Clients in Financial Strife - innovating ways of helping them help themselves

© Copyright – One Sherpa Pty Ltd 2010

“Clients in financial strife

– innovative ways of helping them help themselves”


An introduction to a new way of thinking

In today’s presentation we will cover


An introduction to a new way of thinking

Tips on getting into a small business owners world



An introduction to a new way of thinkingTips on getting into a small business owners world

1. Think Simple




1. Think Simple

2. Think Visual




1. Think Simple2. Think Visual

3. Think Story



Let me ask you three questions on numbers


1. Why is it some people just don’t ‘get it’when it comes to the numbers of a business?


2. Why is it that the finance people seem to have a different way of looking at things?


3. Why is it that finance people make some things seem very complicated?



Most small business owners feel like they’re chasing the money ALL THE TIME


They have no financial context

from which to make their decisions


As a result they have no way to make clear cut decisions nor measure how they’re really going


They understand words and can use them quite forcefully


But for many, numbers look like ants walking up a page


Many small business owners walk around in a fog financially


So how can accountants help them?


We have to jump into their world rather than expecting them to jump into ours


Most small business owners hate numbers and will do anything to try and forget them


They normally trust their accountant but often have no idea what the numbers really say


This is a golden opportunity to put that trust into effect and get them to help themselves


However most small business owners see accounting as a cost and not a benefit so they’re always looking to minimize the accounting cost


So they appreciate advice about helping themselvesParticularly because they often have no training in being a business owner


They often ‘fall into a business’ with little knowledge on being a business owner


Or have great technical skills

BUT does that make them a good business owner?

They may be excellent at their trade


They may know the operational side of their business well BUT this is not enough to succeed as a business owner


Business owners need a broader range of skills


One of those broader skills is:

FINANCE


Three tips on how to help small business owners with finance


1. Think simple

2. Think visual

3. Think story


1. Think simple


One of the most famous advertisements

What was the tag line?


Keep numbers really simple because …..


Small business owners usually only focus on a few numbers


The single biggest reason why small business owners fail is NOT because they fail to do a business plan


It is because the business model which the plan is based on is completely flawed


So helping business owners to understand the financial part of their business model

makes helping themselves possible


There are many ways to think of business model but the simplest and best we’ve

found is to think of three parts


Customer Value

Does the business earn enough margin after including a market wage for

the business owner


Transaction Flow

Is there enough sales volume flowing through a business


Money Flow

Is the working capital (inventory, accounts receivable

and accounts payable) the right size for the volume of the business


Presenting these in a simple way will help small business owners because they can SEE what’s going on in their business


Easy simple dials that can be understood intuitively


There is a FREE tool available to do this at

www.oneminutebusinesscheckup.com


2. Think visual


Remember .. most small business owners see numbers as ants walking up a page


Pictures , graphs and analogies help them understand what the numbers mean


Presenting lots of graphs does not show the

WHOLE business


One way of doing this is using a tool called


It presents a profit and loss account, balance sheet and cash flow in the analogy of a fence


This tool helps small business owners understand why they can be making great PROFIT but have no CASH to pay their TAX


Traditional Reporting

OPENING



FOR THE PERIOD



CLOSING


EQUITY

COSTOF INTERACTION

NETPROFIT

MOVEMENTIN WORKING

CAPITAL

CONTRIBUTIONMARGIN

INFRASTRUCTUREEXPENSES

OPERATING CASH FLOW

MOVEMENTIN FIXEDCAPITAL

NET PROFIT

NET CASHFLOW

BALANCE SHEET“AS AT”

PROFIT & LOSS ACCOUNT“FOR THE PERIOD”

CASH FLOW STATEMENT“FOR THE PERIOD”

THE FINANCIAL FENCE ®

SALES

FIXED CAPITAL

WORKING CAPITAL

BALANCE SHEET“AS AT”

DEBT

EQUITY

FIXED CAPITAL

WORKING CAPITAL

DEBT


A online version is available at www.onesherpa.com with FREE bronze membership


3. Think story


The numbers of a business always tell a story


Getting a business owner to understand the story gets far more benefit for them than

being ANAL about the exact numbers


Filing a TAX return on behalf of a client is completely different to telling a story about what’s happening in their business


Business owners are most likely not worried about the last cent EXCEPT in relation to the accountants bill


They want to know what’s going on so they can be more successful


More successful in their eyes is often just more sales

SALES


Tell them the story about their business model


Put it in the three easy pieces

Customer Value

Money Flow

Transaction Flow


Then they can help themselves by knowing WHERE to focus


Remember you’re succeeding when they ask you questions

not the other way round


The best measure of whether they’re helping themselves is the quality of questions they ask you when you are talking to them


We have to jump into their world rather than expecting them to jump into ours


1. Think simple

2. Think visual

3. Think story


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succeed and prosper

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