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The Art of Financial Storytelling
Mark Holton
Smithink
Mark Holton
• Accountant, FCPA, FIPA & Tax Agent for over 35 years
• Director of Smithink
• Board Member and HonoraryTreasurer of Ronald McDonald House Westmead Sydney Australia
• Chairman NSW Central Coast Academy of Sport Australia
Strategic Analysis Challenge
blueprinthq.com.au
• Three people order three
pizzas and throw in $10
each to cover the $30 bill
• The pizza delivery boy
delivers the pizzas and
collects $30 from the
customers
• When the delivery boy
returns to base, he is
advised by the shop owner
that the bill should have
been $25 not $30
• The owner hands him five $1
coins and tells him to take it
back to the customers
blueprinthq.com.au
• The delivery boy decides that
he cannot split five $1 coins
between three customers
• He decides to give each of
the three customers a $1 coin
and keep two $1 coins as a
tip
• So in fact the customers have
spent $9 each on the pizzas
($10 each less $1 refunded)
• Therefore, we have three
customers who spent $9
each. In summary (3 x $9 =
$27). The delivery boy kept
$2 for a tip ($27 + $2 = $29)
WHAT HAPPENED TOTHE OTHER $1?
What additional services do you think clients will expect from us in the next 3-5 years?
Business advisory services
• Tax planning
• Financial planning
• Risk and insurance reviews
• Succession planning
• Estate planning
• Strategic planning
• Business planning
• Benchmarking
• Business value assessments….
• Pre lending assessments….
Lending pre assessments
Analyse Banking Covenants
• Interest Cover > 2.0
• Debt Service Cover > 2.5
• Effective Gearing < 1.5
• Capital Adequacy < 40%
Bank gap analysis
Determine lending analysis
gap & future improvements
required
Financial Analysis
Identify areas and strategies to
improve lending covenants
Loan Submission
Client lodges application with
some expectation of success
Business advisory services
• Budget and cashflows (Action plans)
• Underlying assumptions require development of a plan for the year
Opportunities to assist in plan development
Provide quarterly board of advice meetings
Business advisory services
• Scenario planning (financial impact of key decisions before they are made)
• Managing accounts receivables and payables
• Managing cash resources and working capital movement
• Managing inventory / WIP
• Performance to various KPIs
Lending covenants
Liquidity ratios
Profitability and Asset Management
Return on investment
Specific measures for the client’s business
Optimist Office Furniture Case Study
Know your clients story
©2015 SMITHINK | All rights reserved
15
13 June2016
Category Objective (It is importantto me that...)
Importance level
Current achievement
Priority level Agreed action Agreed serviceprovider/staff member
Action date Email sent
Business (Business structure) The business ownershipstructures are up-to-dateand lawfully minimise taxand reduce risk to personalassets.
Extremely important
Do notknow
Extreme Review or amend relevantbusiness structures. Consultan accountant.
Accountant
Business (Risk management) I can replace all essentialplant, equipment and stockin the event of fire or othercatastrophic event.
Extremely important
Do notknow
Extreme Ensure risk managementplans are in place. Consult abusiness adviser.
Business Coach / Consultant
Business (Business structure) My personal assets areprotected in the event oflegal action that may occuras a result of business activities.
Extremely important
Do notknow
Extreme Ensure company structureprovides an appropriate levelof protections for personalassets. Consult an accountant and/or a lawyer.
Accountant
Succession (Risk management) The business is notcritically impacted by theloss of any key person(including myself).
Extremely important
Do notknow
Extreme Develop a succession plan.Consult a business adviserand/or accountant.
Business Coach / Consultant
Succession (Business structure) I can transfer control of mybusiness without incurring anunnecessary tax liability.
Extremely important
Do notknow
Extreme Review structure andtransfer strategies. Consultan accountant.
Accountant
Succession (Risk management) If something happened tome, the business would beable to continue operatingwithout me.
Extremely important
Do notknow
Extreme Develop astrategic/business plan. Consult a business adviser.
Business Coach / Consultant
Business (Risk management) My business is protectedagainst loss of stock,machinery failure, fire orother forms of business interruption.
Very important
Do notknow
Very high Ensure appropriate levels of insurance are in place.Consult an insurancebroker.
Insurance Broker
Succession (Succession) I have in place an agreedbusiness valuation processthat ensures a smoothtransition of the business in the event of my illness, injuryor death.
Very important
Do notknow
Very high Develop a valuationmethodology and relevantshareholder or sucessionagreements. Consult an accountant and a lawyer.Consider reG3n valuationprocess.
Accountant
©2015 SMITHINK | All rights reserved
16Category Objective (It is important to
me that...)Importance level
Current achievement
Priority level Agreed action Agreed serviceprovider/staff member
Action date Email sent
General (Business strategy)
Significantly grow the business. Will be done in the next12 months
Requires focus Very high Develop a strategic/businessplan. Consider Business Wisdomprocess. Consult a businessadviser.
Business Coach / Consultant
Business (Risk management)
The business is not dependenton me or other key individuals.
Very important
Very poor High Develop a succession plan.Consult a business adviserand/or accountant.
Business Coach / Consultant
Business (Staff) I am able to find competent,quality staff as and whennecessary.
Important Do not know High Develop and implementstructured recruitment andinduction process. Consult an HRconsultant or recruiter. Consider94six HR module.
HR Consultant
Business (Staff) My business complies withNational Employment Standardsand other employment lawrequirements.
Important Do not know High Review and amend youremployment documents. Consulta lawyer.
Lawyer
Succession (Succession) I have the requirements and documents in place to enable a smooth business sale ortransfer of ownership when Iwish to sell.
Extremely important
Poor High Prepare a checklist of actionsand documents for the saleprocess. Consult an accountantand a lawyer. Consider reG3nsuccession planning process.
Accountant
Personal (Business structure)
The business and personalassets owned by me aresuitably protected.
Very important
Poor Medium Develop or review strategies to protect assets. Consult anaccountant and/or a lawyer.
Accountant
Business (Risk management)
My business and staff areprotected from third partyliability for product faults,employee fraud, OH&S defenceand other costs or penalties.
Extremely important
Average Medium Ensure appropriate levels of insurance are in place. Consultan insurance broker.
Insurance Broker
Personal (Life balanceand goals)
I have a good life balancebetween work and family time.
Extremely important
Good Low Address issues in businessaffecting work/life balance.Consult a business adviser.
Business Coach / Consultant
Business (Controland performance)
The business enjoyssustainable ongoing growthin revenue and profit.
Extremely important
Good Low Identify reasons for underperformance andformulate corrective action.Consult a business adviser.
Business Coach / Consultant
Business (Control The business has good Extremely Good Low Develop and document Business Coach / Consultant
Analyse your clients performance
Look above the water line..
The process
Use powerful processes such as the Power of
One, the 4 Chapters and the Big 3 Cash Flow
measures to understand your clients financial
story and improve the performance of their business.
Turn numbers into knowledge
Analyse key trends
Visually analyse performance
Use simple explanations
Grow the size of your business
revenue without increasing the
% of your compliance work
And have a lot of fun doing it!
Take the challenge
An obligation free webinar (up to 1 hour) that will identify among other
things:
• Your numbers
• Your risks
• Your issues
• Your aspirations
Assess your practice
Are you good at maths?
