The importance of knowing your numbers!!

A year or so ago we took on a new client in the middle of a messy and incomplete Sage to Xero migration. Partial conversion from an unreconciled balance sheet with 9 months unreconciled backlog and year end accounts due soon…
The previous accountant’s draft figures for the year were £200k loss and a horribly overdrawn directors loan account. Ouch.
We helped the client find their profit path.

1. Vision. We spent time with the client getting to know them and understanding what they wanted for their business and what they wanted for themselves.

2. Books. We fixed their books and set Xero up properly so they can track everything and I mean everything. If you can measure it, you can manage it.

3. Profit. We set up monthly management accounts so they understood what their business was trying to tell them. We look at margins, we look at revenue streams and of course – profitability. We accrue corporation tax to date and measure directors loan coverage monthly.
4. Cash. Having accurate up to date accounts helped them track their cash properly and keep on top of their receivables. More cash is collected faster giving them more working capital to play with.
5. Systems. We helped them automate and streamline with new financial systems – add-ons integrating with Xero – so they could do more in less time and delegate some of the work to other team members.
6. Scale. We built forecasts for them and mapped out funding requirements for profitable growth for the next 3 years which helped them get the CBILS loan that they needed to find the growth. They got the money and invested to plan. They moved premises, took on more staff, bought more assets – taking advantage of the 130% super deduction – and they scaled. As profits grew they bought a fleet of Teslas for their management team!!
7. Take Home Pay. The director now takes a £10k monthly dividend, plus his directors’ salary plus his Tesla. It’s always a Tesla. Our clients are obsessed with Teslas!! Next we will look at how much he should be putting into his pension before the end of this tax year .
From £200k annual loss to £200k monthly taxable profit.
Yes monthly!!
In less than 2 years!!!!
That’s the importance of knowing your numbers, having a plan and taking informed profitable action!!

This is what we do for our Caseron clients, and what we teach in our Profit Hackers Member’s Club.

Isn’t it time you joined us?
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