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What Business Owners Really Want

There are a lot of things in life that we don’t fully understand.

Technology, for example, can seem shrouded in mystery – “it just works” is a phrase that Steve Jobs would often joyfully remark.

If only it were like that with business. If only business models just worked! Finding and keeping great people, communicating with existing customers and discovering new ones, while producing great solutions and making sure the numbers add up certainly isn’t trivial. For the small business owner, this feeling of spinning multiple plates can be overwhelming. To add to that – it’s likely that what worked this time last year won’t be good enough this time next year. Technology continues to change the way we do business and the pace of change isn’t slowing down.

New opportunities

We need to understand the past, but more importantly and more than ever before we need to consider the future. And it’s not all doom and gloom. There are serious opportunities emerging. We can trade globally and accept payments more easily than ever; we have new creative ways to access capital through crowdfunding and peer to peer lending. And of course, having our accounting software always available in the cloud is a massive advantage. Thank you, Xero!

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Back to the future

Having said all that, the future can still be a daunting place full of unknowns and uncertainty, opportunities and threats.

Having a plan is great. But it’s generally acknowledged that the reward is in the act of planning rather than in the plan itself.

As Mike Tyson famously said, “everyone has a plan – until they get punched in the face”.

Back to the drawing board

The typical business plan will have a great financial model somewhere within its many pages. A three to five-year P&L, balance sheet and cash flow, and – without fail – a smooth hockey stick pattern of growth.

The reality for most small businesses is that these are totally overkill. They’re immediately out of date and unrealistically optimistic.

What keeps business owners awake at night?

Is it the last quarter performance or, is it the unknowns of the future? As we’ve seen with so many personal finance tools, the focus tends to be on a colourful pie chart of where you’ve spent your money last month; but that’s in the past! While its maybe interesting to see how my spending was broken down last month, what I really care about is if I’m going to run out of money this month, or if I can afford a holiday. Its the same with my business. The past is interesting, even insightful, but the present and future are what I really want to see.

Real questions that need answers

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Is there enough in the bank to pay our salaries at the end of the month? Do we have the cash to deliver this new contract? What is our tax bill going to be and is there enough in the savings to pay it? These are the questions that shouldn’t take hours to answer. It’s estimated that around 80% of small business failures are due to poor cash flow, and going into debt can cause serious headaches for a small business, so being able to anticipate cash shortfalls and build up a cash cushion for the lean times can make the difference between the survival and failure of the company. A set of management accounts won’t often reveal some of these core issues. Business owners need the peace of mind that there will be cash in the bank to pay the bills and meet the payroll.

Cash is the lifeblood of any business.

When all else is said and done, it is the availability of cash that will ensure a business can thrive. Having an accurate and up to date forecast allows decisions to be made quickly and with confidence. Often having this knowledge allows positive actions to be taken, rather than resisting the urge to spend because of the fear of the unknown. The trouble, however, is getting hold of that forecast in the first place. Where does it come from? Last month’s spreadsheet is already completely out of date. So much has changed, and the fear of updating it, getting it wrong, deleting the formulas and messing it up all tends to result in putting it in the “do later” pile.

 

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The solution is integration in the cloud

There are many complex desktop ‘spreadsheet alternatives’ attempting to tackle the problem of forecasting. Float was built with two key mantras in mind. It has to be so easy that anyone in the company could use and understand it, and it has to involve minimal data entry.

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The trouble with making an accurate forecast is that there are a lot of future costs that aren’t actualised as an invoice or bill. We don’t get a bill for our rent, our travel or payroll. We don’t have an invoice for the sales leads we’re about to close. Those are targets, budgets and projections, and they flow together with up to date knowledge of expected payment dates on invoices and bills to help us predict our daily cash forecast. When this information is able to be shared collaboratively, with business partners, advisors and accountants, the forecast can be presented with confidence and without taking hours each week or each month.

Float connects with Xero to pull in all the latest transactions and produce a forecast that is accurate to the day. It’s our hope and our vision that businesses have this insight at their fingertips and can engage daily with the real numbers of their business.

Colin Hewitt, CEO of Float

 

 

Colin Hewitt

CEO and Founder of Float, cash flow forecasting made easy.