Financial

Management

Reinhard Werner & Mark Kwami

What is the current financial position of your business?

• What is your monthly/annual turnover?

• Is your business growing?

• Stable?

• or contracting?

What is the current financial position of your business?

• Is your business PROFITABLE?

• Profitability is more important than turnover or growth!

• But how do you become profitable?

How do you determine if your business is profitable?

How do you determine if your business is profitable?

Revenue (Income)

minus

Expenses (Costs)

=

Profits

It is important that you monitor the profitability of your business.

Tools: Simple balance sheet to monitor your monthly performance ?

List all your Sales

List all your Expenses

(Sales-Expenses=Profits)

Tools: Simple balance sheet to monitor your monthly performance ?

Sample of excel based Performance Sheet

Chart showing income against costs

Chart showing income 2010 compared to 2011

Chart showing revenue generated in different markets

(Retail, Wholesale, Exports)

Role of accountants in your business

• Importance of having a good accountant

• Accountants are like the Doctor in your business!

• Give early Alarm if things are not going well.

• Translate the jungle of figures into simple comprehensive information on the financial health of your business.

• Probably the most important person in your business!

Role of accountants in your business

• No need to have full time accountant

• Part time should be enough for most businesses

• Make sure to brief them and tell them what you want from them!

• Make them generate simple monthly reports (simple charts and tables) that allow you to see the health of your business at a glance.

• Instruct them to make you aware of unusual developments

CBI Indicators Monitoring Sheet!

Importance of setting targets

• Setting targets makes you more focused!

• Stops you from operating under the principle of “HOPE!”or “Wait and See”!

Setting targets

• What is your forecasted turnover for this year?

• What % growth have you forecast for this year?

If yes,

• How are you going to reach your targets?

• What do you need to invest to reach these targets?

Reviewing and evaluating your performance

• Need to monitor and evaluate your targets!

• Did you succeed in achieving your targets?

YES? or NO?

“If yes! Why? What were the reasons for your success? Try to build on these in future.

“If not! Why? What went wrong? What can you do to avoid repeating these in future?

Importance of strategic planning

• What is a Business Plan?

• Why do companies need a business plan?

Business Plan

• Where do you want your business to be in 1 year from now?

• Where do you want your business to be in 5 years from now?

• What do you need to do to achieve these goals?

• How are you going to finance these goals?

• What will be the return on your investment if these goals are achieved?

Now?

Where am I today?

Where?

Where do I want to be in

5 years?

Business Plan

• How do I get there ?

• Why do I want to get there? (opportunities, objectives)

• What do I need to do to get there?

• What are the risks involved?

(how do I safe guard myself from these risks?)

• How much do I need to invest?

How?

Why do you need a Business Plan ?• To get loans from a bank?

• To attract investors?

• To attract government or donor support funding (grants, soft loans, business development support etc.)?

Business Plan• Planning the way forward

for your business can be complicated

• A Business Plan is a “Road-Map” which helps you navigate your business so as to reach your goals

• It helps you to remain Focused and prevents you from getting off-track

Why do you need a Business Plan ?

..... A business plan is not just important for attracting investment into your business!....

.....it is your personal “Road-Map” to a successful implementation of your business idea.

* You need to review your business plan in regular intervals; - are you still on track? - Have you achieved your goals? - If not, why & What went wrong? - What do you need to do better? - Is there a need to adjust your business plan to avoid such

mistakes in the future?

Summary:

• Important to better understand the financial side of your business

• Important to understand the process of costing and pricing

• Profitability

• Important to have an overview of income and costs

• Setting financial targets

• Analysing financial performance

Summary:

• Get your accountants to work for you!

• Be strategic

But remember......

• Your business is not run in isolation?

• There are many outside factors that have an influence on your business!

• It is important that you show interest in those factors that influence your business.

• Keep your eyes open and keep updated on domestic and global developments.

• This can help you anticipate effects on your business and allow you to take the necessary actions.

Summary:

Thank You!