Noella Carroll: Managing Director Pinnaklo Ltd
For a business to grow while maintaining the bottom line, I do believe that you need to put your attention to 5 key pillars, it’s what I focus on with my with clients continuously.
- Work on your long-term financial plan
- Manage your cash well
- Focus on Marketing the business and “business development” also.
- Preparing your accounts for new debt
- Having an engaged and committed senior management team
3 – 5-Year Financial Plan:
This long-term financial plan should be a live document which is updated quarterly/bi-annually to ensure the profit anticipated is realistic based on the latest plans for growth. This forecasting model should tie into the cash forecasting model, so they are interconnected and produce consistent data that decision making can be derived from. The plan needs to clearly specify the growth in revenue goals but also the profit goals, it must be recognised that to grow you need to invest which may temporarily impact profit, this is ok if it achieves the goals and you can see through the plan that the profit will recover, this is what is most important about the financial plan if you want to achieve the growth and keep the profitability level then both goals need to be clearly defined as the growth plan that the management team needs to support including the dip which is a reality when you invest.
Maintaining comfortable cash levels is critical when growing your business, you don’t want to waste valuable time managing a difficult cash situation when you have more important things to be doing. Cash forecasting models based on historical cash activity, management of monies owed, negotiating with suppliers on payment terms are activities that can be implemented to manage cash better.
Marketing and Sales Plan:
The foundation of the planning process are good inputs, whether it be through new service or products, acquisition, market share or other you determine how you are going to grow your business the ‘growth’ piece needs to be sound in estimates and have good basis which can be relied on.
Preparing Your Accounts for New Debt:
To support growth, you may need to seek debt financing, your lender will need to see a historical trend of good profitability, cash management and a strong balance sheet. It may take some time to bring the financial statements to a positive place to support approval for new debt by a lender, bear this in mind this as you plan for growth.
Your Management Team:
An engaged & committed management team is critical. This team need to support the decisions to be made to achieve on the plan, diverting from the plan and activity outside the plan can jeopardise the goal achievement of the plan.
If I can assist you in any way to deliver on your company goals then reach out to me. Noella