Does the bank love your business?

When you want to grow, you need capital. Most small businesses require cash to get started, and often that comes in the form of a loan. It might be that you need to buy plant, cover employee salaries or cashflow the business until it reaches a sustainable size. A business loan can help with any of those scenarios.


But getting a business loan can be a labour-intensive and sometimes frustrating process. Banks want to lend money, but they need to be persuaded. And you don’t only want to be approved for a loan, you want to be approved for the right amount and on the right terms.

So how can you make this process run more smoothly? If you had a CFO, that person would prepare statements and cashflow forecasts, as well as working on the financial side of your business development plan, determining how much money you need and how much debt you can comfortably service. Small and medium-sized Kiwi businesses rarely have CFOs, but a virtual CFO can do all those jobs for you when you need a business loan.

We’ll also help you deal with the bank’s officials, attending meetings and being on your side in negotiations. We can provide all the supporting material that quickly demonstrates the strength and potential of your business. As your virtual CFO, we can:

  • Create financial projections
  • Show current performance
  • Summarise the business’s financial position
  • Demonstrate how the debt will generate growth
  • Predict potential financial questions the bank may have
  • Make a case for the loan from a financial perspective

In addition to these services, a great virtual CFO can help you investigate your various borrowing options. We can help you research the different banks, both large and small, all of which offer business lending. There are also other lending options to consider, like peer-to-peer, angel or private equity investment. Are there better interest rates or preferable terms available? Are you prepared to sell down some of your shareholding? And of course, we’ll put together a schedule that will show you the payment amounts and differences between the options, so you can compare apples with apples. Finally, are there grants or subsidies your business is entitled to? Our virtual CFO service can put together the information required to apply for one of these funds.

Don’t let a lack of capital hamstring a brilliant business. The right documentation and presentation will help the bank love your business. That can give you the funds you need to grow it to the next level.


Keep Performing Intelligently: KPIs

KPI’s are key performance indicators – the important ways you measure how well your business is going. You might be surprised at how many different types of KPI’s can apply in various industries, including the obvious ones, like:

  • Profit/loss
  • Sales
  • Margins
  • Number of new customers
  • Available cash

There are also customer-specific KPI’s:

  • Customer lifetime value
  • Customer acquisition cost
  • Customer retention
  • Customer satisfaction

There are KPI’s for your employees:

  • Employee turnover rate
  • Employee satisfaction
  • Employee productivity

And KPI’s that might relate to your processes:

  • Returns, complaints or faulty goods
  • Conversion rate for queries into sales
  • Efficiency measures

In addition to all these metrics, your industry or business might have its own specific targets and ways of measuring success. If this all sounds confusing, it certainly can be, and very few Kiwi small business owners have a solid grasp on how to develop and use KPI’s successfully. The good news is that the size of your business doesn’t determine the number of KPI’s that are required to efficiently run it.  There may just be one or two measurements that will help you keep a handle on how your company is performing every week, and the monitoring of these will assist your company to grow and increase profits.

But even choosing one or two KPI’s can be tricky, because you’ve got to pick the right ones and know what to look for once you’re getting the data. To help you set KPI’s for your business and develop realistic targets, you may find you need some help. A virtual CFO can step in and look at your business to help you identify, measure and establish key performance indicators that will quickly demonstrate your company’s performance.

A great virtual CFO can meet up with you to talk to you about what success looks like in your business and how to quantify that success. Then you’ll know when the company is heading off course and rapidly be able to correct its direction.

Your virtual CFO can also work out what you’re learning from all your data. Many companies have tools to gather masses of data, only to have it sitting unread and unused, month after month. A virtual CFO can take that data and sift through it to pull out the trends and information you need to help your business grow and thrive.

Don’t struggle through mountains of numbers on your own trying to figure out what you need to measure and what your targets should be. A virtual CFO can help you solve those problems in just a few short meetings. Give us a call and find out how a virtual CFO can help you guide your business toward success and prosperity.

Don’t let tax catch you out

Take a guess at what the number one most common named cause of corporate liquidation is in New Zealand. Here’s another clue: it’s also the fourth most common named cause of bankruptcy for individuals. The answer? ‘Failure to provide for taxation’*.

I find that pretty scary, because many of the other causes on these lists are hard to control. Factors like illness, economic conditions and relationship breakdowns. But tax is not a random force of nature. It’s entirely predictable and manageable if you take a sensible approach. Obviously, that’s easier said than done. The number of small business owners who spend money that should be earmarked for Inland Revenue is startling – sometimes the immediate invoice gets the cash and the IR gets put to the bottom of the queue. It seems that most business owners find it a bit difficult to sort out exactly what percentage of each payment they can draw out safely.

