INSIGHTS
Can a quote template help with your project profitability?
Lots of useful things can be built with a simple Excel template and some basic Excel skills. One of them is a quote template that helps you quote a price to your client that safeguards your profit margins. Even if your clients are used to you quoting a fixed price for...
Why SMEs need more financial management and how to achieve it
You may be thinking you are too small to make sense of your numbers on budgets and forecast and financial management is not for you. Maybe when you grow bigger. But not yet. Aside from the fact that financial management is a pillar of growth, there are other reasons...
Profit drivers for architecture & design companies
Every industry has specific profit drivers that determine the efficiency of delivery and impact how much is available for overhead budgeting. For Architecture and Interior Design companies, similarly to other creative industries, the main profit driver is the ability...
The Importance of Cost Variability in Small Business – Indirect Costs
When things don’t go as planned for your business, and you cannot do much about your income, be it as a result of a global downturn or a local demand shortage, it’s time to look at your costs. There are two types of costs or expenses in your business that serve two...
The Importance of Cost Variability in Small Business – Direct Cost
Here is a scenario: your last year revenues were 12% less than projected and expenses were 7% less than expected too. Good. You managed to save some margin, no matter how small. However, if this trend continues - revenue going down faster than expenses - you will run...
Financial and data analysis – what’s in it for me?
I am glad you asked. You see, big publicly traded companies must report their numbers in detail. It is a legal requirement. But behind the scenes, there is an army of people dissecting, summarising and reporting to the management to help them monitor the course and...
What to think when you think about debt
The whole point of a business is to make money to cover its costs, including your staff and yourself, and ideally something extra to be reinvested or given back to you, the owner(s). But that does not always happen, does it? Some years the revenues are not enough for...
Legacy Clients
Business assumptions and habits are often legacies of the past. You do things the way you do because on day one you had a problem you had to solve and that is how you solved it. They have now become your status quo. Could you change them? Maybe. Should you change...
Legacy Structures
Today’s problems were yesterday’s solutions. Many of the things you do every day in your business, assumptions you make and decisions you evaluate positively, are legacies of the past. You are doing them the way you do because on day one you had a problem you had to...
3 Things You Might Not Know About Your Business
You started a small business, or you manage one today. You know everything there is to know about it. Or do you? Let’s explore three aspects of your business that you may have not thought about. These are: who you have become in your clients’ perception, who your real...
Time for Monthly Cashflow Projections
September is here, things are still looking weird, so now it’s the time to switch to emergency short-termism. In other words, cashflow monitoring on a monthly basis. Whether or not you have done what we suggested previously, or you have a sensible income and expenses...
Consulting principles – what to expect when working with Profitable Insights
I help clients’ businesses become more profitable, using financial and management accounting amongst other things. I use some principles to guide my advice which I think are valid, no matter who you are, or the type of business you are running. In my experience, if...
Scaling up through people
Scaling up in the right way is the key to the growth of your business. In B2B professional services, your growth capacity lies in your people’s skills. Unfortunately, scaling up through people is the most difficult thing to get right. You are dealing with the most...
Scalability criteria
In the area of professional services, scaling up in the right way is the key to the growth of your business. Here we refer only to B2B businesses, i.e. when you sell your services to other companies. You won’t find a single recipe for how to scale up, because it...
Three pitfalls reframed
When you meet a lot of people from the same professional group, you end up hearing some similar stories. In the area of professional services, we have met enough small business owners to be able to identify a number of shared experiences. Their success stories differ...
When in doubt, ask your clients
In collaboration with Jeanne Monchovet (http://www.olystix.com/)Small business selling to other businesses (B2B) do not do regular and consistent client interviews to check their service level and get feedback. The feedback they get is mostly based on a couple of...
Stepping up the costs
As usual, we’re talking here about small businesses in professional services, because we like to help them grow and thrive. Their usual pattern is to start life in the entrepreneur’s own home, then move out to an office, and then to a bigger office. Every step up...
Should I move offices?
As usual, we’re talking here about small businesses in professional services, because we like to help them grow and thrive. Their usual pattern is to start life in the entrepreneur’s own home and then move out to an office. But when is a good time to move to an...
Don’t brainstorm your strategy
Exciting consultants are like fortune tellers. They take a quick look at your market, cast a brief glance over your competitors, interview a couple of people in your organisation – and then, using their mysterious powers, they tell you what your future looks like....
Your business is bigger than you are
Here’s the scenario. You started your business some time ago, before or during the last recession; you heroically survived cash shortages at the beginning and have personally shouldered every burden ever since. You mainly sell services in a knowledge-intensive...
Who is showing you the money?
Here’s the scenario: you have a business in professional services and employ a number of people. You’ve been successful for a while and are still growing steadily. One of your employees has the role of ‘finance and admin manager’, and this person is someone you trust...
Hire for cost or hire for skills?
In the world of professional services, some entrepreneurs in charge of small businesses are in the habit of hiring young and inexperienced people as part of their growth strategy. They always envisage finding someone who’s talented, eager, bursting with potential –...
Telling the time
A lot of entrepreneurs do their own calculations, which often means making very simple, rule-of-thumb estimates. If a consultant starts poking their nose into such estimates, won’t it undermine an entrepreneur’s ability to make quick decisions? This wish to avoid...
When percentages rule
Here’s the scenario: your business is a knowledge-intensive professional services company. Let’s say you teach whale-spotting skills to corporate employees in London. Either you employ specialised staff or you outsource delivery to them. As part of the service you...
Be aware of your own habits
If you’re a small business owner and you find yourself stuck in a no-growth path, it might not be the market that’s to blame. If your costs are too high or your team isn’t delivering as expected, doing what you do best could actually be your downfall. Marketing people...
Misleading Reports
When you are the owner of a business, even if it is just a small business, how you look at the data and which information you use in your decision making is key to the health of your business. You do collect data, whether you are aware of it or not, and you do use...
Should I project revenue growth?
Assuming you are making financial projections regularly for the professional services business you own and manage, should you project an increase, no increase, or less every year? Most entrepreneurs have a habit of projecting higher revenue year on year. It makes...
Should I hire a sales person?
Let’s assume that you, the owner of the business, have been doing all the sales so far. You have grown as far as you could, your responsibilities have multiplied and you need to manage your team. So you no longer have the time to run after new deals. And you believe...
Why do you need projections?
You are the owner of a small business with a great team and things are going well. You have a fairly good idea of what lies ahead. Why do you possibly need financial projections? A projection is something that only the bank wants to see or big corporates need in order...
How do I grow further?
Growth can mean many things and can come from many directions. The easy route: increase the value offered to your existing clients and get more business from them. Why is this easy? Because you need to know your clients inside out and have great relationships with...
Time horizon to monitor
You could easily have a decade span of information monitored in your reports. You can keep along the last 3 to 5 years of finance and project for the next 3 to 5 years. That is a good span of information to help you in your short and long term decisions. Misleading...
Integrated profit and loss comparisons
Keep comparisons with previous years in a clean integrated spreadsheet that includes the profit drivers you want to monitor. You can visualise it quarterly, bi-annually or annually, depending on your seasonality. Do not start your spreadsheets brand new each year and...
Direct costs (or COGS) comparisons
Keep reports on variations of your categories of expenses that form your Direct Cost. That is your first key to ensure the profitability of your service and you want to know how things have changed over time. The changes in your cost of unit can tell you whether you...
Cash flow reports
Your cash flow is important as a projection for future, not as past information. You don’t need to maintain cash flow statements year on year. You could keep ageing reports, such as Average Days Outstanding and reports on percentage of revenue that you cash in over...