business wisdom gift

Love Your Financials

In and around Valentine’s Day this year 2016 I am reminded of the KISS Mnemonic. In my book it stands for Keep It Simple Simon.

I recently looked up HSBC’s Accounts and they were 160 Pages. When I assessed customers’ accounts in the 30 Years with the Bank it was always useful to “runner” the accounts. This basically meant to put the basic elements of the accounts into a table to simplify them.

After finishing I realised over 50% of my clients in the Bank, and Business Wales say it’s more like 80%, do not have a good grasp of their financials / up to date trading profit. Especially not the profit attributable to specific products or services.

So my HWYL Company is dedicated to simplifying finance.

The first part of the HWYL High5 Simplification Series is The High5 Five Figure Finance.

So on Valentine’s Day it’s Keep It Simple Simon.

The High5 Five Figure Finance

1. Sales

2. Cost of Sales

3. Overheads

4. Drawings

(B)

(C)

5. Average Customer Spend

(D)

 

From these 5 Figures we get, Gross Profit (A), Net Profit (B), Break Even (C), Number of Clients on average (D).

 

A Story

I went to see a customer who had two Fish and Chip Shops. I had evaluated his figures and found one shop was profitable the other made a loss.

When going to the loss making Shop I said to the owner, Mario (not his real name), “Can you give me that bundle of £500 of £5 notes”  …I chucked in the waste-paper bin.

“Mario, imagine it’s next week, and I say to you again can you give me that other bundle of £5’s? and I throw it in the waste-paper bin.”

The point is that that outlet was losing £500 per week and they didn’t know it!

The options were to;-

A) Close it or Sell it and concentrate on the other

B) Reduce costs.

C) Remarket it and get the sales.

D) Change it to Pizza and/or Kebab.

E) Keep ploughing money into it, paying to open the door!?!

Unless it makes a profit people have in their “Business”, what is just a very expensive job.

How would you classify yours?

For more about Simon Jones and HWYL visit his website here.

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