At last- UK Limited comes out of Recession!
Government statistics show that GDP in Q4 2009 grew by 0.1% (just about the smallest rise you could have)! But what does that mean for you and me as businesses and what does it mean for the population as a whole?
One swallow does not make a summer and 0.1% means that at very best what growth we have seen is fragile. Retail Sales were up in December but it remains to be seen whether this was just a pre Christmas spree based on special offers and getting in before VAT went back up to 17.5%.
There is of course significant capacity for growth where, for example, short time working has been used to avoid redundancies. There may not be much room left to accommodate a further period of the R word!
What isn’t going to happen? Well we are unlikely to see demand growing across the board-but it will increase in places and some businesses will need to look at how they can cope with the pressures of Growth! This of course is not always as easy as it first seems and neither is that big new contract being touted around. Of course it might just be the salvation for your business but the death knell for another. What if the buyer itself goes bust? Trade credit insurance can be used to protect against this but sometimes the premiums seem unrealistically expensive. On the other hand taken as part of a package with sales ledger based finance it can work out quite affordable.
Understanding all the risks in taking on a major new customer is always important. If they will become your largest customer in terms of sales volume how will you continue to service the rest of your customers? If the value in sales terms is high how does the margin you will make compare with those earned from other customers? What would happen if you gave up on your other customers and then lost the new big one? Can you share the work with someone else?
Having good quality financial information and not just data is a must and being able to interpret it is a must too. So is having a set of useful Key Performance Indicators so that you can readily measure how you’re doing and whether you are running according to plan. You do have one of those too don’t you?
Key Performance Indicators or KPIs are usually measurements of important activities so in a hotel, occupancy (percentage of rooms occupied) in an airline, load factor (percentage of seats occupied) in a professional practice, percentage of billable hours billed, in a garage workshop the percentage of available hours that have been charged to customers jobs etc. They may also relate to non financial measures such as the percentage of calls answered within four rings, or the percentage of orders received which have been fulfilled the same day.
Ask yourself the question-does my finance function add value to my business? It may need an overhaul or perhaps you need to develop some sensible KPIs that will work for you? Either way we can help and remember the old adage failing to plan is planning to fail.... If you want to review your options or update your plan, or if you would just like to chat through your thoughts, call me for a free meeting of up to two hours for Newsletter readers (usually up to an hour) on 07894 128876 or email me on:
jeremy.webb@webberyassociates.co.ukI hope to see or hear from you soon
Kind regards
Jeremy
