Get Paid Faster & Improve Cashflow with Lorna Smith

[00:00:00] Lorna: A lot of businesses when they’re cutting costs, they’ll cut things that are actually doing them a really good service. So they’ll cut marketing, they’ll cut training, they’ll cut coaching and stuff like that. But actually, if they don’t focus on those things or it goes away, they’re then just back on their own to run their own business, and they might be less successful, or they might kind of stall a little bit, which is fine for some businesses.

They can just cruise for a little while. But the whole point of running a business, if you’re looking at growing it, is to get more business, so spend the money on the things that are gonna get you more business.

[00:00:32] Ben: Lorna Smith, welcome to Berko and Beyond. 

[00:00:34] Lorna: Thank you very much. 

[00:00:36] Ben: Uh, it’s a pleasure having you here, uh, because I probably need some financial advice. We might, we might get into it a little bit later. Uh, but you’re a financial consultant, but also a coach, and you know Berko and the surrounding area very well.

Um, so yes, discuss financial consultant and coach, which I find interesting? 

[00:00:56] Lorna: It is interesting. So the financial consultancy piece is going in and working with any small, medium-sized business and helping them forecast forward. So a lot of businesses work with really good accountants and bookkeepers, so they can do all the processing type of work.

Um, but quite often, they either don’t really know what that information is telling them, or they don’t really know then what to do to try and change the business or try and make the business stronger and better. And that’s what I go and focus on. So I’ll either do some reporting or cashflow modeling for businesses, or I will just go in and talk to them about everything and go, “Right, where are the priorities?

Where do we wanna go to?” 

[00:01:38] Ben: So half the things you’ve just said there for a lot of businesses have just scared us off ’cause we’re like, whoa, cashflow, whatever. If I’ve got money in the bank, it’s kinda working. So what, what do you, when you first sit down with, with a business, uh, what are the sort of numbers that, that you’re wanting to look at and saying, “Hey, do you know about this?”

[00:01:55] Lorna: Mm. 

[00:01:55] Ben: I’m asking for a friend. 

[00:01:57] Lorna: For a friend. Of course. The first number that you want people to think about is firstly where they’re trying to get to. So most pe- businesses in their head, they know a financial number that they’re trying to achieve, whether that’s top line, so your sales, your turnover, or whether that’s bottom line in terms of the profits.

So if you talked about those two particular numbers, you kind of then get to where everything else is happening in between. 

[00:02:21] Ben: Right. So I’m gonna pick this apart as we go, if that’s all right. 

[00:02:24] Lorna: Of course. 

[00:02:25] Ben: So for, as a business owner, uh, financial advisors and people I’ve spoken to before have gone, “Well, you know, top line, that’s fine if you’ve got that, but the bottom line is that where it, where it gives you the more information.”

But that’s not, I don’t think that’s always necessarily true, is it? 

[00:02:42] Lorna: No. So I think everything in between gives you all the information. The top line is obviously what you’re getting in. And that’s where your marketing and your sales and your, all of those great processes come into it. Also pricing.

Everything can go into that top line, ’cause that can be changed in so many different ways. 

[00:02:59] Ben: Mm-hmm. 

[00:03:00] Lorna: Everything in the middle is how much you’re spending. So what are you spending things on, and what either needs to be cut back, or do you need to increase to actually make better investment choices? And then that leaves you with the bottom amount, which is where you either reinvest that back into the business if there’s lots left at the bottom, or you take it all out and spend it happy days as the director, which 

[00:03:22] Ben: The take home, as we like to call it.

[00:03:23] Lorna: Which, um, from my experience working with a number of businesses over the years, I think directors obviously do want to take the money out because that’s what they’ve been working really, really hard for. But it’s getting people to understand that if you take it all out, there’s literally nothing left.

And if you have a horrible year or a horrible month or something goes horribly wrong, then there’s nothing left in the business to kind of support that. But then if they’ve been trading for a really long time, then you’ve got that goodwill and you’ve got that profitability already built up in the business.

So it allows that little bit more flexibility during a bad year potentially. 

[00:03:59] Ben: So is, as a financial advisor, is there a number that you would recommend that, that you have and that, that, that there’s a runway that, to leave in there? Is it a, you know, six months, 12 months? 

[00:04:11] Lorna: I would always say a minimum of three months depending on what people’s operating costs are. 

[00:04:16] Ben: Yeah. 

[00:04:16] Lorna: Um, but the more you have in the business, the, the better it’s going to be for if you do have a, a really sh- short spell or a bad month or a bad couple of months. ‘Cause sometimes you just don’t know what’s gonna come out of the woodwork, and I talk a lot about, um, business owners having a good spread of clients.

Those that have a concentrated amount of clients can sometimes run into a bit of trouble if something happens to that client, which might be out of their control. It could be that that client gets bought out by another business, or that client goes under, or they change who they’re using and their providers and, and things.

