Clients in Financial Strife - innovating ways of helping them help themselves

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National Institute of Accountants Public Practice Symposium
May 2010

Published in: Business, News & Politics
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Clients in Financial Strife - innovating ways of helping them help themselves

  1. 1. “Clients in financial strife – innovative ways of helping them help themselves” © Copyright – One Sherpa Pty Ltd 2010
  2. 2. In today’s presentation we will cover An introduction to a new way of thinking © Copyright – One Sherpa Pty Ltd 2010
  3. 3. In today’s presentation we will cover An introduction to a new way of thinking Tips on getting into a small business owners world © Copyright – One Sherpa Pty Ltd 2010
  4. 4. In today’s presentation we will cover An introduction to a new way of thinking Tips on getting into a small business owners world 1. Think Simple © Copyright – One Sherpa Pty Ltd 2010
  5. 5. In today’s presentation we will cover An introduction to a new way of thinking Tips on getting into a small business owners world 1. Think Simple 2. Think Visual © Copyright – One Sherpa Pty Ltd 2010
  6. 6. In today’s presentation we will cover An introduction to a new way of thinking Tips on getting into a small business owners world 1. Think Simple 2. Think Visual 3. Think Story © Copyright – One Sherpa Pty Ltd 2010
  7. 7. Let me ask you three questions on numbers © Copyright – One Sherpa Pty Ltd 2010
  8. 8. 1. Why is it some people just don’t ‘get it’ when it comes to the numbers of a business? © Copyright – One Sherpa Pty Ltd 2010
  9. 9. 2. Why is it that the finance people seem to have a different way of looking at things? © Copyright – One Sherpa Pty Ltd 2010
  10. 10. 3. Why is it that finance people make some things seem very complicated? © Copyright – One Sherpa Pty Ltd 2010
  11. 11. © Copyright – One Sherpa Pty Ltd 2010
  12. 12. Most small business owners feel like they’re chasing the money ALL THE TIME © Copyright – One Sherpa Pty Ltd 2010
  13. 13. They have no financial context from which to make their decisions © Copyright – One Sherpa Pty Ltd 2010
  14. 14. As a result they have no way to make clear cut decisions nor measure how they’re really going © Copyright – One Sherpa Pty Ltd 2010
  15. 15. They understand words and can use them quite forcefully © Copyright – One Sherpa Pty Ltd 2010
  16. 16. But for many, numbers look like ants walking up a page © Copyright – One Sherpa Pty Ltd 2010
  17. 17. Many small business owners walk around in a fog financially © Copyright – One Sherpa Pty Ltd 2010
  18. 18. So how can accountants help them? © Copyright – One Sherpa Pty Ltd 2010
  19. 19. We have to jump into their world rather than expecting them to jump into ours © Copyright – One Sherpa Pty Ltd 2010
  20. 20. Most small business owners hate numbers and will do anything to try and forget them © Copyright – One Sherpa Pty Ltd 2010
  21. 21. They normally trust their accountant but often have no idea what the numbers really say © Copyright – One Sherpa Pty Ltd 2010
  22. 22. This is a golden opportunity to put that trust into effect and get them to help themselves © Copyright – One Sherpa Pty Ltd 2010
  23. 23. However most small business owners see accounting as a cost and not a benefit so they’re always looking to minimize the accounting cost © Copyright – One Sherpa Pty Ltd 2010
  24. 24. So they appreciate advice about helping themselves Particularly because they often have no training in being a business owner © Copyright – One Sherpa Pty Ltd 2010
  25. 25. They often ‘fall into a business’ with little knowledge on being a business owner © Copyright – One Sherpa Pty Ltd 2010
  26. 26. They may be excellent at their trade Or have great technical skills BUT does that make them a good business owner? © Copyright – One Sherpa Pty Ltd 2010
  27. 27. They may know the operational side of their business well BUT this is not enough to succeed as a business owner © Copyright – One Sherpa Pty Ltd 2010
  28. 28. Business owners need a broader range of skills © Copyright – One Sherpa Pty Ltd 2010
  29. 29. One of those broader skills is: FINANCE © Copyright – One Sherpa Pty Ltd 2010
  30. 30. Three tips on how to help small business owners with finance © Copyright – One Sherpa Pty Ltd 2010
  31. 31. 1. 2. 3. Think simple Think visual Think story © Copyright – One Sherpa Pty Ltd 2010
  32. 32. 1. Think simple © Copyright – One Sherpa Pty Ltd 2010
  33. 33. One of the most famous advertisements What was the tag line? © Copyright – One Sherpa Pty Ltd 2010
  34. 34. Keep numbers really simple © Copyright – One Sherpa Pty Ltd 2010 because …..
  35. 35. Small business owners usually only focus on a few numbers © Copyright – One Sherpa Pty Ltd 2010
  36. 36. The single biggest reason why small business owners fail is NOT because they fail to do a business plan © Copyright – One Sherpa Pty Ltd 2010
