Secret sauce for business success…

December 7, 2010 § Leave a comment

I recently read a book (Founders at Work, Jessica Livingston) about the early days of some well known web based businesses such as Blogger, PayPal, 37 Signals, Hotmail and Craigslist.

There were some interesting and consistent themes around the stories of success.

  1. Luck – in the right sector at right time
  2. The problem being solved was often satisfying personal need
  3. Founders recruited a quality team
  4. They had existing knowledge of sector
  5. Surprisingly, there was not a strong profit motive

There is no shortage of guidance on how to succeed, but these areas might provide some indicators.


Growing a finance function

December 7, 2010 § Leave a comment

You are growing your business, there are a lot of pressures – funding/product development/staff/revenue/cash to name but a few.

How should your business adapt to meet the needs of reporting your financial performance?

There is a form of life cycle that the accounting side of the business follows:

Stage Key influences Finance function
Pre trading, very early stage, just starting out. Cash is tight, hold on to it. Do it yourself.
Look at HMRC’s website.
Speak to an accounting contact for initial guidance.
Developing the business plan, starting to look for funding. Incurring costs. Need to tidy up accounts ahead of investment.
Get shareholdings straight for investment schemes such as EIS.
Preparation of forecasts for investors.
Things to think about:
– getting the business VAT registered
– basic quarterly management accounts

– check shareholding ok for EIS relief

– forecasts in shape

Funding received, pushing on for growth, taking on employees. Senior team focussed on the business not accounts.
Staff now need paid and possibly incentivised for joining.
Investors want to make sure their money is accounted for.
Office administrator does the basic bookkeeping.Outsource payroll – it can be a minefield, and is pretty cost effective when done by a third party.
Have an accountant in for 1-3 days a month to:

Prepare a budget and monitor management accounts against budget. Provide commentary to keep investors up to date.

Further funding rounds, business actively trading, moving towards or at profitability. Need to know if business is profitable/viable.
Continued investor review.
Ever larger team.
With the increased workload – bringing on a management accountant to look after the day to day finance function.
Senior level part time FD role also potentially needed to help with negotiations with investors/bank and to build credibility of the team.
Onwards and upwards – the business keeps growing Larger management team, more involved internal as well as external reporting requirements. Full time FD and management accountant/bookkeeper etc forming the finance function.

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