So every single business at the moment is just looking at every element of their business, and some of those things you can’t really control. And so if you’ve got cash in the bank or you’ve got money in the business, uh, which I would say at least three months, then you’ve got three months to kind of shift your business to be able to To, to sort things out and to, to grow again or, or flip, or fl- or be a bit more flexible. 

[00:05:17] Ben: So when you go into an, into a new business, when you go into a new client, do you look at that? I- are there, um, are there patterns that you see across businesses of all shapes and sizes? Is that there are often similar mistakes, or is, is the one where you go, “I know I’m gonna go into this company, and I’m pretty sure I’m gonna find X”?

[00:05:38] Lorna: I think sometimes processes. Um, I think a lot of businesses, well, not a lot of businesses, but there’s definitely patterns in how businesses are processing their financials. Um, and sometimes if they’ve got a really great p- finance person in there, then quite often they’ve been set in their ways for quite a long time, and getting them to either move to a little bit more automation or to actually review things more effectively can take a little bit longer.

So I think those that have got somebody that’s been working with them for a longer period of time sometimes are a bit slower to change because it’s, “This is how it’s always been done around here,” so there’s a little bit of that mentality. Um, and then there’s certain industries, I guess, where you’ll get definite patterns, and some of that can be seasonal patterns, so you know full well if you’re going into, like, a garden landscaping business, it’s gonna be a little bit seasonal.

So you kind of have to work with them on the basis of make hay while the sun shines, so to speak, so make sure that you’re saving all of your money and being spending wisely while you’re making lots of money so that you can afford things in those kind of more scarcity times, especially when it comes to employing people, ’cause some people don’t want to employ seasonally.

[00:06:53] Ben: Yeah. 

[00:06:54] Lorna: They want to employ people for a long term, but actually they might not have enough work for them in the sh- in the s- in the sort of short days or that, that period of time when The work’s not there. Um, and then it’s getting them to look at other things that they can do and diversify and things if they need to, to make the money up in those kind of s- sparse months.

[00:07:16] Ben: Yes, sparse months. Well, no, because there are, there are a lot of businesses like that. And do, do you work, do you specialize in any kind of industry or is it, it’s a one-fits-all or I guess it’s, it, financial advice is financial advice, right? 

[00:07:28] Lorna: Yeah, I mean, numbers are numbers at, at the end of the day. Um, how they’re processing them and making sure that the numbers are correct and accurate is one thing.

Because a lot of businesses, again, not a lot of businesses, but there are some businesses that I go into that might not do things the same way as a really well-established business has been doing. So it’s getting them that coaching and that training to actually get to that point, because bad information in is bad information out.

So if I’m not getting the correct information, then I’ve got to correct that at the beginning. And that’s not an area that I particularly specialize in. I will go to accountants and bookkeepers to get those things sorted out, because that’s not what I’m trained in. Um, but I know the kind of numbers that I’m, I know the kind of reports and things that I’m looking to get out of those businesses.

So yeah, I think, getting it all set up correctly at the beginning is the hardest thing to do. And a lot of businesses when they set up, they just do what they do really, really well. Well, and you- And sometimes that financial bit is just either left or just done as and when they get a chance to do it.

So I always try and start there at the, at the absolute least, is get onto Xero, QuickBooks, Sage, whichever digital banking, um, finance platform. Link your bank account. 

[00:08:52] Ben: Get the whole thing sorted. 

[00:08:53] Lorna: Get the whole thing kind of automated, um, using one of those automation sort of platforms like Dext or HubSpot or think something like that, and then work from there.

So it can be a bit of a, take a bit of time at the beginning to get everything all set up correctly, but then at least if the information is feeding through, then you can start picking numbers out and just asking the questions like, “What is this? What does this relate to? How do you spend this? How does your income and invoicing work?”

So again, are you invoicing early enough? Are you collecting money early enough? Are you paying bills late enough? Some simple little things like that are normally quite the place that I start at. 

[00:09:34] Ben: Um, any horror stories that, without naming names, of where you’ve, you’ve gone into businesses and- 

[00:09:41] Lorna: Horror stories

[00:09:41] Ben: and when I say horror stories, I mean from the point of view that we can all learn from, that, that if there are any kind of typical mistakes or things that, that… 

[00:09:51] Lorna: Um, a typical mistake is not invoicing, so just not doing it at all. 

[00:09:57] Ben: Wow. 

[00:09:57] Lorna: Yeah. That’s not a great thing to do. Um, and or leaving it till really late.

So again, if people are busy and they haven’t wanted to outsource that element of work, that just sometimes is the last thing that people get to, either at the end of the month or even sometimes into the next month. So obviously the longer you’re leaving doing any invoicing, you’re not getting any money in, and then you’re gonna run out of money straightaway.