However, as the statistics show, this is not a smart long-term approach. It only leads to problems – you either leave other creditors unpaid or you need to scrabble around for cash from your personal savings or credit facilities. This is probably happening every tax or GST payment date in hundreds or even thousands of small businesses up and down New Zealand. For those who fail to resolve the problem even after scrabbling around, the result is late penalty fees, fines, increased interest and massive levels of stress.

If you’re the kind of relaxed individual who doesn’t want to start creating spreadsheets to figure out how much tax to save each month, a virtual CFO could be the perfect solution. We can look at what you’re billing, what your expenses are, and your tax level. Then we can give you an amount to save each month to ensure you’re never caught short. It’s such a simple way to reduce your stress and eliminate late payment and other penalties.

It’s not only provisional or terminal tax, it’s also your GST. It arrives in your account and the temptation to spend it is strong, but you need to remember that it’s not your money. Not only can terminal tax come as a bit of a fright when you’ve just finished your first two years in business, but the year in which you switch from tax deducted at source from remuneration to provisional tax can be a tough pill to swallow.

Don’t let tax cause you stress or penalties – let a virtual CFO accurately budget how much to put aside.

*Download the latest insolvency statistics report here.

Do you need a financial sounding board?

Looking for someone to bounce your ideas off? Hoping to make smart financial decisions and avoid the pitfalls? These aren’t the questions you should be asking your friends and family members, unless they really know their stuff. This is where your virtual CFO comes in seriously handy.

“…Roughly 50% of small businesses don’t make it past the five-year mark. While there are several reasons for business failure, many small businesses simply aren’t making the wisest financial decisions,” according to Xero. “Unfortunately, most small firms can’t afford an in-house finance head to help navigate the dark art of accounting and finance. Nor do they want to. They’d rather be running the business, talking to customers and drumming up that next sale. They need the help of an accounting professional more than ever.”

That accounting professional can be your virtual CFO, helping you understand all the potential financial ramifications when you’re making decisions for your business. We can talk you through the short-term costs, the long-term outcomes and how long it will take for your expenditure to pay for itself. We can analyse the numbers and look for potential upsides – or downsides – you may not have considered.

Bounce your ideas off your virtual CFO to help you grow sustainably – not too fast, not too slowly. We can talk to you about how to fund your growth, whether it’s from the business or via a loan or a new investor. We can run a cost-benefit analysis and talk you through the ways we’ve worked with other clients to make similar decisions, and what the results were. And don’t forget we understand the tax implications, so we can help you factor in any cost or savings in that department.

For just an hour or two each month, you’ve got your own chief financial officer to bounce ideas off and give you a fresh perspective on the bottom line. Because we have so many successful clients, growing hundreds of businesses across our books, SME can give you a broader outlook than you might get even with a dedicated CFO. It’s not always easy to make rational financial decisions when you’re so heavily invested in the day-to-day running of your organisation. A second pair of eyes – and ears – can be an invaluable tool in the growth of your company. Talk to us today about consulting with a virtual CFO.

The on-demand CFO

Sometimes you don’t need a full-time CFO – and that’s where a virtual CFO comes in. Virtual CFO services can help you get all the expertise and financial reporting you need, on a regular basis, without employing your own Chief Financial Officer. Excellent.

A virtual CFO can help you by providing possibilities and potential answers to some of the big questions facing every business:

·       Can we afford it?

·       How will we pay for it?

·       What are the long-term financial implications of this decision?

·       Where can we save money?

·       How can we make more money?

·       Are we correctly pricing our products or services?

·       What should our targets be?

Ideally, you’d have a virtual CFO working on these questions regularly and providing you with direction and strategies for growth. But you don’t always need to have a virtual CFO on a regular reporting schedule. Some small businesses may find they need the services of a virtual CFO for a single project or a set timeframe. It could be that you just need to analyse your financial data:

·       Which products are making us the most money?

·       Are our accounts ready for the sale of the business?

·       What trends are we seeing in sales over time?

·       Where can we increase prices?

·       Which items are falling short of expectations in terms of margins?

Alternatively, a virtual CFO can be outstandingly helpful if you’re aiming to raise funds. Your virtual CFO can present your current accounts to showcase the positive aspects of your business and its potential for success and growth. Your CFO can help you find new shareholders, speak to lenders and evaluate other credit options.

Additionally, your virtual CFO is a vital part of any feasibility study. The right advice can help you work out whether you should:

·       hire that extra staff member

·       buy that new vehicle

·       stock that new high-end product

·       open a store

·       launch a new brand, or,

·       upgrade your office, for example.

Finally, do you need someone with deep financial understanding to represent your company when you are meeting with major clients, suppliers, lenders or shareholders? Your virtual CFO can help represent your business in a range of situations.

Talk to SME today about working with a virtual CFO on your next project or feasibility study – or simply to help you answer the big questions and set your business up for a successful year ahead.