Archives for 2012

Why Lack of Money is not the real cause of Business Failure

November 28, 2012 by Georgette Rowland Osborne

[youtube]http://www.youtube.com/watch?v=TUyKXYSWdhM[/youtube]

Businesses don’t go bust overnight

When I talk to people who have lost a business or are going through tough times.

So tough they fear they could go under

So many of them will site a particular situation or milestone that was the thing that caused it.

“The bank withdrew my overdraft, I relied on it”

“I was refused a business loan that I thought was a sure thing”

“ I lost a few good clients due to the recession”

“ We were expecting to land a big deal and it didn’t happen or it is still happening”

“We did get a big deal, but it broke us trying to service it”

I could go on and on

It is not impossible for one big thing to push your business over the edge, it is just less likely. The big thing tends to be the straw that finally broke the camel’s back.

The reality is that most businesses hit financial difficulty due to a slow painful death like a scene from a Quentin Tarrantino movie, as opposed to a Jackie Chan or Bruce Lee quick deadly from out of nowhere Kung Fu blow.

Kung Fu style you die quick, but if you oldies like me remembers Reservoir Dogs or even Pulp Fiction, the poor victim is often tortured or messed with psychologically before they meet their end.

When they are eventually finished off, the obvious cause of death would be what was done to them last, the gun shot, the stab wound, whatever. But they were so wounded by then, despite probably fighting to stay alive that the damage had already been done.

So if we step away from my violent example and put that in a business context. By the time a company or sole trader closes their doors; there have usually been a catalogue of problems, some big but many small that seem almost routine but are the result of:

– Serial inefficiencies,

– Constant fire fighting

– The owner being distracted from the important in favour of the attractive

– An obsession with lack of cash but with little concrete knowledge of exactly why

All too often it is when the liquidators or administrators are called in that the person gets a real snapshot of their true position and factual reasons as opposed to assumptions as to why they have arrived at this place.

And guess what: the majority had accountants.

Getting accurate data once a year is not enough.

It is the equivalent of driving on the highway with your lights off and only turning them on when you hit trouble.

If you think of the lights as information, as long as they are on and pointing you in the right direction you can see where you are headed and gauge likely trouble spots. While changes can be slight detours business decisions often need to be total changes of direction to get to where you want to be and you can only do this with trustworthy info.

Keep your business out of the dark; don’t wait until you hit something to find out where you are headed.

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I am Georgette Rowland of the Financial Gym saying thank you for your time.

I would love to know your experiences so please leave your thoughts and comments below and I would appreciate it if you could like the video also.

Too many businesses go under so let’s work together to get the number down. Please share this with anyone who you believe could benefit.

If you do not already get my giveaways then download my free booklet and get yourself added to the list.

Have a great day Georgette

Financial Lies We Tell Ourselves

June 9, 2012 by Georgette Rowland Osborne

I am eternally fascinated by the number of ways we sabotage our financial lives by saying we want or believe in one thing while behaving in a way that is completely opposite to that. Not deliberately, we just fail to see the in-congruency. And then wonder how we messed up in areas that seemed so straight forward.

During a conversation with a contact of mine, who I will call Dave; he mentioned that he was struggling to in his relationship with his business partner. who I will call Greg.

Greg had accused him of being difficult and finding fault with him over minor matters. After chatting to Dave it began to emerge that he felt that Greg was not honest about their relationship. Greg described him as not only a business partner but dear friend, however apart from business matters Greg made little effort to engage with Dave. Dave made Greg godfather to his son and best man at his wedding while Greg had an active social life outside of work that rarely included Dave.

Dave was embarrassed to admit that he was hurt by this and unwittingly Greg’s behaviour had ignited a sense of mistrust in Dave which had been slowly building up into resentment. “How can he call me friend, when I clearly am not?”

One of my favourites, is the “I am doing this for my family” Well what’s wrong with that? you ask. Nothing, it is one of, if not the best reason I can think of for doing anything if you have children. However what if this same person has no will, no life cover, very little savings of their own let alone anything saved for the children, and very common – no pension.

Commonly the reason is not enough funds to live and do all those things, which is perfectly understandable. But dig deeper, when money has been a little easier did they engage the services of a financial advisor, or open a little saving account for little Beth? No they bought a car, because they always wanted a BMW and they have “earned it” If they pop their clogs tomorrow, would little Beth be able to live in the BMW, I think not.

Picture them arguing with their insurance company about an increase in premiums for home contents or business interruption that could prevent them losing all they have worked for or even how they make their living. But happily pay through the nose for the BMW insurance. If the BMW goes missing, painful. If the home or business is burgled or destroyed by fire, devastating!

Despite preaching how important it is to look after the family, the irony is the decisions made do little to make this a reality.

In business, how common it is to prescribe to the dream of building a big successful business. Tut Tut at the irresponsibility of people who do not dot the I’s and cross the T’s; while ignoring the fact that the VAT or Payroll taxes have not been paid for months. Having no money is a very real reason for this but what if they had the money but had to make a choice where to use it.

All too often that choice is not in favour of the tax man.

Apart from wages and rent, pretty much everything else should be lower down the pecking order. Granted, needed staff could walk out, your trade may be severely restricted if you are evicted from your premises, but the tax man uses a very persuasive removal firm called bailiffs. And if that does not satisfy outstanding debts they wind up your company. Was buying that stock because it was a great deal instead worth it?

How we prioritise is what gives us away, but we are all too often the last to see the discrepancy.