[00:10:23] Ben: I guess you’re running the risk there of missing, de- depending on how you, how you work with, with your, your clients or your suppliers as well, you, you’re ending up missing their cy- their cycle. So if it’s, if your client has got a rigid payment cycle, which, I mean, we’ve been in a position before, luckily not, not anymore, where we had a client that was, uh, it was 90 days and it often went to 120 days.

[00:10:51] Lorna: Yes, yeah, that’s long. 

[00:10:52] Ben: Now, the, the, this was a, a client that we did work for every month. So, um, they’re actually a high-end fashion client, and we used to film their whole collection of leather goods. Nice. And then they went, they went out. Uh, because they went out, um, obviously the way the fashion industry works is y- it’s kinda two or three months ahead.

So actually we were filming… By the time we got into things, actually it didn’t matter that we were 90 days ’cause we, it was only the first, the beginning of that project, if you see what I mean. 

[00:11:24] Lorna: Yeah. 

[00:11:25] Ben: But, yeah, I still speak to people today who are obviously we… For us now, I wouldn’t touch a client on, who’s on 90 or 120 days with…

That’s a massive red flag to me. 

[00:11:36] Lorna: Yeah. And that’s such a long period of time for you to be without money. ‘Cause obviously if you’re fronting absolutely everything and not collecting it for 90 days, something could happen in the middle and then that could be your business that could go pop quite quickly.

[00:11:50] Ben: Yeah. So we’d, from a video production point of view, we work with clients and we- So we al- we always ask for a 50% deposit up front within seven days before we start shooting. And if there’s any pushback on it, the answer i- from us is, “Well, you know, we’re a small, small business. We’re not here to f- you know-in the nicest way, we’re not here to fund your project for you.” 

[00:12:12] Lorna: Yeah, exactly. And sometimes those businesses are looking for that funding anyway, aren’t they? ‘Cause they want to get as much out of you as possible, and also not to pay as quickly as possible. So it’s kind of like good negotiation on their part half, but not great for smaller businesses that kinda get caught a little bit in the middle.

[00:12:30] Ben: So what’s your advice for those businesses that might be getting caught in the middle, that are in those kind of cycles and are thinking, “Well, but this is… This, we, we rely on this”? How, how can they- 

[00:12:40] Lorna: Always- … 

[00:12:41] Ben: factor in for that? 

[00:12:42] Lorna: Always work out exactly how much that upfront cost is going to be for your business.

‘Cause if things get delayed, and you’re then also then not having the money coming in, you need a bit of a contingency for that. Um, and I would always recommend taking a deposit, 100%. So firstly, you, your deposit needs to cover those first 90 days to be able to actually do the, the piece of work, and then at least the, the money’s starting to come in at least after those 90 days.

Because then you can start to fund some of the next projects. But I would always just recommend not overspending, ’cause I think that’s when then people start dipping into money from other projects to be able to pay for this particular one, and then that takes a really long time for people to unwind that.

So it’s like robbing Peter to pay Paul. 

[00:13:31] Ben: Hello, I am a recovering- … dipping into other projects to… Yes, it’s almost it’s, it’s kind of robbing Peter to pay Paul within your own business, isn’t it? 

[00:13:39] Lorna: Yeah, absolutely. And that can unravel businesses very, very quickly, because it’s just, if, if the money’s not there, then they have to get it from somewhere else.

And that’s where things like talking to banks or other funders to try and fund some of those gaps is, is where those conversations need to happen. And you’ll find that there’s smaller businesses that aren’t f- haven’t been established for a very long time, and they might struggle to get that level of, to get some funding.

But if you’re a well-established business and you’ve got good financials generally, then you can get some funding, um, which will fund those kind of projects. So I would definitely look into funding options as well. It might not be the, the cheapest, but it might be the best way to keep cash in the business.

[00:14:24] Ben: Uh, and what is… I guess you, you look to pass that cost on as well. So for, for instance, invoice factoring, if you’ve got, you know, a percentage of the, whatever the charge is on those, to then actually try and pass that onto the client. 

[00:14:36] Lorna: Yeah, you just increase your prices a little bit to then compensate for what you’re having to pay to be able to do their projects because they’re not paying you quick enough.

[00:14:45] Ben: So, um, I kinda joked at the mi- at the, at the beginning of this conversation about businesses just going, “Oh, I’ve got money in the bank, and that- Mm … that’s fine.” So why is that so dangerous, just looking at one’s bank account and going, “Yeah, there’s money there. We’re okay”? 

[00:15:00] Lorna: I think if you’ve been running your business that way and you’ve always kept a balance in the account, then you’re probably a little bit safer.

Again, if that balance definitely covers at least three months of your spend, then you’re safe-ish. But the danger of just running everything by your bank account is that you’re just running your business slightly blind. You don’t know exactly how much everything costs. You don’t know exactly when things go in the business and come out of the business.

