There are three elements of business that are crucial to achieving command over the financial state of any business, says financial director Adrian Goodman.
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SINCE STARTING my business in January 2021, primarily to help SMEs and start-ups to establish financial controls in their business, one of the most common questions I’ve been asked is: “What do you actually mean by ‘Financial Control?”
Initially this caught me out. Before setting up my business, I’d worked in finance for most of my adult life, which is a sizeable amount of time. My career included multiple director-level positions, advanced finance projects and roles at some very large businesses, where financial controls were widely understood and accepted as key elements of the business.
When I began working with smaller organisations, there was rarely an internal finance team and the business owner was often preoccupied with meeting customers or working on their product offering, as opposed to the peripheral elements of the business such as finance, strategy or business development.
I was frequently asked why Financial Control is necessary and how it adds value to the business. Many of my clients were under the impression that as long as they had engaged the services of an accountant, the finances of the business were taken care of.
I started my business with the explicit intention of helping smaller businesses to achieve the same level of Financial Control I had engineered at larger businesses. I made this decision in 2019, after my then-employer announced that they were entering administration, shortly after my appointment, and that my colleagues and I were out of a job. This happened a few weeks before Christmas so you can probably imagine the degree of anguish in that room. I still maintain that this could have been avoided if Financial Control had been monitored and prioritised so I set out to help as manybusinesses as possible avoid the same fate.
Instrumental in this mission was my ‘Four Points of Control’ framework, a control mechanism I had devised and implemented at many businesses. By following this approach meticulously, it’s almost inevitable that Financial Control is achieved.
The components of this scheme also provide an answer to the question many of my new clients were asking.
Put simply, Financial Control is established by asking three questions about your business and answering them objectively:
“How are we doing?”
“Is it good enough?”
“Are we doing the ‘right’ thing?”
Or, as I call them, the three ‘Elements of Control’:
- Performance Evaluation
- Economic Viability
- Compliance
If a business focuses on these three elements intently and ensures that they are promoted throughout the organisation, Financial Control is achieved. Since all aspects of business carry a financial impact, this also means that Total Control is achieved. This is the key to attaining consistent, profitable growth, as opposed to making decisions on the fly and hoping they pan out.
So how does this happen? The bad news is that it doesn’t just happen. It takes robust processes, an understanding of rudimentary financial concepts and commitment to getting it right.
The good news is that it’s not rocket science.
Adrian Goodman is founder and managing director of PPX Consulting.
01536 856 740