Episode Transcript
[00:00:00] Hi, guys. Welcome to the Profit first podcast. This is Steven Edwards from Grow Profit First Accountants. We are a proactive Profit first certified accountancy practice based in the uk, specifically in Gloucestershire, but serving people all around the country. So I want to talk about today's topic, and today's topic is why does it feel so hard right now in business?
[00:00:28] So if you're a business owner, you've been running your business for a few years, then I'm pretty sure a lot of people listening to this are feeling the pinch. Things are feeling harder. It's more difficult to get new customers, it's more expensive to get new customers.
[00:00:46] Everything's going up. The cost of everything's going up, but also the general sentiment in the country, the feeling, the energy, the vibe. Obviously there's a budget about to be released, so. So we'll see how that contributes to business sentiment in the uk. But things are tough and it's been said many a times in the past that 80% of businesses in the UK are struggling on some level.
[00:01:13] If you've heard that before, it's probably stuck with you because when you first hear that, it's a bit of a revelation because you realize you're not alone. You don't feel that.
[00:01:23] And I'm saying this as a business owner myself. Yes, I'm an accountant, I run an accountancy practice, but I'm also a business owner like you. So we don't feel that we have to carry all this weight and we have to be perfect. Because the truth is, being a business owner, you are carrying a lot. You are ultimately responsible for the performance of your business, the results of your business.
[00:01:44] You're responsible for your team. If you've got team members and most of our clients, most of the people on our list have got some kind of team, you're responsible to make sure that they're getting paid, they're paying the mortgage, as well as paying your own mortgage, as well as paying hmrc.
[00:01:59] There's, there's a lot of pressure. So it's okay for it not to always be important. And almost any, everybody I'm speaking to at the moment, this is, this has been magnified.
[00:02:09] It's, you know, it's 80% of people. In normal times, it's probably 90% or 95% of people at the moment.
[00:02:17] There's less money in circulation, there's less positivity. And that has an impact because people fall into a little bit of a scarcity mindset. And outside of scope today, I'm a huge believer in protecting Your mindset, focusing on what you can control, which I might talk about towards the end. But we also need to be realistic and appreciate it's tough out there. And the reason I'm sharing this is I, I want you to, as a business owner, not to kick yourself. I want you to acknowledge, yes, it's difficult financially. Like I said, most businesses we're speaking to have got cash flow challenges. They're still carrying that bounce back loan. Maybe there's a payment plan with hmrc. It doesn't need to be this way. It doesn't have to be this way, but it's, it's, you know, it's more common. It's definitely more common. So if you're going through this yourself, I want you to realize that you're not alone. You might feel like you're alone and you might, you know, part of you might even feel a little bit like you're a failure. You might even feel like, should I pat this in?
[00:03:17] You know, what, what am I doing? What am I building? I've been in my business for X many years. Is it really progressing? But. So there's a season for everything. There's a season just to get through things. There's a season to plant some seeds. There's a, there's a season to reap the rewards of our harvest. And at the moment, I think the work you do now behind closed doors, the thinking you do, the decisions you make right now is all about building that resilience. It's all about thinking longer term, planning longer term, thinking strategically. We've got to be careful not to fall into a scarcity mindset. So if I take my business, business as an example, we're spending more marketing this year than we ever had, even though business is tough.
[00:04:01] So we don't want to fall into the trap of being a victim because of the circumstances. But the main message I want to get across is that you're not alone in this. Lots of other people are struggling in their business as well. What can you do about it? What can you do about it is the most important thing.
[00:04:20] So what you can do, and this is a very high level, first and foremost for focus on the controllables.
[00:04:28] So if you were to make a list of all the obstacles in your business right now, have a left hand column and a right hand column, what are the things I cannot control?
[00:04:39] You cannot control the government's policy with tax. You cannot control what's on the news. This is why I personally don't really watch the news most of the time. Yes, there will be. It's worth watching time and time again to keep, such as the new budget that's about to come out, etc, etc.