And so it’s very easy just to go, “Well, I’ve got money in the account. I’ll s- pay for something.” But actually, you don’t know what the end of the year looks like. So if you can try and budget at least or do a cashflow, and I am a big thing on cashflows. Sometimes they’re a little bit tricky to get, put together really accurately live document from the day, from day one, because things change all the time. But that’s fine, ’cause I think as long as you’re measuring your… You put a cashflow together and then you’re measuring your actuals as you’re going through the year, you can then start to work out whether you’re great at doing cash flows. But also whether your budgets and things have been accurate and that you’re on track with everything. That’s the key thing … 

[00:16:15] Ben: And I guess having something is better than having nothing at all, right?

[00:16:18] Lorna: Mm. Yeah. Exactly. Even if it’s just really simple, this is what comes in, this is what goes out, this is what we’re expecting at the end of the month, and just do that for every single month for 12 months. Um, I think people find it difficult to know exactly what they’re coming in if they don’t have a pipeline or if they don’t have regular business income that comes in.

Um, but then historically they might be able to average that out over the course of a year and figure out what that monthly income kind of looks like. 

[00:16:49] Ben: Talk to me about the difference between, uh, consulting and coaching. 

[00:16:55] Lorna: So the consulting part is that I would do the work for the client. 

[00:17:00] Ben: Yeah. 

[00:17:00] Lorna: So I will put the cash flows together, I will run the reports, I will give them their reports at the end of the month and then talk them through it.

[00:17:06] Ben: Yeah. 

[00:17:06] Lorna: The coaching part comes at the end when or during that conversation to say, “Right, the, this is what the numbers look like. Where are your priorities this month or next month or the next three months? What’s coming up in the next three months, and how do we want to deal with all of these particular numbers?”

And then getting them to kind of learn as we’re going along what needs tweaking, what numbers need looking at, what their c- what their real big drivers of their business are. And then they just kind of start to get it as, as we kind of go along through the course of, like, a few months over a period of about a year or, or whatever it takes for me to work with them.

[00:17:48] Ben: So when you go into those businesses, and I, I, I… We kinda said earlier about, you know, the horrors or the things that you might be expecting str- straight away. Are the drivers that you find for, for, for scale or, or, or for consistency, um, are they usually, are they usually the ones you can spot straight away, or is it sometimes actually when you dig into those numbers it’s a surprise to you or a surprise to the client?

[00:18:13] Lorna: I mean, the numbers that you’re kind of going to dig out to scale are always going to be- The kind of balance sheet numbers, so whether that’s things like your debtors, your debtor book, clearing that up, getting those really good clients on board. Um, but I guess the difference in conversation is when you’re a startup is, when you’re a startup, you’re spending your whole life trying not to run out of money.

[00:18:40] Ben: Mm-hmm. 

[00:18:40] Lorna: And when you’ve got to sort of like that medium size, like three or four years in and y- and you’re a bit more of an established business, it’s like what do we do with the money to make it better? So where do you invest the cash or where do you invest the profits? Is that better to invest it in technology?

Is it better to invest it in people? Do we need more people to grow the business? Do we me- need better systems and processes to grow a business? So I think it’s figuring out the business itself and whether it’s, it needs an investment in people or whether it needs an investment in tech, and quite often it can be one or the other, or quite often it can be both.

But I think a lot of businesses think that to be able to scale, they need to just employ more people, but actually they probably just need better processes and systems, and have systems in place, and that’s where the money is best spent. And also things like marketing. So I think a lot of businesses, when they’re cutting costs, they’ll cut things that are actually doing them a really good service, so they’ll cut marketing, they’ll cut training, they’ll cut coaching and stuff like that.

But actually, if they don’t focus on those things or it goes away, they’re then just back to them being them, on their own to run their own business. And they might be less successful, or they might just find that they just kind of stall a little bit, or things just flatline, which is fine for some businesses.

They, they can just cruise for a little while, but the whole point of running a business, if you’re looking at growing it, is to get more business. So you need to sort of spend the money on the things that are gonna get you more business. 

[00:20:10] Ben: And sometimes you need someone else to point that out to you, right? You need to have a little- 

[00:20:14] Lorna: Mm-hmm.

[00:20:14] Ben: Kind of, uh, have you thought about this? Because, yeah, just part of the consultancy and the coach, I guess. 

[00:20:21] Lorna: Yeah, exactly. Because with the coaching, it’s all a case of… You know, I don’t tell business owners what to do. Like, they generally know what they want, and they generally know what they, where they’re trying to get to, and if they don’t, then it’s just asking lots of questions to try and guide them to their own decisions.

But then my role really is to- Just to help build that map to get them there rather than me saying, “Right, well, we’re just gonna do this.” Because if I put all of the ideas into their heads, they’re not going to want to do it ’cause it’s not their thoughts. Whereas if we kind of go, “Well, we want to make X amount of money.

