A financial coach can help your SME to negotiate the accounting trail more profitably.
People might say that numbers don’t lie but for small business owners, success can be buried in figures that aren’t thoroughly interrogated. Somewhere in between accounting software and a CFO, financial coaches are making a mark with businesses that are actively pursuing growth or simply looking for a fresh perspective.
For the past six years, Melissa Kirby, director at Sharpe & Abel, a nine-person legal firm, has engaged Anthony Luvisetto, CEO and founder of iCompass, to help her business thrive and take some of the stress out of its financial management.
She says that monthly consultations with Luvisetto pre-COVID had driven 35 per cent growth year on year and the company’s curve is again on the rise. She initially engaged Compass to forecast cashflow so she could put aside funds for employee superannuation and tax payments, as well as identify times of the year when there was money available to deploy towards expansion.
But most recently, with one valued lawyer in the firm planning to go on maternity leave, Kirby was concerned that, given Australia’s current skills shortage, she might have to cover the gap herself. Thinking more big picture, Luvisetto advised her that “we could afford to hire two lawyers – one to bring in more business and another to cover the maternity leave – and it would be worth paying slightly more to source the mat-leave replacement through an employment agency, given that a six-month contract would otherwise be hard to fill”.
Liz Grant is one of several coaches working with Small Business Australia, an organisation dedicated to supporting the sector. One of its Zoom-based coaching series, Improving Cashflow and Finances, includes a one-hour, one-on-one session tailored to your business.
Vikki Froutzis and Robert Earp plan to continue having Grant as their coach after working with her through three sessions, funded by Victorian Chamber of Commerce and Industry business development grants. The self-described “mum and dad owners” of Glow Studios – a photographic studio and office rental company in Melbourne – wanted to take their business to the next level. Their office spaces are generally occupied but the attached studios are underutilised. How could they use that real estate to increase their income?
Earp says Grant has “given us a lot of chunk to consider and implement in the business”. In fact, the couple tacked an extra five days onto a recent holiday to absorb the implications of what they’d learnt and to run various scenarios in the “What if?” spreadsheet tool Grant created for them, which calculates income based on different ways they could choose to hire out their studio spaces.
In the first instance, says Grant, a skilled financial coach can help clients to uncover the gold in various financial statements.
Profit and loss: “Overall profitability is one thing,” says Grant, “but I like to assist business owners to understand the profitability of their different products and services. They may be promoting something that’s not making them much money and not promoting a potentially more lucrative product.”
The balance sheet: “This helps to discover which assets are really serving the business,” she says, and may, for example, prompt a client to explore how many of the company vehicles on the balance sheet are being used effectively. “Do they display company branding? How many are used by salespeople? How many are used for delivery?” The balance sheet “also gives you a great sense of the debtor and creditor relationships in financing the business. If a company is holding more inventory than they need to, how can we change the business model to have less?”
Cashflow: “This clearly shows where the money’s coming from and where it’s going; what you’re spending on your assets versus your product development versus your staff. What are your debt ratios and how are you paying off the debt? Could you renegotiate your loan(s) and do better?”