You wouldn’t add a roof to your house without having a solid foundation and four walls. Why not? Because it would fall down.
Building a business isn’t much different.
You can have some success without building the proper infrastructure but you’ll have trouble scaling without first implementing a solid foundation.
What’s a solid foundation?
- Standardized, repeatable and documented processes to market, sell and deliver work
- Essential rhythms like quarterly goal setting, reporting, solving for issues
- The right people in the right seats
From a finance POV, we suggest you begin with the end in mind.
- Put the right financial infrastructure in place early. It’s a lot easier to implement a new system when you have few projects and resources in place than it is to slow the system down to do so when you have grown to the point of needing it yesterday.
- Project based businesses need a proper job costing system. They don’t need to be cost prohibitive anymore and they aren’t difficult to implement. We like Workflow Max, it is inexpensive, integrates with Xero accounting platform, and is a job costing, project management and resource management system all in one.
- Establish a discipline around building estimates, timely invoicing and reconciling your projects at the beginning.
- Ensure you’re closing your month end on time, so you have visibility into your performance. When you’re growing a business, you need to be able to make decisions quickly and you need reliable information to do so.
- Take the time to build a budget. This will serve as a guide to get you where you want to go. It doesn’t need to be perfect, nor restrictive, but it will keep you focused.
- Understand your business performance. Too many firms simply rely on their income statement to understand their performance but track little information that goes into it. Some things you should consider include:
- Where is my revenue coming from – a few big clients or many small clients?
- Which clients are most profitable? Can I improve the profitability of my least profitable clients or should I plan to replace them over time?
- How am I performing against my most important KPI’s? Staff cost and overhead ratios are important indicators in creative firms. Am I regularly monitoring these?
At Finally, we work with creative firm owners to establish the right financial infrastructure to track, measure and predict financial performance. This is in addition to providing ongoing advisory, financial planning, analysis and monthly accounting services.