What are the three strands that we want to think about? Is it do we need more sales? Do we need to focus on pricing? Do we need to look at costs?” “Well, I think we should focus more on costs. What do you think?” “Well, yeah, ’cause I think you’re overspending on a load of things, so let’s just spend a couple of months really drilling down on costs and seeing where we can get to, negotiating with suppliers,” all of those kind of things.

And I might take some of that work off of them and go and do some of the work for them- 

[00:21:26] Ben: Yeah … 

[00:21:26] Lorna: on the consultancy piece, but the coaching bit is getting them to really understand the financials in their business. 

[00:21:33] Ben: So how did we end up here? How did the, the, the, uh, a love of numbers presumably. I know your background’s in, in, uh, in banking, but also in coaching as well.

[00:21:42] Lorna: Yeah, so my background was banking. Um, I worked 15 years in banking, but I had a couple of different roles in the bank. So initially I wanted to go into, um, HR training and development from university. That’s what I wanted to do, and I did an internship at HSBC in their training and development team, and I absolutely loved it.

Um, then ended up in a roundabout way working in relationship management, um, in the bank when I first left university after traveling for a little while. And, um- I just loved that relationship building, you know, getting to know clients, getting to understand their business, getting out and about, learning off of, like, the senior relationship managers and directors and stuff.

I absolutely loved that. That then obviously came with an element of, like, needing to know how to read a balance sheet, how to read a profit and loss, and how to put together credit reports to be able to get those businesses the money that they needed to, to fund their business. So that was the early days.

Um, I then moved across to Bank of Scotland, which got quite quickly from when I moved there, taken over by Lloyds, and in a roundabout way, ended up in a training and development role. So I was just taken with one of the area directors, and it was called an area development manager role, and we trained relationship managers on how to be better at being relationship managers.

So that came with either helping them with numbers and helping them just talking to clients, being better at sales, that kind of thing. That kind of progressed into a, what was called a performance manager role, and so we worked with the regional directors to essentially set budgets, help hit sales targets.

That then came with a whole load of coaching of senior managers and also the relationship managers. So hence I kind of ended up combining the two things that I really enjoyed doing. The, like, working with businesses, but also that coaching, and I absolutely loved that job. It was the best job. Um, that job, because it technically didn’t make money, then got stopped, so they stopped doing that job, and then I went back into relationship management, um, and had my own portfolio of SME-sized clients.

That again, it was getting to know them, getting to understand the business, and helping them fund any cash gaps or purchases that they might want to do, whether it was buying a property, buying vehicles, that kind of stuff. So we would… That’s what the job was. Um, and the reason that I wanted to leave and kind of go on, on…

I wasn’t sure whether I wanted to go on my own, so I tried a couple of different things first. But, um, there was, like, a couple of clients that I had who were always phoning me on a Monday morning because they were gonna go over their overdraft, and it was a case of, okay, why are we going over the overdraft again?

Is the overdraft not working for you, or is your business operations not doing what it needs to do? And again, they had a couple of really big clients that just did not pay them on time, and so every single week they were really up against it. And it must’ve been a really stressful conversation for the business owner who’s having to phone me every single week to go, “I need some more time.

I need some more money.” And this just kept on creeping up and up and up, so I went in to see them. And by the time I’d been taken around everywhere and shown all the business operations, and it was a really lovely little company, really nice business, it was quite…they didn’t have that many people in the finance team, so I think they had, like, one person that maybe came in once or twice a week that would do the invoicing as and when they got there, so invoices were going out late.

Money was being collected late. They had nobody ringing any of their clients to pay them, so hence every single week there was a conversation with me to increase the overdraft. 

[00:25:45] Ben: Mm-hmm. 

[00:25:45] Lorna: Actually, I was like, “Well, if you just fix this little thing which is-” 

[00:25:49] Ben: Have the conversation right there instead.

[00:25:49] Lorna: … quite easy, easier to fix, that will stop you from having to have the conversation with me, and let’s try and have a conversation with those bigger clients of yours to get them to pay you a bit earlier and a bit more on time.”

‘Cause again, I think they were, like, a 60 to 90-day, um payment terms. And I just kind of thought- That there are so many businesses that needed that probably level of support, and as a bank manager, and I had 150 clients, I couldn’t give that level of support to every single one of them. And so I thought, “Actually, do you know what?

I think that would be a really good thing to go away and do, and help businesses in that finance element.” 

[00:26:32] Ben: Yeah. 

[00:26:33] Lorna: Because I think that’s really important, and it would stop them from either having conversations with the bank manager or burying their heads and, unfortunately, some businesses are lost because business owners either don’t understand the numbers, or they do and they ignore it, and then things just get worse and worse and 

[00:26:53] Ben: worse and worse.

So you’ve, you’ve led me very nicely into the next question, is why do you think so many businesses avoid looking at their finances? 

[00:27:01] Lorna: I think they either don’t enjoy looking at their finances, because they’re not numbers people. They never..

[00:27:06] Ben: Numbers aren’t that exciting, are they? 

