Episode Transcript
[00:00:00] Excuses. Here I am. So, hi, guys, and welcome to this week's Profit first podcast. So, I'm Stephen Edwards. I'm the founder of Grow Profit First Accountants. We're certified Profit First Accountants in the UK and we work with ambitious business owners looking to grow their business, but ultimately to pay yourself more and to have more money in the bank. Because in my experience, I most business owners are surviving on some level. And when we actually look at the numbers, around 80% of business owners are pretty much surviving paycheck to paycheck. And we want to break that cycle. We want to help you build better businesses. And on that note, the topic of this week's podcast is what I call the grow model. And there's three areas you should be focusing on as a business owner when it comes to your finances. And in my experience, in my opinion, accountants are letting business owners down. Accountants are doing the minimum. They're kind of just ticking the boxes. And I believe what I call the grow model and the three main areas, whatever we want to call it, and this is through my experience in last 20 years, is how you could work with an accountant or internally build a better finance function and move you closer towards that business that actually pays you what you kind of deserve for all the effort and the hard work and all the risk you've put into building your business. Okay, so there's three main areas. Number one, we call it the Finance Foundation. So it's the foundations, because we got to start from there. We got to build from strong foundations. And what does strong foundations mean? When we talk about your numbers, some of these are so obvious that, you know, I almost don't want to talk about them. However, I am going to talk about them because I want to make sure you, as a business owner have got these in place. So we need things like an online bookkeeping system. We should be on an online bookkeeping system. There is, if you are a business owner, limited company, looking to grow your business to above and beyond 100k, you know, to several million, whatever you want to grow into, even if you just want to, you know, grow it to a few hundred K and you're around £100,000 now, you need an online bookkeeping system. You need something like Xero, something like QuickBooks, Sage Free Agents. We are big fans of Xero. It's not the only system out there, but we prefer it. We think it's the best. QuickBooks is fine. The other ones are fine. But you need an online bookkeeping system. That's the way the government's going, it's the way the world's going. It's. And why do you need an online bookkeeping system? Apart from the fact that the government are literally pushing you, having an online bookkeeping system, it's going to give you more real time data. No, you should not be waiting. I spoke to somebody recently who's a fairly good sized business pushing close to 1 million in revenue and they are waiting every three months to get their books up to date from their accountant. So their accountant is doing their VAT return, doing their bookkeeping and they don't really know where they stand on their numbers until it gets to the end of the quarter. Not only that VAT return was actually late sometimes.
[00:03:20] So when we have an online bookkeeping system, we're talking weekly or fortnightly bookkeeping. But you can run your numbers every single month and you can get a snapshot for how well your business is doing, filing everything on time, you know, knowing what your tax is, having some good conversations with your accountant, at least on an annual basis, or having that relationship, you can reach out and you can pick their brains on the numbers. You know, your payroll sorted, you've app sorted, your book sorted, that's the foundations, that's the basic stuff. In my opinion, however, a lot of business owners are not there yet. It's, they're six months behind, they're three months behind, they're missing receipts, they're missing invoices, they've not plugged all their bank accounts in, they're missing information.
[00:04:03] It's, you know, you don't want to scale a mess, you want to scale control, you want to scale clarity.
[00:04:10] So it starts with strong finance foundations. And then once we've got the foundations in place, we're talking about profit improvement. So that's all about making more money. That's where profit first comes in. Paying yourself more money and profit first is one of the most powerful ways we can, we can do that. It's not the only way, but it works. It's it. But quite simply it's about paying attention to your numbers. Once we've got the foundation, once we've got the accurate numbers we can rely on, we can then use profit first. And then we can also use management accounts where we can look at the reports, we can look at the margins, we can look at the gross profit, we can really drill into the numbers to make better decisions. This is big boy business stuff or big girl business stuff. This is where boardrooms come in. This is where we hold ourselves accountable to our performance. We We've got budgets, we've got forecasting, we're not going to run out of cash and say, oh my God, I can't afford my tax bill. We're looking forward instead of backwards. So number two, I call profit improvement, but it's mainly about looking forwards and not looking backwards. One of the kind of packages we do have a handful of people in our business at grow is we provide like an FD service, like a finance director in your business. We meet with people every month and we help them move forward in their business without spending thousands and thousands, you know, because an FD could cost you anything from 80,000 to £160,000 per annum. So we work with people in a far more affordable way to help them move forward. But you don't need to be, you know, going all in and having an FD level service. You need to get the foundations right and then you need to start looking forward, even if you're only looking forward once a year, to say, what do I want to achieve? We're coming into 2026, what do I want to achieve for 2026? What does my budget look like? If you cannot make your business work on paper, it's not going to work in real life. And it's that simple.
[00:06:13] Number three. So number three is all about wealth maximization. So we've got the foundations, we're looking forward, we're helping you make more money, there's more cash in the bank.
[00:06:24] But we want to minimize your tax bill. We want to maximize what you take out for yourself and your family, because at the end of the day, the business is a vehicle to give you and your family the life you want and the life you deserve. So we're talking proactive tax planning, we're talking pensions, we're talking investments. There's 33 main ways of saving tax. And when we work businesses, either at the beginning, we do a proper deep dive diagnostic to go through the 33 ways to save tax just to make sure they're not missing out on some opportunities.
[00:06:56] And then it's all about keeping on top of it, making sure we're not just ticking the boxes, making sure we're not missing out on some of the easy wins on an annual basis. And we call that a tax mot. And it's where we actually sit down with some of our clients before the end of the year. And we help put a tax plan together so there's no surprises because your circumstances might change.
[00:07:17] You know, when you're just starting your business, your tax situation, your family situation, your goals, your aspirations, your income is very different to five years later or 10 years later, or it's very different compared to someone who's looking to sell their business and retire and exit. So that's what we call the grow model. Three areas finance, foundations, profit improvement, and wealth maximization. If you're interested in our tax diagnostic, if you're a client or not a client, reach out to us because we actually go through the 33 ways to save tax. It's a deeper review than the normal end of year accounts, end of year tax return, and we actually offer a guaranteed tax saving. We typically save people between 2 and 5K. So if you're interested in that, please, please reach out. But have a great week. Thanks everyone. Cheers. Excuses.
[00:08:08] So.