Money and figures tell a story.

Over years of building relationships with business owners I have uncovered depression (very common), alcoholism, huge personal debt caused by a strong sense of entitlement because of unresolved neglect issues, to name a few.

I am no trained counselor and my remit is strictly professional, but when people confide in me it is difficult to separate the business issues from the person. All too often the theme seems to be people living lives that are in conflict with who they are and what they really want, frequently to please others or live up to expectations.

Or worse because they have created a life that does not support them, personally and or financially and are at a loss how to change it.

I have a process I call I.C.R.A which I have used for years to get me out of a rut and help keep it that way.

Identify – Where am I now

Clarify – Why is this the case and what needs to change

Rectify – How am I going to fix it

Ask – Find the best people to help you

Nothing new, just my way of remembering, steal it with my blessings.

Have a great day!!

It is not just alcoholics that have enablers – directors do too

February 18, 2012 by Georgette Rowland Osborne

We all love the come back hero.

It is reassuring to know that major set backs and obstacles may only be blips along the path to arriving where we want to financially. The rise and fall and rise again of people like Donald Trump and Anthony Robbins are greatly inspirational to the rest of us mere mortals.

But what about those that seem to rise and fall repeatedly even in the absence of major set backs? And even more fascinating are those that do it with the full acceptance of those around them, despite the dire consequences.

It is impossible to ignore the impact of the economic situation on small businesses; and I am desperate for owners to make understanding what their money is doing on a monthly basis a priority,

However even when armed with all the information required, the person with the information still may continue in exactly the same way as before; even though it is obvious to them what the consequences could be. Even threatened bankruptcy may still not be a big enough incentive for change.

I have witnessed over the years many a falling out between directors or really damaging; a director or owner who is killing company finances and the staff are powerless to do anything about it?

“there was £1000 in that tin at the beginning of the week and now it’s gone and and there are no receipts”

I have seen hundreds of pounds spent on children’s toys and clothes from a business account, with the intention of replacing the money, but it never happens.

I have seen businesses close because they owed money to the VAT man that they couldn’t pay because they spent the money. They open up again as a new business. Go through the process of setting up separate bank accounts so they can transfer money each month for VAT and PAYE. Then 6 months into the new business these additional accounts are still at zero, 2 VAT quarters have passed and there is no sign that any VAT or PAYE has been paid to date.

But there are countless invoices for SatNavs, MacBooks and large amounts of stock from suppliers that want payment up front for clients that pay late.

How do you tell a business owner that the business is fine just as long as they are kept away from the money. To show my age. In the days when writing a cheque was the main way to make payments. It and requiring 2 signatures before an expense could be authorised was commonplace. It was a good way to keep some semblance of control. Though not infallible.

The advent of online banking kiboshed this to some extent; as I found to my cost. There were a number of businesses I worked with in my days of naivety and blind trust where I would log on to the bank account in trepidation at what I would find. It was a regular occurrence to see large sums of money transferred out for non business items, while I knew the VAT and rent was due. Or there would be large advance payments for bulk stock items, before they knew if they had orders for them, because “it was a good deal”.

And in true enabler fashion, I would question the expenditure, make disapproving sounds, may even point out the knock on effect, but with no real conviction or hope of being listened to. The avoidance of conflict was always paramount. I was too inexperienced then to have the guts for tough love.

The ego has a lot to answer for. Many a business owner has ignored the fact that the big client they crave could actually be the worst thing that could have happened to them; because their monthly accounts show they do not have the money or capacity to supply or service them without putting themselves in difficulty. The kudos of having that client appears – on the surface – more important than the very survival of their company.

As the saying goes “If you keep doing what you’ve always done, you’ll keep getting what you’ve always got”

Yet how many of us after nodding in excited agreement, promptly go off and do just that. Clearly having knowledge is not enough in many cases.

To tackle the deepest depths of our psyche in order make great changes can be a long as it is arduous, and in the meantime money and financial security is being lost.

In the early days I was very sceptical about coaches who focused on the emotions in terms of business. My attitude was always make enough money and you will feel better anyway. But then it is clear the possibility of losing it all again never really goes away for many, so the need to address the emotion or subconcious began to make more sense to me.

And lets face it, not all millionaires are happy.

Though I still believe that we can put in place and follow through on plans of action that keep us on the straight and narrow despite our own shortfalls.

Accountability is a very sexy word in business circles, but it’s impact is indisputable in helping to keep otherwise poor decisions to a minimum.

Just the fact that a business has hired Precision or Financial Gym to do their figures is in itself a big step for an owner who only ever had to divulge their private affairs to their accountant. In the case of annual accounts the accountant is often is only seeing the overall picture. Where I would be seeing the deepest darkest detail of how that picture came about.

The lovely thing is that initial reticence is replaced by relief that they are no longer alone and they can discuss their issues with no fear of anyone else knowing.

I have had my own setbacks and used techniques and unrelenting energy to turn things around, but no man is an Island. Do not fight alone, even if you are a sole trader. Hire and get the support of experts. Be part of networking groups with a view to give and get business support and encouragement, rather than just to get business.

Try to stop gravitating towards people who blindly allow you to get away with murder, but court those who will be honest with you. It may be a great network as above or the no-nonsense mentor or business coach.

And as fellow business people, if a colleague of business owner is finding it tough;

Even with lots of money in the bank problems still arise.

Get in there and be a support system.

You never know when it could be you who needs it.

PAY IT FORWARD

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