[00:27:07] Lorna: No, they’re not  

[00:27:08] Ben: Unless, you know…

[00:27:09] Lorna: I know, and like my friends think it’s funny that I work in this kind of business because they’re like, “You really hated maths at school.” I was like, “I know, but I’ve got a calculator now, so it’s all fine.” And everything’s done on spreadsheets with formulas, so it’s okay. 

[00:27:24] Ben: It does it all for you. 

[00:27:26] Lorna: But, um, yeah, I think people just, they either really don’t enjoy that part of the business, or they really don’t understand it, or they just haven’t got good enough reporting, um, methods, or the, the reporting’s just not done well enough for them, so they’re not tracking any kind of numbers.

So I think you’ll find the businesses that track every number will be all over their financials because they know every single bit that’s gonna be going into their P&L at the end of the month. Um, but there are a lot of businesses that just don’t do that. So I mean, Richard Branson always said, “Hire people who are better at you than all of these elements,” and he’s never done the financials in his business.

He’s always had experts doing that for you, and I would definitely recommend bringing somebody in if people don’t understand their numbers. 

[00:28:15] Ben: Do you find a difference between businesses that do, uh, I, I guess these are volume, so the, the widgets businesses to the higher ticket, uh, be it consultancy or be it some sort of service.

So I guess what I’m getting at, if there’s an, i- if someone who’s, you know, churning out 100, 1,000 invoices a week to someone who’s churning out, or someone who’s not, someone who’s, you know, just a bigger ticket, couple of invoices a month, do you find a difference in those busine- businesses and the way that those owners look at their numbers?

[00:28:50] Lorna: Yeah, probably, ’cause I guess the bit that- The service-based businesses are gonna have potentially better margins. Um, and so if they’re only having to do five or six invoices a month, it is much easier to track that level of business. Um, a business that’s, like, manufacturing something or that’s got a production line and they’ve got load of different elements that are having to go into those invoices, they’re gonna take a lot longer potentially to put together if they’re not correctly set up.

Um- But you still might have a business owner at the end of it that doesn’t want to look at that either. They just let their finance person get on with it, but they’ll generally have a finance person that will do it. Um, it’s all in that conversation afterwards. So I’ve had a couple of other clients who, they might be quite good at processing things, um And they’ve been really successful in the past, but they haven’t kept a track on anything, and so things have just kind of dropped off, or things have gone under the radar, which they hadn’t really picked up on, and actually put that business into real disaster kind of territory.

And, or they’ve just lost a lot of control in the finance element, in the finance team, so they’ve l- left people to their own devices to get on with certain things, and then taken their eye off the ball. 

[00:30:10] Ben: Mm. 

[00:30:10] Lorna: And that’s just as dangerous. Even having somebody that just does everything for them, if they’re not either checking or having sense check meetings every single month with a finance hat on, so to speak.

[00:30:23] Ben: So from a, a coaching point of view, is there a, a mindset change that you see that’s, that needs to happen? 

[00:30:30] Lorna: Mm. 

[00:30:30] Ben: And how, how do you coach that through to, to businesses where you … Exactly what you’ve just described happening, the, the, it’s on the slide. 

[00:30:40] Lorna: Mm. 

[00:30:41] Ben: What’s the mindset shift? And, or does it vary? 

[00:30:44] Lorna: I think it d- definitely varies depending on the person.

Um, I think even if you can just get them to have a 20-minute conversation once a month with the people that are doing the finances, and have some key things that they want to be able to ask, and they need the answers to, that just gets people into the habit of just knowing those specific numbers. So it could easily be something like, “We know that we want to make 25, 25 grand of sales every single month.

What’s our sales figure been this month?” And if it was a case of it was 22, “Okay, why was it 22? Why was it not 25?” Or, “The bottom line needs to be X. Why is it 20, why is it X, and why is it not X?” And just ask, asking some simple questions, because that will always lead into potentially a better conversation.

So it’s just having, I think, I guess, three or four key questions that you want to ask of either the person doing your numbers or when you’re looking at your numbers. Oh. But yeah, it definitely depends on the person, because some people, if they’ve done it that way the whole time, they’re not going to want to shift, and I think getting that mindset shift’s a lot harder than putting the numbers in front of them, going, “Right, what are we gonna do about this?”

Because they might still not do anything about what you’re putting in front of them, because either it needs a real shift in direction of the business, which comes with challenging conversations, which comes with challenging processes, which comes with challenging absolutely everything that they’ve been doing operating that business which isn’t working, to getting them to understand that if you do it this way, or if we tweak these couple of little things, it’ll be so much better in the long run.

But sometimes people think that they know better, so they carry on how they were 

[00:32:38] Ben: And you’ve seen those situations I would imagine. 

[00:32:40] Lorna: Yeah. 

[00:32:41] Ben: Which has got massively frustrating for you- So frustrating … trying to help someone out. So how, how do you cope with that? 

