Identifying where business affairs can be improved
At McCabe Ford Williams we want our clients to be successful. To that end, we aim to challenge our clients to establish where their business affairs could be improved and to provide advice which enables those improvements to be made.
The secret to success
A successful business is one where management have a business plan. Depending on the size of the business this may be a formal documented procedure or more informal.
Key elements to a business plan
The key elements of any business plan whatever the size of the operation are:
- Key objectives for the business are established.
- The key objectives are communicated to all relevant personnel, including external advisors. Your professional advisors will be more able to provide you with valuable advice if they know what you want to achieve.
- The business plan covers a sufficient length of time to meet your objectives.
- The business plan is regularly (at least annually) reviewed and updated to take account of the current situation.
The next stage in a successful operation is budgeting. Again the level of detail will be dependent upon the size and complexity of the business being operated but some form of budgeting is always advisable.
For budgets to be of greatest benefit they should be:
- Prepared annually and involve all personnel who have the ability to impact the performance of the business, such as line managers.
- Computer-based to allow for efficient amendment to forecast figures throughout the year.
- In the same format as management accounts/information to allow for them to be easily compared against actual figures.
- Include an element of cash management as the availability of working capital enables you to make effective use of available trade discounts, managing movements in supplier pricing fluctuations, repayment of borrowing, investment or growth.
More complicated businesses may make use of sensitivity analysis to establish how their business would look if sales volumes, purchase prices, wage increases were to be at different levels.
The final stage of a good management system involves the production of management reports on which business decisions can be based. The most successful management reporting systems have the following elements:
- Management information is produced on a regular basis (monthly/quarterly) and is sufficient for the size of the business.
- Management accounts are relevant to the user, using an appropriate level of summarisation and contain all relevant items.
- Management accounts compare actual figures to those budgeted and explanations for the variances.
- Management information is produced in a timely fashion to enable the correction of the causes of adverse variances.
Of course in order for management information to be truly useful it has to be reviewed by management and actually used as a tool in making business decisions.
For management accounts to be useful as a tool they have to be reliable. A good system of management accounting will mean that the period end management accounts are effectively the same as the statutory accounts, subject to any information not available at the time the management accounts were prepared.
Good management information also enables professional advisors to have reliable information on which they can provide tax planning advice for the current accounting period.
Contact your local McCabe Ford Williams office to discuss how we can help you to make a success of your business through:
- Reviewing and appraising your management reporting processes
- Assisting with the production of business plans
- Assisting with the production of budgets and forecasts
- The provision of bookkeeping services and VAT compliance
- The provision of payroll services
- The provision of BACS bureau services
- The provision of management reporting services
- Tax advice throughout the year
- Detailed tax planning assignments
We provide all of these services by making best use of available technology and cloud software to keep you informed about your business.
All of that on top of traditional accountancy services such as year-end statutory accounts production and other compliance services.