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“Clients in financial strife
– innovative ways of helping them help themselves”
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An introduction to a new way of thinking
In today’s presentation we will cover
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An introduction to a new way of thinking
Tips on getting into a small business owners world
In today’s presentation we will cover
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An introduction to a new way of thinkingTips on getting into a small business owners world
1. Think Simple
In today’s presentation we will cover
© Copyright – One Sherpa Pty Ltd 2010
An introduction to a new way of thinkingTips on getting into a small business owners world
1. Think Simple
2. Think Visual
In today’s presentation we will cover
© Copyright – One Sherpa Pty Ltd 2010
An introduction to a new way of thinkingTips on getting into a small business owners world
1. Think Simple2. Think Visual
3. Think Story
In today’s presentation we will cover
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Let me ask you three questions on numbers
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1. Why is it some people just don’t ‘get it’when it comes to the numbers of a business?
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2. Why is it that the finance people seem to have a different way of looking at things?
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3. Why is it that finance people make some things seem very complicated?
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Most small business owners feel like they’re chasing the money ALL THE TIME
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They have no financial context
from which to make their decisions
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As a result they have no way to make clear cut decisions nor measure how they’re really going
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They understand words and can use them quite forcefully
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But for many, numbers look like ants walking up a page
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Many small business owners walk around in a fog financially
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So how can accountants help them?
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We have to jump into their world rather than expecting them to jump into ours
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Most small business owners hate numbers and will do anything to try and forget them
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They normally trust their accountant but often have no idea what the numbers really say
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This is a golden opportunity to put that trust into effect and get them to help themselves
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However most small business owners see accounting as a cost and not a benefit so they’re always looking to minimize the accounting cost
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So they appreciate advice about helping themselvesParticularly because they often have no training in being a business owner
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They often ‘fall into a business’ with little knowledge on being a business owner
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Or have great technical skills
BUT does that make them a good business owner?
They may be excellent at their trade
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They may know the operational side of their business well BUT this is not enough to succeed as a business owner
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Business owners need a broader range of skills
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One of those broader skills is:
FINANCE
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Three tips on how to help small business owners with finance
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1. Think simple
2. Think visual
3. Think story
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1. Think simple
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One of the most famous advertisements
What was the tag line?
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Keep numbers really simple because …..
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Small business owners usually only focus on a few numbers
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The single biggest reason why small business owners fail is NOT because they fail to do a business plan
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It is because the business model which the plan is based on is completely flawed
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So helping business owners to understand the financial part of their business model
makes helping themselves possible
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There are many ways to think of business model but the simplest and best we’ve
found is to think of three parts
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Customer Value
Does the business earn enough margin after including a market wage for
the business owner
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Transaction Flow
Is there enough sales volume flowing through a business
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Money Flow
Is the working capital (inventory, accounts receivable
and accounts payable) the right size for the volume of the business
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Presenting these in a simple way will help small business owners because they can SEE what’s going on in their business
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Easy simple dials that can be understood intuitively
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There is a FREE tool available to do this at
www.oneminutebusinesscheckup.com
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2. Think visual
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Remember .. most small business owners see numbers as ants walking up a page
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Pictures , graphs and analogies help them understand what the numbers mean
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Presenting lots of graphs does not show the
WHOLE business
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One way of doing this is using a tool called
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It presents a profit and loss account, balance sheet and cash flow in the analogy of a fence
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This tool helps small business owners understand why they can be making great PROFIT but have no CASH to pay their TAX
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Traditional Reporting
OPENING
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Traditional Reporting
FOR THE PERIOD
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Traditional Reporting
CLOSING
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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
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A online version is available at www.onesherpa.com with FREE bronze membership
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3. Think story
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The numbers of a business always tell a story
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Getting a business owner to understand the story gets far more benefit for them than
being ANAL about the exact numbers
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Filing a TAX return on behalf of a client is completely different to telling a story about what’s happening in their business
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Business owners are most likely not worried about the last cent EXCEPT in relation to the accountants bill
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They want to know what’s going on so they can be more successful
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More successful in their eyes is often just more sales
SALES
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Tell them the story about their business model
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Put it in the three easy pieces
Customer Value
Money Flow
Transaction Flow
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Then they can help themselves by knowing WHERE to focus
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Remember you’re succeeding when they ask you questions
not the other way round
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The best measure of whether they’re helping themselves is the quality of questions they ask you when you are talking to them
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We have to jump into their world rather than expecting them to jump into ours
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1. Think simple
2. Think visual
3. Think story
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