  37. 37. It is because the business model which the plan is based on is completely flawed © Copyright – One Sherpa Pty Ltd 2010
  38. 38. So helping business owners to understand the financial part of their business model makes helping themselves possible © Copyright – One Sherpa Pty Ltd 2010
  39. 39. There are many ways to think of business model but the simplest and best we’ve found is to think of three parts © Copyright – One Sherpa Pty Ltd 2010
  40. 40. Customer Value Does the business earn enough margin after including a market wage for the business owner © Copyright – One Sherpa Pty Ltd 2010
  41. 41. Transaction Flow Is there enough sales volume flowing through a business © Copyright – One Sherpa Pty Ltd 2010
  42. 42. Money Flow Is the working capital (inventory, accounts receivable and accounts payable) the right size for the volume of the business © Copyright – One Sherpa Pty Ltd 2010
  43. 43. Presenting these in a simple way will help small business owners because they can SEE what’s going on in their business © Copyright – One Sherpa Pty Ltd 2010
  44. 44. Easy simple dials that can be understood intuitively © Copyright – One Sherpa Pty Ltd 2010
  45. 45. There is a FREE tool available to do this at www.oneminutebusinesscheckup.com © Copyright – One Sherpa Pty Ltd 2010
  46. 46. 2. Think visual © Copyright – One Sherpa Pty Ltd 2010
  47. 47. Remember .. most small business owners see numbers as ants walking up a page © Copyright – One Sherpa Pty Ltd 2010
  48. 48. Pictures , graphs and analogies help them understand what the numbers mean © Copyright – One Sherpa Pty Ltd 2010
  49. 49. Presenting lots of graphs does not show the WHOLE business © Copyright – One Sherpa Pty Ltd 2010
  50. 50. One way of doing this is using a tool called © Copyright – One Sherpa Pty Ltd 2010
  51. 51. It presents a profit and loss account, balance sheet and cash flow in the analogy of a fence © Copyright – One Sherpa Pty Ltd 2010
  52. 52. This tool helps small business owners understand why they can be making great PROFIT but have no CASH to pay their TAX © Copyright – One Sherpa Pty Ltd 2010
  53. 53. Traditional Reporting OPENING © Copyright – One Sherpa Pty Ltd 2010
  54. 54. Traditional Reporting FOR THE PERIOD © Copyright – One Sherpa Pty Ltd 2010
  55. 55. Traditional Reporting CLOSING © Copyright – One Sherpa Pty Ltd 2010
  56. 56. BALANCE SHEET BALANCE SHEET “AS AT” “AS AT” THE FINANCIAL FENCE ® WORKING PROFIT & LOSS ACCOUNT WORKING CAPITAL “FOR THE PERIOD” CAPITAL COST CONTRIBUTION INFRASTRUCTURE NET SALES EXPENSES PROFIT OF INTERACTION MARGIN FIXED CASH FLOW STATEMENT FIXED CAPITAL “FOR THE PERIOD” CAPITAL MOVEMENT MOVEMENT NET OPERATING NET IN WORKING IN FIXED PROFIT CASH FLOW CASHFLOW CAPITAL CAPITAL DEBT DEBT EQUITY EQUITY © Copyright – One Sherpa Pty Ltd 2010
  57. 57. A online version is available at www.onesherpa.com with FREE bronze membership © Copyright – One Sherpa Pty Ltd 2010
  58. 58. 3. Think story © Copyright – One Sherpa Pty Ltd 2010
  59. 59. The numbers of a business always tell a story © Copyright – One Sherpa Pty Ltd 2010
  60. 60. Getting a business owner to understand the story gets far more benefit for them than being ANAL about the exact numbers © Copyright – One Sherpa Pty Ltd 2010
  61. 61. Filing a TAX return on behalf of a client is completely different to telling a story about what’s happening in their business © Copyright – One Sherpa Pty Ltd 2010
  62. 62. Business owners are most likely not worried about the last cent EXCEPT in relation to the accountants bill © Copyright – One Sherpa Pty Ltd 2010
  63. 63. They want to know what’s going on so they can be more successful © Copyright – One Sherpa Pty Ltd 2010
  64. 64. More successful in SALES their eyes is often just more sales © Copyright – One Sherpa Pty Ltd 2010
  65. 65. Tell them the story about their business model © Copyright – One Sherpa Pty Ltd 2010
  66. 66. Customer Put it in the three Value easy pieces Transaction Flow Money Flow © Copyright – One Sherpa Pty Ltd 2010
  67. 67. Then they can help themselves by knowing WHERE to focus © Copyright – One Sherpa Pty Ltd 2010
  68. 68. Remember you’re succeeding when they ask you questions not the other © Copyright – One Sherpa Pty Ltd 2010 way round
  69. 69. The best measure of whether they’re helping themselves is the quality of questions they ask you when you are talking to them © Copyright – One Sherpa Pty Ltd 2010
  70. 70. We have to jump into their world rather than expecting them to jump into ours © Copyright – One Sherpa Pty Ltd 2010
  71. 71. 1. 2. 3. Think simple Think visual Think story © Copyright – One Sherpa Pty Ltd 2010
  72. 72. To access a copy of this presentation go to www.onesherpa.com/presentations © Copyright – One Sherpa Pty Ltd 2010
  73. 73. This presentation has been brought to you by: An online global resource centre and membership community dedicated to helping small business owners succeed and prosper www.onesherpa.com © Copyright – One Sherpa Pty Ltd 2010

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