[00:04:54] But if we focus too much on what we cannot control, it's going to drive us crazy. It's not going to give us the right energy, the right state of mind to make better decisions. But create a list on a piece of paper, left hand side, all the obstacles, the challenges that I cannot control in my business, get it out. Trust me, you will feel better, you will feel in a far better place if you can at least get it written down. You know when they say a problem shared is a problem halved, that is essentially what you're doing, you're writing it down, it feels like you're offloading, you're not just letting it spin around in your mind constantly. So get all those things as much as you can written down on a piece of paper, left hand side of the column, line down the middle. Problems I cannot. Obstacles, challenges, problems I cannot control. So if you're saying cash flow challenges, that's not in that I cannot control problem.
[00:05:42] There might be elements of the cash flow challenge you cannot control.
[00:05:46] So for example, let's say you've got a payment plan to HMRC and it's, I don't know, it's 3K a month, perhaps you cannot control that you need to pay it. But if you're saying I've got cash flow challenges, don't be, don't be generalist when it comes to these, be specific. Because if you've got cash flow problems, there could be 10 different reasons behind the scenes why you've got cash flow problems. And there's a lot of those you can control. Is it chasing your customers to get paid sooner? Is it changing your pricing system? Is it going after different customers? Is it having a different offer for your services? There's certainly things you can control within your cash flow.
[00:06:21] It's not always possible. Let's say you've got big customers and they pay you on 60 day terms, you might not be able to do anything about that. Now, longer term, you can reduce the reliance on those big customers and get customers that are willing to pay you in 30 days or upfront, which can be a game changer for a lot of businesses, even if it's a deposit. So all the things you cannot control, just be careful about, are they genuinely things you cannot control? That's why I've just waffled on about that for a couple of minutes.
[00:06:46] On the right hand side, what can I do? About it, what can I do to tackle this problem? What can I do to make it 1% better today? What can I do to make an improvement this week before the week finishes, before Friday?
[00:07:02] What can I do just to move in the right direction? Is it having a phone call? Is it speaking to my accountant? Is it booking that meeting to go through my tax planning before the year finishes? Is it speak to my financial advisor? Is it speak to hmrc because I've been putting it off and I need to talk about a payment plan? Is it speaking to my bank because I need to sort out my overdraft or I need to get a new finance solution that could reduce my interest?
[00:07:27] Is it I need to make that big hiring decision, but I'm putting it off.
[00:07:31] I'm just trying to give you some ideas, but focus on the things you can control.
[00:07:35] And one of the things we talk a lot about is you can control the way you run your finances. You cannot control certain elements, but you can control how often do you do your bookkeeping. We think you should be doing your bookkeeping every single week.
[00:07:48] You know, ideally somebody else so you can focus on growing the business. But even if it's you as the business owner, someone should be doing your bookkeeping every week. You can focus on looking at your numbers every single month to understand the situation. We don't want to, you know, no one likes those dreaded HMRC brown envelopes, but we don't want to take that approach with our Zero, with our QuickBooks. We don't have bury our head in the sand so we can tackle our numbers head on, understand our numbers, understand the situation. What needs to improve, to improve. If you don't identify it, how can you possibly improve it? It?
[00:08:21] I can focus on maybe doing more marketing. I could focus on spending X amount of hours to bring more customers into my business. I'm just trying to give you some examples. I can focus on surrounding myself with people that can help me think differently. Who's been there, they've been through this problem, whether that's a community, whether it's a mentor, whether it's a coach.
[00:08:40] So there's lots of things you can certainly do. I can focus on starting every single day, not checking my email, go into the gym, exercising, so I feel in a better state.
[00:08:51] So that because I'm in a better state, I'm going to tell myself a better story for the day. I'm not going to get dragged into all the doom and gloom and then I can have a better strategy. We call that the Triple S strategy. Put yourself in the right state in the morning, you tell yourself a better story and then you have the right strategy. I can control those things, but there's lots of things I cannot control. So we want to. By writing it down, we take away the power from the problem in our mind. We don't let it go around in circles and just the same record spinning around in our heads. We are identifying the problem and we are coming up with solutions to tackle the problem. Hopefully that's useful. Guys, I know I've weaved some finance wisdom in there. This is the Profit first podcast. This all links into what we do with our clients.
[00:09:35] We help them understand their numbers as they are no better, no worse, then we can do something about it. Let's create a roadmap. Let's create a plan. How are we going to push you in the right direction in the next 90 days? Where do we want to get to in the next year? Two years, three years? What needs to happen? What needs to change? If this is all connected is understanding the story in our business and focusing on what we control. Until next time. See you guys. Thanks.
