Clients in Strife - Innovative ways to

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© Copyright – One Sherpa Pty Ltd 2010 “Clients in financial strife – innovative ways of helping them help themselves”

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© Copyright – One Sherpa Pty Ltd 2010

“Clients in financial strife

– innovative ways of helping them help themselves”

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An introduction to a new way of thinking

In today’s presentation we will cover

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An introduction to a new way of thinking

Tips on getting into a small business owners world

In today’s presentation we will cover

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An introduction to a new way of thinkingTips on getting into a small business owners world

1. Think Simple

In today’s presentation we will cover

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An introduction to a new way of thinkingTips on getting into a small business owners world

1. Think Simple

2. Think Visual

In today’s presentation we will cover

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An introduction to a new way of thinkingTips on getting into a small business owners world

1. Think Simple2. Think Visual

3. Think Story

In today’s presentation we will cover

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Let me ask you three questions on numbers

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1. Why is it some people just don’t ‘get it’when it comes to the numbers of a business?

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2. Why is it that the finance people seem to have a different way of looking at things?

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3. Why is it that finance people make some things seem very complicated?

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Most small business owners feel like they’re chasing the money ALL THE TIME

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They have no financial context

from which to make their decisions

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As a result they have no way to make clear cut decisions nor measure how they’re really going

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They understand words and can use them quite forcefully

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But for many, numbers look like ants walking up a page

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Many small business owners walk around in a fog financially

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So how can accountants help them?

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We have to jump into their world rather than expecting them to jump into ours

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Most small business owners hate numbers and will do anything to try and forget them

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They normally trust their accountant but often have no idea what the numbers really say

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This is a golden opportunity to put that trust into effect and get them to help themselves

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However most small business owners see accounting as a cost and not a benefit so they’re always looking to minimize the accounting cost

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So they appreciate advice about helping themselvesParticularly because they often have no training in being a business owner

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They often ‘fall into a business’ with little knowledge on being a business owner

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Or have great technical skills

BUT does that make them a good business owner?

They may be excellent at their trade

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They may know the operational side of their business well BUT this is not enough to succeed as a business owner

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Business owners need a broader range of skills

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One of those broader skills is:

FINANCE

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Three tips on how to help small business owners with finance

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1. Think simple

2. Think visual

3. Think story

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1. Think simple

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One of the most famous advertisements

What was the tag line?

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Keep numbers really simple because …..

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Small business owners usually only focus on a few numbers

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The single biggest reason why small business owners fail is NOT because they fail to do a business plan

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It is because the business model which the plan is based on is completely flawed

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So helping business owners to understand the financial part of their business model

makes helping themselves possible

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There are many ways to think of business model but the simplest and best we’ve

found is to think of three parts

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Customer Value

Does the business earn enough margin after including a market wage for

the business owner

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Transaction Flow

Is there enough sales volume flowing through a business

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Money Flow

Is the working capital (inventory, accounts receivable

and accounts payable) the right size for the volume of the business

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Presenting these in a simple way will help small business owners because they can SEE what’s going on in their business

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Easy simple dials that can be understood intuitively

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There is a FREE tool available to do this at

www.oneminutebusinesscheckup.com

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2. Think visual

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Remember .. most small business owners see numbers as ants walking up a page

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Pictures , graphs and analogies help them understand what the numbers mean

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Presenting lots of graphs does not show the

WHOLE business

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One way of doing this is using a tool called

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It presents a profit and loss account, balance sheet and cash flow in the analogy of a fence

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This tool helps small business owners understand why they can be making great PROFIT but have no CASH to pay their TAX

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Traditional Reporting

OPENING

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Traditional Reporting

FOR THE PERIOD

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Traditional Reporting

CLOSING

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EQUITY

COSTOF INTERACTION

NETPROFIT

MOVEMENTIN WORKING

CAPITAL

CONTRIBUTIONMARGIN

INFRASTRUCTUREEXPENSES

OPERATING CASH FLOW

MOVEMENTIN FIXEDCAPITAL

NET PROFIT

NET CASHFLOW

BALANCE SHEET“AS AT”

PROFIT & LOSS ACCOUNT“FOR THE PERIOD”

CASH FLOW STATEMENT“FOR THE PERIOD”

THE FINANCIAL FENCE ®

SALES

FIXED CAPITAL

WORKING CAPITAL

BALANCE SHEET“AS AT”

DEBT

EQUITY

FIXED CAPITAL

WORKING CAPITAL

DEBT

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A online version is available at www.onesherpa.com with FREE bronze membership

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3. Think story

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The numbers of a business always tell a story

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Getting a business owner to understand the story gets far more benefit for them than

being ANAL about the exact numbers

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Filing a TAX return on behalf of a client is completely different to telling a story about what’s happening in their business

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Business owners are most likely not worried about the last cent EXCEPT in relation to the accountants bill

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They want to know what’s going on so they can be more successful

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More successful in their eyes is often just more sales

SALES

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Tell them the story about their business model

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Put it in the three easy pieces

Customer Value

Money Flow

Transaction Flow

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Then they can help themselves by knowing WHERE to focus

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Remember you’re succeeding when they ask you questions

not the other way round

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The best measure of whether they’re helping themselves is the quality of questions they ask you when you are talking to them

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We have to jump into their world rather than expecting them to jump into ours

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1. Think simple

2. Think visual

3. Think story

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