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The 5 Minute Finance Director

5 minutes to save money, gain critical insights and plan for the future? Seems way too good to be true doesn’t it?

Well, if you’re reading this and you’ve started up your own agency this is very possible. Even easy.How? Here goes.

You’ve probably made the decision to use a cloud accounting solution like FreeAgent or Xero. You may even have some external bookkeeping help from an accountant.

What I want to show you is how, in 5 minutes, you can work out a Finance Director insight yourself. You’ll save yourself money. You’ll understand how your business is doing and you’ll even begin to work out the big “What if” question when it comes to hiring the next employee.

How do you do this? Simple – you work out your revenue per head. For the month you’re in take your revenue, divide by your headcount and multiply by 12 and you’ve got your annual revenue per head. For the year to date performance take the cumulative revenue do the same calculation but divide by the number of months into the year you are.

Simple calculation but profound insight. If you know how much you should be generating you’ll have an insight into either how busy you are or how efficient (or not) you are at turning your team’s time into revenue.

For what you should be generating take your headcount and multiply by your daily rate(s) and by the number of working days in the month (or you can assume 20%) and finally by how much client work (as a percentage) you expect to do. This is a snapshot of your commercial model.

If you’re busy and your revenue per head is above target and you have a healthy pipeline then the next big step of taking on another employee is a little more comfortable.

If you’re not busy and your revenue per head is well below target unless you have a healthy pipeline you may have too many in your team already.

Now whilst there is still a vital role for consultants like me in looking at why the revenue per head is where it is and what you can do about it you can save yourself money in the vital early stages by looking at your business in this simple, insightful way.

If you’d like to build on this knowledge to manage your Agency better then you can sign up to order my forthcoming book “A Short Guide to Agency Finances” at www.novemberfriday.wpengine.com

 

 

 

 

 

 

 

 

 

Accounting for Start Ups has never been easier but there’s still a vital role for a Finance Director

One of the many pleasant surprises I’ve learnt over the past 18 months or so as a freelance Finance Director is how much online accounting systems have moved on.

I’ve always counted my blessings I’ve worked more in Excel than Kalamazoo. The speed, ease and accuracy with which you can manipulate data has taken a lot of the drudgery out of the FD role.

The explosion of new, simple and exceptional value online products such as Xero, FreeAgent and KashFlow has had the same effect on accounting systems for the start-up entrepreneur. They enable anyone’s accounts to be on a robust platform from day 1.

Being able to log on wherever you are to check on the cash position or raise an invoice for work you’ve just done makes accounting easier, flexible and more relevant.

So far, so bleak for the accountant whose role could be marginalised to the annual accounts and tax computation. However there is a real opportunity for the Finance Director to become a trusted business advisor.

Naturally I’m a little biased here but no matter how simple and easy it is to process transactions or pay suppliers there is always going to be an important role for an FD who can explain not only why the numbers are what they are and ways they could be improved.

It is this added value role which can’t be replaced (yet) by software. In fact having the right software at the right time and cost should mean the time saved on the more day to day functions should mean a greater focus what the numbers mean.

Getting that advice and insight in a cost effective package is what I’m about. One of the things that can improve the chances of a small agency surviving and thriving is getting good, practical advice from an experienced, flexible and cost effective Finance Director. If this sounds interesting contact me.