[00:32:47] Lorna: Oh, that’s a really good question. Um- I guess getting to understand the person a little bit better and getting to understand what their longer term plans are, ’cause then you can work with them on, well, if we tweak these little things, then actually it’s gonna get you to that point quicker.

Or just trying to take some of the stress off of them a little bit, because I think once a business is in that real panic mode and things are really distressed, it’s really stressful time for them. Because, you know, you’re, you’re looking at potentially losing houses, potentially having to let however many staff go, and that comes with quite a lot of stress.

So I think having somebody to either take some of it off or to at least talk to calms them a little bit. Um, but sometimes I’ve had to just get quite strict with people in terms of, right, you’re not making any payments out of this company until it’s been run past me. Um, which then comes with its own challenge in that I then would get hundreds of phone calls.

It’s like, “We need to buy, like, toilet roll.” I’d be like, “Oh, okay, fine. Now we need to put, like, little parameters in. Okay, you can spend this much in a week, but you cannot spend this much, and these are the people that we’re paying this month, and that’s it. Other than that, you’re not paying anything else out of this company until we’ve had X amount in.”

[00:34:12] Ben: So if there will be people listening to this podcast or watching this podcast who probably are almost in that situation or in that situation, what, what is the, the, the, the biggest piece of advice? If they know they’re in danger but are likely ostriching it and sticking their head in the sand. 

[00:34:30] Lorna: Don’t.

Just go and talk to anybody. Go and talk to somebody that you trust. Um, if they’ve got a good accountant, go and talk to their accountant and get the financial information that they need. But also, really good accountants are good at having these conversations as well. Um, if it’s got that bad, I would get some advice maybe from a restructuring, um, company.

Like insolvency practitioners are really good at saying, “These are your potential options if your business doesn’t turn around in time.” Um, at least then you can make some contingencies. And stop spending, really review all of your costs, and really review how your business is operating. So one in particular we had, um, they had a lot of

So I, I feel it was something simple, but it probably wasn’t. I think they hadn’t quite got their overtime, um, process correct, and so they had people working during the week, but then if they put in overtime in terms of it took them longer to, to complete a job or they worked in the evenings, they would put their overtime through, and I think overtime was paid at, like, two times um, rather than just their normal salaries. And it got to one point where one month where most of them had actually earned more overtime than they had their day rate.

So not only were they paid their full-time salary, they were then also paid a massive amount in overtime because they’d never had any rule in place to say if you didn’t work your day shift but you only worked your evening stuff, that you wouldn’t get your day rate, you’d only get the evening. So it, it- 

[00:36:16] Ben: Yeah

[00:36:16] Lorna: wasn’t quite as straightforward as it, as it sounds, but they never, they never took any notice of it. And so it was only again when we were pulling out the whole payroll saying- 

[00:36:25] Ben: Looking into the numbers … “

[00:36:26] Lorna: They’ve been paid a massive amount of money this month. Why is that?” And then you look into it and, like, people weren’t checking it, and it was just going through to the HR person who was just putting everything through.

So things like that and simple things like that really caught that business out, and that had been going on for years. 

[00:36:46] Ben: Until you dive into the numbers, sometimes you just don’t see it. 

[00:36:48] Lorna: No, exactly. And then that would’ve come with a challenge in conversation. It’s like, well, firstly, are they taking the Mickey?

Have they found a little loophole that they all know and they’d all told each other about? 

[00:36:59] Ben: Mm. 

[00:36:59] Lorna: So that then becomes a bit of an HR thing. And then secondly, how do you then roll out a new expenses policy or a new, um, overtime policy quickly that, and get that whole team on board with it without losing people?

So it, it then became a little bit more of a deeper, more complicated conversation, but it was something that they just never got right from the start. So I think for anyone that’s starting to employ people or bringing more people on, it’s getting those things really nailed down at the beginning because a lot of people add things on as they’re kind of going, and I think that’s more dangerous.

[00:37:37] Ben: Um, so talk to me about your business, as in you, the business owner, ’cause obviously you’ve moved from the, the, you know, the, the bank and you’ve gone through a couple of other changes, but now you’re running your own business and, uh you’ve got to take all this a- advice … onboard yourself. 

Do you take your own medicine, I guess is what I’ve, I- I’m asking. Uh. Do you take your own advice? 

[00:37:59] Lorna: I always invoice on time. 

[00:38:00] Ben: Excellent. Good to hear. 

[00:38:02] Lorna: And I’ve got my QuickBooks set up so that if it doesn’t arrive when the payment date is due, it sends out a little reminder to people. So that’s always the automation side. Um, so yeah, I try and automate that as much as possible. I do have my dad who does my numbers for me, so he does all of the accounting side. So I have outsourced that to him.  

[00:38:22] Ben: That’s excellent. I like that.  

