Financial Fitness

Most business are conceived in order to make money. Not all of them will do so, and those that do, will go through stages when the cash is scarce. Most small businesses cannot afford a dedicated CFO so managing a company financials can be very stressful for a new business owner and it’s easy to make mistakes.

Having a virtual CFO, or someone suitable experienced on either the governance board or advisory board can help to provide a level of management and oversight. Identifying and correcting compounded errors in a full year of accounts is much more difficult than checking the figures are on track on a regular basis.

For those more mechanically minded, think of it as the preventative maintenance of a machine or a car. Things are far more difficult and expensive to fix once they’ve broken down, than if you have periodically checked that all is well and fixed any niggles that look as if they might become problems if left unattended.

Regular analysis and amendment also helps to create future forecasts with more accuracy, and recognise when the actual performance is diverging form plan. In addition to helping the business to perform better at lower stress levels, good financial management is key to meeting investor scrutiny.

Financial fitness also includes examining cashflow to forecast income and expenditure and identify how the pattern of peaks and troughs and how to minimise them. The smoother the cashflow across time, the easier it is to manage unexpected events.