When we first met Jim, Subvision was a growing side hustle, turning over £40,000 as a result of weekend and evening work. At the time, the business was being run solely by Jim with the support of Subcontractor Keith – now a partner in the business.
Most business owners in the early stages will relate to the way Jim was feeling at the time. He had a vision for world domination, but stresses were high. He was constantly worried about getting paid and paying tax (and all its implications). Though there were lots of areas he needed advice in – when to hire, how to structure his income, how to pay VAT – he was powering through the bookkeeping himself using FreeAgent, with Keith handling the payroll.
Even though you can be your own Accountant, your time is better spent on other things
Jim had come to this conclusion. He could muscle through everything alone using whatever free tech was available at the time. Or he could enlist some professional support in order to free up his time, so he could work on the business, rather than be trapped in the daily workings of it.
We’ll always start by digging deep into your goals. We want to know what you want out of your business. Do you want a Porsche, a house in Greece, a four day work week? Then we’ll look at the kind of support you need to achieve those goals. What does your business turnover need to be? How much do you need to take out of the business each month personally to achieve the lifestyle you have in your sights.
You don’t have to outsource everything to us at once. Jim started by getting support with the areas he was least confident in.
We started by completing his year end accounts, but he continued to do the bookkeeping himself. The problem is, he was concerned that what he was doing wasn’t accurate, and he needed accuracy to be able to submit a VAT return accurately. Instead of taking over everything, we started small and simply by providing Jim with regular reviews.
We made sure everything was reconciled, he had correct VAT treatments, and correct analysis of expenditure. The review had started as a half an hour every quarter, but the business continued to grow and expand. As the business became more complicated, Jim was running out of time.
A leap to a full time venture meant Jim no longer had time to do the bookkeeping, so we jumped in
About a year into working with us, we took over the bookkeeping for Subvision.
- The first thing we did was move the business over to Xero, to provide more sophisticated and intuitive support than the free tech Jim was using. Because Subvision provides highly detailed quotes to their clients – Xero helped Jim a lot with his quoting.
- Then we implemented the use of Dext (formerly ReceiptBank) – to move him away from manual data entry. This cut down the time it spent Jim to provide us records making it as easy as possible for us both to do great work.
- We remove the stress of doing Payroll by taking it over – looking also at ways they could get their timesheets to us as quickly as possible. We employed technology to make this easier, so an increase in staff members wouldn’t mean a huge time spend increase.
Addressing the issue of late payments
With all the necessities taken care off, everything became about cashflow. Moving into more an Outsourced Financial Director position, we started looking at making payments on Jim’s behalf to ease the issue of not being paid on time. 60-90 day terms no longer worked for invoicing. As he was growing, his working capital gap grew – making managing cash flow a lot trickier.
We could only manage cash flow effectively by becoming a part of Subvision, so we knew when payments were coming in, and which suppliers he needed to pay. We could advise on cash flow management months in advance with this in depth knowledge of the business.
By the end of year 3, we were acting as Virtual Finance Director for the company, managing cash flow. During the second year of working together, he’d taken on 2-3 members of staff, and we saved valuable time by making sure staff were paid on time and suppliers were too. At the end of year three, the business was turning over £270k, and Jim could confidently make decisions about where he wanted the business to go next. Together, we could also set dream turnover targets, and practically work towards them.
The challenge: preventing rapid unsustainable growth
For all businesses, there is a danger of growing too quickly. We had to have this conversation with the team at Subvision, to prevent them from growing so fast their expenses became too high. You can have all the turnover, but remember: cash is king.
In our fourth year of working with Jim, we were able to get an invoice factoring agreement in place, in order to help cover the working capital gap as they grew. This helped Jim out big time, as he was able to fund 80% of his debt up front. A major financial stress was avoided.
In the following year (2019) Subvision grew, but their costs barely increased. This was due to an intense focus on pricing jobs correctly and reviewing overheads, ensuring they weren’t overspending in areas they didn’t need to be. At the 2019 year end, we decided management accounting was necessary to ensure we could consistently control costs and not see a repeat of the rapid growth panic.
Achieving dream targets and setting more (even during a pandemic)
With full financial support, by 2019, Jim was able to focus his mind on his making dream targets a reality. His target was 1.2 million in turnover, and with constant conversations, constant reviews and assessments he hit it.
But not every dream revolves around turnover. Jim’s targets also included reduction in debt, and our involvement in his cashflow management is helping him to achieve that goal. With access to his most important financial information:
- He can now save for taxes and debt payments, knowing how much he’ll need to pay at any given point.
- He knows his VAT liability every month
When the Covid-19 pandemic hit, we already had the infrastructure of support in place due to our years working as Virtual Finance Director for Subvision. Jim was able to rely on us heavily. We took into consideration the funding available, and were able to refinance for loans to cover interest costs and monthly cash outgoing. We focused his mind again on his outgoings, assessing how much he was paying out in monthly standing orders.
Most of all, he could use us as a sounding board to decide how much money he really needed each month. Our partnership provided moral support during worldwide panic – he’d get off a call realising he was in a stronger position than he thought, with overheads covered and the family provided for.
In 2021, Jim is aiming for even higher – and we’re excited to help facilitate that goal.
Our mentality is partnership from day one, but it doesn’t require a complete overhaul of your finance function overnight. We do pretty much everything for Subvision, except for quoting and invoicing which is kept in house due to the personal input it requires. But we can take it step by step, dropping in the right support as your business grows – so you can focus on setting your own dream targets.