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10x growth in 6 years: How understanding their finances better has supported this client’s business growth

Updated: Oct 29, 2024

Imagine receiving a tax bill from your accountant that is more than double what you would have expected.


That was the reality for one of our clients (before we took them on, of course).


Their accountant at the time had simply emailed them the figure with no other communication, and no thought for the level of stress and panic it would cause.



Do you recognise any of the following?


While you might not have had this exact experience, many of the clients we take on fall into one or all of the below categories:


😔 Their accountant only speaks to them once a year or during tax season


😔 Their accountant isn’t helping them understand their finances so they can grow, or


😔 Their accountant is organising things at the last minute, so they don’t have a chance to identify where their finances could be improved


10x growth in 6 years- what can you learn?


Six years after we started working with them, their team has grown from the 2 co-founders to now 20 staff members in total, and there’s been significant growth in their turnover and profit too.


While we can’t take credit for all of their success, having a better understanding of their numbers has made a real difference and significantly contributed to that growth.


In this article, we are going to identify how we helped them, and how that can help your business.


🔍 Throughout this article we will also pose you some important questions so that you can start identifying and filling any gaps within your accounting and finance process.



Annually = more reactive


After almost two decades in business, we do not get surprised when business owners have similar stories to this client.


Why? 


Because when you are leaving most or all of your accounts and taxes until after the end of the tax year, you are less likely to be prepared for the situation you find yourself in. 


You are going to be more reactive.


On the flip side, a proactive approach means that you are aware of your likely liabilities, what needs to be done, and when. 


Had this client’s accountant, and accounting process, been more proactive than reactive, they would have had a much less stressful situation.



If you’re looking to grow, this is the ideal relationship you want with an accountant:



It is important to see your accountant as a trusted advisor.


By having open conversations with your accountant, and by them empowering you to have an understanding of your financial position, a proactive accountant will be able to advise you on the best approach.


One of the many conversations we have had with this client since working with them was around taking on premises for the business, and if they could afford it at the time.


It was an important conversation, and we were able to support them with ease because we had a grasp of their numbers.


Every business has challenges though, and this client is no different.


As an example, because they work in the construction sector, the changes to subcontractor rules relating to CIS and the reverse charge had an impact on their cashflow in the short term.


Again, because of the reporting we can do, and the understanding the client had about their numbers, we have been able to help them navigate challenges like this.


In short, you need to have a close relationship with your accountant and to see them as a part of your team.


Before continuing, pause here and answer the following questions:


🔍 On a scale of 1-10 (where 1 is ‘not at all’ and 10 is ‘very’) how approachable do you feel your existing accountant is?


🔍 How comfortable do you feel asking them questions about anything in your business?



How have we helped this client, and what does that mean for you?


1) You need to focus on processes and strategy initially:



When these 2 co-founders initially engaged us to support this business, it was clear they were gearing up for growth.


To do that, they knew they needed to have a good understanding of their finances and have the right processes in place.


A couple of the questions we discussed at this stage, which will support you if you are in a similar situation, were:


🔍 What is the best finance process for you? 


🔍 What numbers do you need to have the most visibility of?


Having the right process and a great level of visibility around your numbers will help you make well-informed decisions.


For them, QuickBooks, along with the reports we can run, provided the basis of their financial process.


Also, while they had an understanding of the delivery of their service, this business was in a slightly different sector to their previous companies, so they needed strategic support, which we were able to provide them with too.


If we have learned anything from almost two decades in business, it’s the importance of having the right people in your corner- strategic advisors who you can turn to.


🔍 Who do you turn to for advice?


🔍 What support does your existing accountant provide you with, so that you can understand and improve your financial position?


2) Put yourself in the driving seat:



Understanding your numbers empowers you because it supports you to make well-informed decisions.


That’s why, whoever your accountant is, you should feel empowered and have a good understanding of the financial position your business is in.


Our approach is to empower clients as much as possible.


Whether we are delivering a complete finance and accounting function, or acting as an external support mechanism for an employed team member within a client’s business, the client must understand their numbers so they can make well-informed decisions.


3) If you know nothing about your business finances, at least know this:



As an accountancy practice, our focus has generally been on providing many of the services that you would expect, but for this client- and many others who are looking to grow- we provide consultancy and advisory support too.


As part of this, we provide our clients with a regular, high-level summary of their business finances.


The way we frame it is that ‘if they know nothing about their finances, they should at least know this’. 


The summary provides them with a snapshot of where they are, based on what they need to know, and provides a comparison against previous quarters too.


Some of the things we include in that high-level summary are:


🔍 Their turnover


🔍 Their gross margin


🔍 Their net profit


🔍 Any significant costs


🔍 Investments in wages etc


This snapshot provides them with something for them to monitor and allows them to keep an eye on where their business is.



When done well, your accounting and finance department should provide a return on investment



While accounting can be seen as a cost to be kept to a minimum, when done well (and with a proactive approach) it is an investment that can provide significant returns.


To that end, below we have identified some of the results that this client has achieved:


An increase in their profit margins:



One of the core areas we have helped them with is their margins. Overall, we have helped them increase their profit margins by 10%.


How did we do that?


In short, by monitoring and reviewing it regularly.


The high-level, executive summary we mentioned earlier, focuses on their margins among other things. 


Therefore, if it’s dropping in a quarter they can see it and deal with it proactively at the time. 


Whereas if we waited until the end of the year, it’s too late to do anything about their margins then- they’ve already likely had at least 6 months of issues by then.


🔍 What is your profit margin right now?


🔍 And how much would a 10% increase be worth to you and your business?


Real business growth:


By having a real focus on margins and helping the owners to understand the key numbers that impact their business, we have been able to support them to grow their business in other ways too.


In terms of the size of their team, this has seen a 10x increase, and thinking about their turnover, this has more than doubled. 


An increase in turnover, combined with the increase in profit margins we outlined earlier, therefore means that the business is making more profit than before too. 


In fact, the business’s net profit has increased by around 10%.


What can you learn from this client’s experience?


1) Proactive works both ways



Many of the clients we work with have left their previous accountants because they only heard from them once a year or during tax season, and they wanted one that would speak to them regularly.


As we have outlined above though, the ideal relationship between you and your accountant should be one where you are comfortable approaching them and asking them questions, as well as them engaging with you.


In short, being proactive works both ways.


For example, our most successful clients (of which this client is one) are those who ask us questions about their numbers and lean on us for advice about their business.


It’s one of the reasons why our tagline as a firm is ‘Unlocking financial success together’.


2) The importance of relevant information & your system to get it:



If you’re a business owner who has a hunch about your profit margins, your turnover and your overall numbers, you need to turn that hunch into real-world data and reporting.


By having access to that data and reporting, among other wins, we were able to help this client increase their profit margins. Without that data and reporting, their margins could have been impacted by inflation and other factors and may have gone down.


3) Having a structured approach to your margins:



With this client, and all of our most successful clients, we have a structured approach to their margins. 


If you only focus on your margins now and then, you won’t have a true reflection and you won’t be able to identify any trends you could otherwise see and react to.


Added to this, a proactive accountant will support you in understanding the reasons behind your numbers. 


They will be analysing your reports and will provide a level of accountability to understand what might have changed in your business, so that they can identify what might have caused any dips.


SJO Accountants primarily help business owners with at least 5 team members to understand their finances better so they can grow their business, by implementing a proactive approach to accounting, finance & tax. 


SJO was founded by Sara Otley in 2008, and since then we have grown to 10 staff members, looking after hundreds of clients.


Overall, our team has more than 60 years of experience in the accounting and finance industry. 


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