[00:38:23] Lorna: ‘Cause he’s, he’s been FD and FC at companies before, so he does all of that bit for me and makes sure that Companies House is up to date.

And some of those things, um, that I either wouldn’t get round to doing or that I have zero interest in doing so he does that bit for me. Um, I think it’s easy to not hold yourself accountable when you work for yourself. And so- I, I’m quite good at setting targets in terms of I know that at the end of this month I want an X amount more clients, or I want to have done another couple of projects or, or whatever that looks like.

Um, but if I haven’t hit those numbers, there’s no consequence other than I just haven’t hit those numbers. But, um, I think we were talking about it the other day with, like, the highs and lows of being a business owner. 

[00:39:14] Ben: Yes. 

[00:39:14] Lorna: And sometimes I really, really love it, and I love, um, the kind of lifestyle that I’ve now been able to build, build around the business.

And then some months I hate it because I feel like I’m on my own all the time, and I loved working in a team. And having come out of, like, large corporates and always been part of a team, I’ve never kind of done a solo role. I’ve always had a team around me, and whether that was a good team or a bad team is irrelevant.

I’ve always had a team. Um, to now sometimes my only interaction is with some of my clients. I might not see them… I don’t see them sometimes more than once or twice a month. 

[00:39:52] Ben: Yeah. 

[00:39:52] Lorna: And so if I haven’t got a really full diary, then I’m a bit like 

[00:39:57] Ben: There’s no one around 

[00:39:57] Lorna: There’s no one here. It’s just me. So I think it’s having that group of people that you know that you can just either phone or just talk to and, and having some really good business connections.

And actually, I think being in and around Berkhamsted has really helped with that, ’cause it’s got a really good business community, and there’s some really great professionals and some just amazing people that I know full well that if you just picked the phone up to them to have a chat, they’d just welcome it.

It wouldn’t be an unwelcome phone call. 

[00:40:28] Ben: Now, I mentioned at the start, the start of the, the conversation you, you’re, you’re well known in Berkhamsted, um, from different groups, different networking groups, different people around us. Have you got any favorites? Any ones that you would recommend to anyone or, or, or do we wanna keep some of those secret ’cause we don’t want too many there or- Or what- 

[00:40:47] Lorna: Any favorites?

[00:40:47] Ben: and also, how did you … Well, I, I, I guess more than any favorites, how did you find that starting out in running your own business and having to go and put yourself out in front and say, “Hi, um- Hi … hi” 

[00:41:00] Lorna: I’m something new now. Um, because I was a relationship manager for Lloyds in and around St Albans area for quite a few years, I built up a good connection of people then.

[00:41:12] Ben: Mm-hmm. 

[00:41:13] Lorna: And so when I said to them about moving off and going and doing my own thing, a lot of people were really supportive of the idea. And I think that’s definitely helped because either going to all of the networking things as not Lorna, Lorna from Lloyds, which is what I was known as or who I was known as, but Lorna, who now does her own thing and no one’s entirely really sure what it is, um, has always been a slightly different conversation.

Um, but I think just being really consistent with groups has really helped because- The more that you’re known at one particular area, the more relationships you build up and, like, the stronger those relationships are, and then the more that they think about you and invite you to other things. And that’s kind of led, led on to that.

So I’ve always done the Coreum Lunch Club, and I’ve, I used to s- I did that from when I was at Lloyds, so hence that’s been a consistent… That’s had lots of different changes of people and, and stuff, but obviously all Berkhamsted and Hemel Hempstead based. Um, so I’ve, I’ve, I’ve always gone to that one. Um, and then there’s some of the chamber events over in St.Albans. I generally tend to do quite a lot of stuff over there as well. 

[00:42:30] Ben: Brilliant. Um, final question from me. 

[00:42:33] Lorna: Okay. 

[00:42:33] Ben: If you had a magic wand and you could get every business owner doing one thing with their, for their financials, what, what would it be? Or doing one, or, or doing one thing differently.

Put you on the spot here, haven’t I? 

[00:42:50] Lorna: That really has, yeah. And I think for me, if what, if business owners did one thing, and that would be, um, looking forwards, like, trying to look at their num- trying to look at their numbers forwards as opposed to backwards. Backwards gives a really great snapshot of what’s happened, but actually, if every business owner started looking at what they want to happen and trying to plan forwards, that’s a good place to start.

[00:43:16] Ben: Brilliant. Great advice. Lorna, thanks for coming on the show. Really enjoyed this chat. 

[00:43:20] Lorna: Oh, thanks. I’ve loved being here. 

[00:43:22] Ben: Good stuff. Yeah. We’ll see you again. 

[00:43:24] Lorna: Thank you. 

[00:43:26] Ben:

 Thanks for watching this week’s episode of Berko and Beyond. If you’d like to be a guest on the show, then drop us an email, podcast@berkoandbeyond.com.

And don’t forget to like and subscribe wherever you watch or listen to your podcasts. We’ll see you next week.