Finance assesment Lewis

Techniques for running a creative business All about the ﬁnance  Lewis Beaton 

My proposed name for my agency... (drum-roll) 

FICTIONAL TROUSERS   

I have been asked to look at the key financial processes involvedwith running a small business in the context of a communicationsagency, the directors are Lewis Carroll and L.S. Lowry     stop, we’ll have to get this baby off the ground. We needFirstsome dosh, a few Ronnie-rounds, some WONGA. How can weget this? Well as Mr Carroll and Mr Lowry have just risen fromthe dead, I’m assuming that we don’t have a huge amountof disposable income lying around. There are various ways anew business can get some start up capital:

Grants. These can come in all shapes and forms but often require alengthy application process. Enough of the negatives, wedon’t have to pay these sons-of-bitches back. Bonus. Thereare grants for small businesses in general, more for NGO’s.They may have a special grant for re-incarnated culturalicons, gotta be worth a punt innit?

Loans If we can’t get the Tories to give us any dollar, we will haveto go see Mr (w/)banker. We will have to get a businessplan together and will probably have to secureit against something.

Venture Capital This is funding specifically for small businesses. It generallyconsists of groups of big wigs* that will give us moneyto start our agency if we share it with them.*Elton John is on every Venture Capital panel in the world.  

Bootstrapping This is a method of funding that requires no debt. We doa small amount of work for a client to get some money,and then we build our business bit by bit by bit off theback of each piece of work.

Once we have set up our little hot bed of awesomeness, thereare three main financial processes that we need to be mindfulof to keep the cash flowing, to keep our agency profitable andto keep out of Darth Lord Sorrel’s pocket.

Cash-in This is money that’s actually come into our account, thiswill be from retainers (resource package fees), and theprevious months invoices that have just been paid. Thismoney may also be from things like licence fees onproducts or ideas that we have developed with clients,(like the augmented reality bacon sandwich) we mayalso get a share of royalties on any music that has beencreated for our advertisements. There will be a target forcash-in every month that our finance rottweilers will betasked with chasing it up.

Cash-Out Money that has to go out to our creditors. This iseverything from the gas bill and public liability insuranceto crack and hookers for schmoozing clients.Technology will also cost a fortune as we will obviouslybe needing the shiniest Apple products. We will alsohave to pay our staff, art directors get twice as much ascopywriters, and four times as much as planners. Thesuits get a paid based on a hotness scale. We have tomake sure that cash-out is lower than cash-in to remainprofitable. We will try and keep this as low as possible bygetting our finance monkeys to fanny about and takeas long as possible to pay every invoice.

Charge-out Charge-out is when we send invoices out to clients for ourbrilliant services. This helps us to forecast how much cash-inwe will be getting in the coming months, and find outwhether we will have to sack any of the less attractive suits.There will be a target for charge-out every month that oursales rottweilers will be tasked with chasing.

New-Creditors This is the opposite of charge-out, it’s when people are askingus for money. We need to know this stuff so that we canfigure out if we will be in profit in the coming months, againwe want to keep those hotties. We will pretend to have notreceived any invoices for at least two weeks in order to keepthat money in the bank for as long as possible.

This >me next year we will be millionaires. 

Finance assesment Lewis

by lewisbeats on May 12, 2011

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