It is something of a cliché to say that most new business fail due to cash-flow problems. But it is also a truism.

Johnny Martin has made it his mission to get business startups to understand how their business finances work, or to use his words, “take control of your cash and manage your business with confidence”.

In addition to his monthly workshops in the Business & IP Centre at The British Library he has now published a book. Understanding your business finances is part of the ‘Essential Business workbook’ series published by Cobweb, who also produce the essential Cobra database.

Johnny understands how most people starting a business are intimidated by the financial aspects and often hide their heads in the sand.

“Many people come unstuck when they start a business because they don’t know what the numbers are telling them. Some don’t even have any numbers to work with! Others manage to get through the early days create a really successful business, only to be ripped off by a so-called business partner who is ‘dealing with the money’. (And believe me that happens a lot.)”

Johnny has worked hard to ensure the language, writing style, fonts and page layout of the book are as clear and simple he can, to make this vital knowledge as accessible as possible.

The content is divided into twelve chapters with a worksheet in each one, to turn the theory into practice:

1. Introducing the three key financial reports - Cash flow forecast - Profit and Loss report - Balance Sheet
2. Understanding the business model
3. Forecasting sales - researching your market and competitors - setting your process to make a profit
4. Getting to breakeven - fixed and variable costs - calculating your breakeven point
5. The profit and loss report (the P&L)
6. Introducing VAT
7. The difference between cash and profit
8. No one goes bust with money in the bank - monitoring and understanding your cash flow
9. Balance sheets and accounting principles - understanding the balance sheet
10. An introduction to financing your business - what type of funding is suitable for your business - sources of business finance
11. Day-to-day accounting in your business - who can help you with your accounting
12. Putting all you’ve learned into practice

He has also include a ‘Jargon buster’ at the end covering topics from Accrual accounting to Working capital.

I will end this short review with another cliché, this time from the publishing world. ‘Everyone should read this book’. Except in this case it really is true. If everyone starting or running a small business were to read and understand this book, the number of business failures would be significantly reduced. Resulting in a stronger economy and happier entrepreneurs and their families.

“You CAN do this stuff. It’s sill okay to delegate finance to accountants or key members of staff, but don’t abdicate the responsibility completely. No one is going to look after your interests better than you.” Johnny Martin

 

Neil Infield on behalf of Business & IP Centre