Does your business budget reflect your business goals?

It’s worth remembering among all the hype and hurried analysis of the Government’s budget that the most important budget for your business hasn’t just been pulled out of that famous briefcase: it’s the one that’s setting your spending priorities day to day.  Just as we can tell a lot about the government’s priorities and real message from the budget changes, it’s our own businesses’ spending priorities that tell a lot about what our priorities really are.

A great practice for any small business is to take a full and proper look at the whole budget – not just the tweaks and headlines. To do this, you’ll need to ensure that you’ve covered each of the following five areas:

1) Know what you’re spending, and on what. It’s easy to keep a track of spending on big ticket items like salaries, and rent and bills with key suppliers, but while those transactions might be clearly visible,  it’s important to keep tabs on other spending in the business, such as travelling, entertaining, telecoms and IT. These are all costs that are easy to take on without really realising the impact on the big picture and it’s crucial that you have a clear and up-to-date picture of where things are. For most small businesses, keeping management accounts can and should be a simple operation. It might be achievable with a spreadsheet, but more often than not, one of the many bookkeeping software tools around can act as your point of reference for tracking spending and can join up your payroll, invoicing and staff expenses activity in one place.

2) It’s then essential to classify your spending – to know where the money is really going. Rather than just accepting generic categories, make sure that you pick what is right for your business. Sales and marketing might be one budget or might be separate activities needing their own budgets. Team members might originally be allocated to one area of the business but then move to work somewhere else. Ensure that you have the right labels on all your expenditure and be prepared to make judgement calls to represent things correctly. For example, your phone bill might be an admin cost, but if 80percent of charges are from outbound marketing calls, that’s how the cost should be accounted for.

3) Before looking at the results of 1 and 2, you need to look at strategy – what activities and numbers are important for your business? Are you focussed on growing your turnover as quickly as possible, or on maximising profit from your most important product or service? It’s worth thinking about this in budget terms and considering what percentage of your effort you feel you should be pushing to a particular area, whether this be marketing, sales, operations, support or admin.

4) Now comes the moment of truth, where you bring together your priorities and your strategy with where your money is going. The chances are that they won’t line up. All businesses evolve over time as markets change and products and organisations mature. Businesses that can adapt and spend their resources in a way that aligns with their strategy will outperform those that don’t every time.

5) Finally, you have to follow through on all of the findings. Your budget might show that you need to spend less in one area and more in another to ensure the health of the company, but it’s not as simple as waving your briefcase like a magic wand. You will need to engage your colleagues with changes in how the business operates – perhaps quite major ones – and it can be just as intimidating to have ones budget trebled as it can to have it slashed. Your budget might require that team members are assigned to different roles in order for the business to improve its performance, so once you’ve set out your own budget, that’s when the work really begins.

Re-posted from SME Insider 8th July 2015

Storytelling for startups

As you might have spotted from the gap between posts – or from the content of my last post, recent weeks have taken me on the road much more than at any time in previous weeks.

I often find that there’s useful downtime to be had when travelling away from home, and when perhaps unexpected delays open up some time with nothing obvious to fill it.

It was in one of these gaps that I got to thinking about storytelling and how important it becomes to businesses very quickly.  Over recent months, my own small startup has come out from behind closed doors and launched new features and new sites into three different countries.  The upshot of all this is that our team have been on the road a lot more and so good communication is key to keeping everyone pointed in the right direction.

With this in mind, as a team we’ve scheduled a couple of days this week to get together away from the office and take a look at where we are at the mid-year point and make sure that we’re all clear on where our overall strategy is heading and the course corrections that we’ve made so far this year.  I’ve struggled to work out how to convey complexity and depth of what we’re doing in a way that’s easy to share across out team, but found some help by looking at how brands use storytelling to weave together a compelling narrative out of a complex topic in a way that helps us to make sense of it.  I’m really pleased with how this has turned out so wanted to share it here now that my team have taken a look – the idea here was to recap with the team on the key highlights of the last few months and at the same time to convey the feeling of what it’s been like.

On the road

Today I’ve arrived in Amsterdam for the first day of The Next Web.

Today was the first time that I’ve really taken the business that I’ve been working on for more than a year now out in public to show what it can do and start to get some feedback.  Launching something is always an exhilarating experience, so whatever knocks come along the way, it’s great to celebrate getting something shipped – out the door – and in the hands of customers.

Today’s a big day for me, so I put together a video.  I hope you enjoy it!

What happens when an AI runs your finance function?

HalAs a small business – in fact as any kind of business – we get used to more computerisation and more automation.  But computers are now starting to interact directly with our customers and suppliers on our behalf, and whether we like it or not this forces us to think hard about how we embed the brand and the values of our business into the rules that drive the systems that run parts of the business day to day.

In my work with my team at Ormsby Street, I’ve seen how analysis of data can lead to better decision-making about one-area – cash flow, and I’m very much hoping to have the chance to reveal the first iteration of how that looks at TheNextWeb conference in Amsterdam on 23rd April.  But in the meantime, whilst the programmers at Google figure out how to let cars make decisions about where to drive – and how safely to do it – let’s get used to thinking about that question as it applies to the jobs we do and the businesses we work in.