Mistakes of experienced entrepreneurs in the field of financial management company
I, as the financial director of the company, as well as a specialist who implemented financial planning in hundreds of different companies, I can say for sure that the main mistake of entrepreneurs is a dislike for cash flow control. Entrepreneurs do not fit into indicators or do not fit into those in which they need to fit.
Few entrepreneurs actually see the whole financial picture, and not parts of it. Just entrepreneurs are people more often ideological. They are also good sellers. And they stick forward, do not look back at past mistakes and do not lose time to analyze the situation. However, many of them are in a daily financial routine, and expenses go through them. As a result, chaos and confusion accumulate, since the daily routine does not help to restore order in finances. And it is a wrong opinion that since finances pass through the founder himself, he controls everything. As a result, even if the turnover grows, then the money disappears like sand through your fingers.
I had a situation when the founder began to understand expenses, among which there were 4 articles “transportation expenses”. We figured out three. These were such articles as the delivery of goods to the warehouse, the delivery of goods from the warehouse to the client and the transportation of goods among their outlets. When we began to dig into the fourth article of expenditure, we found out that these were travel cards for staff. And those who have cars or if someone lives nearby, they simply gave out money. And to the question of who ordered it, the chief accountant, who had been working for the company since its inception, replied that in 2003, when there were difficult times, the founder said to support employees and pay for travel. In the yard was 2011. And the number of employees has increased 7 times since that time.
And then we introduced the right system, which allowed us not to spend a lot of time on finances and at the same time control them. A decision on upcoming expenses was made once a week. The process of planning expenses was done by managers, and the founder received a ready-made decision by employees and as a result spent one hour a week to make a final decision and at the same time see everything in full view.
And even in small companies with the founder agree on discounts without settlements and on the run. I had a situation where a client took goods worth 15 million rubles. And the company cost the product 10 million rubles. That is, every month the client brought dirty profit 5,000,000 rubles. Good, regular, large customer! And then he asks for a 15% discount (2,250,000 per turnover), promising to increase the volume by 30%. The company agrees to give it to him. And what happens? At a discount, the same amount of goods is now worth not 15,000,000, but 12,750,000. And so that we have the same 5,000,000 dirty profit, we must not ship to this client 30% as he asked, but 81.8 % more! And with a 30% increase, our dirty profit will amount to only 3,563,625 rubles. That is, roughly we are “in the red” by 1,436,375 rubles, although the turnover has grown, our supplier is also happy. But apart from that, we really did not understand why we had a shortage of money. You can have an army of financiers who will be busy with a bunch of reports, but at the same time not look in the direction of increasing profits.
And there are a lot of such cases in my practice. No, I’m not saying that the founder should sit with a calculator and calculate discounts! But faced with a loss once, the founder can develop discount rules. Or ask your financiers to calculate and do it, and in the future do not allow to violate such rules. In the first 2-3 years of the company’s existence, the entrepreneur creates it. With your goals and rules. Which are based on negative or positive experiences.
In addition, many entrepreneurs do not consider how much the company needs to earn, taking into account not only the costs of operational activities, but also taking into account the costs of developing the company and taking into account net profit. Indeed, if you do not include net profit in expenses, then you can not wait for it on the residual phenomenon. And our income is made up of our needs. They didn’t include net profit – and it turns out work for the sake of work. Too often I’ve seen this. Well, and as a result, of course, the absence of any airbag and the load on credit loads. The favorite phrase of such entrepreneurs is “Money must work!” And when they get the idea of reserves, they really resist it. And what are reserves, this is not at the expense of the former spending the deferred money. And this is an increased need for income. And in the end, money works at the same level, and reserves are created. After receiving additional data, most entrepreneurs create, among other expenses, such a line as replenishment of the reserve fund or payment of dividends. A certain percentage is spent on these expenses, in the same way as on taxes or on the purchase of goods.