felt like I could?breathe. I went from being stressed and strung out to being confident and cocky.

Shortly afterwards, Andrew handed over our books to Nicola, who had recently qualified as a Chartered Accountant. Nicola still looks after our books to this day.

The research we’re doing at Heavy Chef Foundation shows that my experience is not an isolated one. Struggling with cashflow due to poor financial management is rife amongst small businesses and startups. However, even the most anxiety-inducing scenario can be turned around. In our case, some hard decisions flying in the face of my false pride, ensured that Mike and I could build a decent company.

With this insight in mind, we’re going to focus the next few weeks on the essential topics of cashflow, financial management and administration. These themes may not seem as sexy as some of the other subjects we’ve covered at Heavy Chef, but if we ignore them our businesses will perish.

Simple as that.

The two friends who helped me back in 2004 happened to be two remarkable individuals. The following year, they started their next business, which was called Yuppiechef. They did okay with that one. However, the principles that were deployed during that period were not remarkable.

• Ensure your accounts are well managed.
• Invoice and follow up on time.
• Stick to what you good at and delegate the rest.

Ja, and don’t do your books on Excel, if at all possible.

As?Andrew?has said, “profit is a choice”. This choice relies on sound financial decision-making. Over the next few weeks, we’re going to teach you some of the tricks, hacks, tips and techniques that will turn your own business around - or at least set you on the right direction.

If you have similar challenges relating to finance and cashflow, please let us know. After a fascinating discussion with Paul Keursten and Selebogo Molefe in JHB last week (check out the video?here), we’re moving to CPT for our next community gathering?on July 26th.

We’re busy collating questions, stories and comments for our next two guests, Uwais Asmal from Outsourced CFO and Andrea Klassen from Bayport Financial Services. Now that lockdown restrictions are lifted, we have tons of free in-person tickets for platform members, community members and newsletter subscribers.

If you’d like to join us for a glass of Backsberg Merlot and some world-class networking,?email your questions?for our guests to my colleague Zsu asap. She’s behaving like Oprah with a bag of presents on her birthday. Do it now and Zsu will send you free seats, gratis. You can also use the promo code HC2022-JUL26 at check out.

Peace.