All businesses need a clear strategy to follow to ensure the business owners' objectives are achieved. A strategy gives the business owners control over their business and ensures it moves in the direction they want.
CIMA qualified accountants formulate business strategy to create wealth and shareholder value.
DEF Ltd was a new but rapidly growing business. The business owners were very knowledgeable about their field and driven to be successful. However, they had little experience of running a business and no financial background. After the first year the business had achieved a turnover of over £500,000 and made a small profit but cash was tight. The business owners were overstretched and losing control.
Fortunately, they found a management accountant who was able to help them work through a measured strategy for the growth of their company. A key part of this was identifying that several of their key clients were not very profitable for the company, but used up a disproportionate amount of staff time. The decision was made to stop working with those customers.
The result was three fold:
The business now has two offices and a profit after tax and dividends of over £100,000 p.a.
It is a well-established truth that businesses live or die based on their cash flows. If you intend for your business to grow, you will most certainly need more cash than what is required for maintaining a steady turnover. You might be asking: How much will I need? and 2) Where will it come from?
Provided by Alice Davidchack →