MyCake
Welcome to our flashy new results interface. Part 2 – the What If? tool
In the first installment of the welcome to the new benchmarking results interface we looked at the graphs in the Annual Report cluster. In this post we’re going to look at how you can use the data from the last 12 months to help you make plans for the future.
It is not unusual for entrepreneurs to wake up sweating at 3am with questions of ‘what would happen if we lost a key client and therefore 30% of our turnover?’ but don’t have the tools to hand to look at the implications.
Success can be equally stressful as it tends to overstretch your resources. Having an idea of how much extra business you need to win in order to be able to invest the profits in new staff, R&D etc would also be a way not only to put your mind at rest but to set quantitative targets for growth as the year progresses.
So, wouldn’t it be useful if you could easily and quickly use last year’s figures as the basis for exploring scenarios for your future without having to struggle with excel spreadsheets on a Sunday evening? Here’s how you can:
Stage 1 – last year’s data is entered and approved and now you can view it in the results section:
Stage 2 – play with the sliders to see how the figures change:
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version 1: a 30% growth in sales… see the extra net profit and consider whether you’d need more staff, higher production costs, more marketing etc in order to reach it:
Having adjusted some of your costs, see whether this 30% growth would really fund them all? By way of example we’ve increased raw materials by 20% and labour by 20% in the above example. This means that the profit would actually drop from £45k to £39k! So clearly if you were to increase sales by 30% you’d still need to be careful on the allocation of resources to ensure that what was coming in wasn’t just going out immediately!
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version 2: a 30% drop in sales … perhaps losing a key client.
How long can you continue with your current overheads and staffing costs? What would you cut first – people, production costs or overheads? Evidence demonstrates that companies never cut costs soon enough … this is in part because when you’re faced with the need to make painful cuts people tend to put off decisions which, unless they win new business very swiftly, tends to make the situation worse not better. Evidence also demonstrates that those companies who have thought about this sort of thing in advance, worked out what the key points are for making such decisions tend to make them sooner and more confidently than those who do not plan for this sort of thing.
So, in summary the What If? tool allows you to test out scenarios quickly and consider what you would do if these became reality. This makes for useful discussions with senior management and is helpful in planning your next 6-12 months.
Welcome to our flashy new results interface. Part 1 – the annual report
We’ve been working with Nothingrinder for the past couple of months to bring you a much improved benchmark results interface within MyCake. Here’s a preview of what’s now possible.
The annual report
The annual report set of graphs shows you your Profit & Loss sheet as a bar chart. It starts with the top level of information … income, cost of sales, profit, indirect costs and profit.
From this page you can either benchmark your company at this level or you can drill down to more detail on each of these key areas.
Benchmark top level – net profit
… in this example you can see that the top quartile (best 25%) have a net profit of some 54.5%. In this example you can see that the users’ net profit of 31.2% is at least above the average of 22.8% … so in the top half but not the top 25% asks the question of whether they could do better?
Benchmark detail – income
If the questions are “how am I doing and how can I do better?” then we probably need to drill down to more detail. In this example we’ve picked the income line to look at and see how it splits out into the main sales income, any grants received and ‘other’ income (typically expenses charged to clients, non-core products, interest on bank deposits etc).
Some sections of the P&L have more drill down levels than others so at each stage you’re asked if you want to benchmark at this level or drill down further. You know you’ve reached the deepest darkest level when you’re only given a benchmark!
We thought this ability to benchmark at a top level as well as in great detail would be useful for the times when you just need a rough answer to the question of what do others do and how do you stack up? Of course if you’re looking at ways of making cost savings for example you may well want to drill down into just one line of indirect costs … to see what others spend as a proportion of income on an area like travel.
So what might you do as a result of reading this … try this:
- pick a completed year of data (say 2008 or 2009)
- look at what your split of income was across sales:grants:other
- see how these ratios compare to the best, worst, average and top quartile for the whole of the MyCake user base
- sit down with a cup of tea and have a think about what ratio would be good for you to aim for in the rest of the year and 3-5 things that you’ll do differently to help you make this shift (perhaps charging more expenses to clients, finding ways to add some new products into people’s standard orders etc).
In the next instalment we’ll walk you through the What If? calculator to show you how you can use past information to help you plan for the future.
MyCake ~ a few tweaks to book-keeping service
There are a number of tweaks and improvements for MyCake users of the online book-keeping software:
New fonts for invoices
Tahoma, Verdana and Courier New have been added to the list. In Settings -> Invoice Options -> Display Options, you get to chose the font used on your invoices and other PDF documents.
Postcodes with customer name
Following requests for the ability to include postcodes in the drop-down list of customers (ie, the list shown when you choose a customer or a new invoice) it has been added as an option. Go to Settings -> Advanced Settings and enable the option labelled “Show Post Code in Customer List”. The feature will soon be upgrading to offer a range of other display options.
Manage your list of payment types
You’ve always been able to edit the list of different methods that use to pay for your purchases – ie cash, cheque, credit card. For incoming payments from your customers the list has always been fixed. This wasn’t too much of a problem as the list contained most methods of payment you’d expect. But it’s nice to be able to remove methods you never use. So you can now edit the list of incoming payment methods. Click “Settings” and then choose “Payment Methods”.
Improved layout for settings page
There are so many different settings available that it was becoming problematic to quickly find the setting you are looking for. To improve this, the Settings page has been broken down into the following sections: Your Account, Lists, Configuration Settings and finally External Services. We hope this will make the Settings more manageable.
Priting labels
When viewing a customer or an invoice you’ve always had the option to quickly print either a C5 or DL envelope. You can now use the new option to print a Dymo label.
Changing account codes on multiple transactions at once
If you’ve accidentally recorded a large number of transactions against the wrong code then it can be a real pain to manually edit each one. So there is a new feature to let you do this very quickly. Run a Trial Balance, Profit & Loss or Balance Sheet report. Click on the name of the code containing the offending transactions. You’ll see a list of all transactions against this code for the date range specified. Next to each transaction is a tick box. Tick the transactions you want to move (or use the box at the top of the page to select all) Then at the bottom of the page, from the “Action” drop down list, choose the option to reallocate the transactions. You’ll be taken to a page where you can select which code to reallocate the transactions to.
Converting bank transaction to receipts / automatic code change
If you have a transaction in your bank account for money going out you can convert this to a receipt (or a Purchase Invoice in accountant-speak). If the bank transaction is assigned to the code “Other” then it will be automatically changed to the suppliers default Outgoing Type. This feature can be enabled or disabled in Settings -> Advanced Settings.
Sales vs. Grants … income defined
What does your income look like and can you see what is at risk re public spending cuts?
Various folks have said they’d like to see how their income splits out between grants and sales. So in order to help you do this we’ve added in a few categories to the standard set of nominal codes in Kashflow and we’ve also added it as a line in the benchmarking side.
Now you can clearly see your income streams and the amount coming through from public funds that may be at risk as the new Government gets to grips with its spending.
If you’d like a hand working out how to make this separation in your own figures so that you can track the vissicitudes and variations in this area then please do have a look at the benchmarking forms or drop us a line …
prune your list of VAT Rates
Within MyCake, you will see that all relevant VAT rates are listed, based on your default currency symbol. This can be slightly annoying if you only ever use a couple of the available VAT rates.
You can choose which rates should be listed in your drop-down box by adjusting your account settings. Simply go to Settings – VAT Settings. Near the bottom of the page you’ll see the option to add and remove rates ~ it looks like this:
add notes to a bank account within MyCake
We wish we could say you can literally add money notes to your bank account but instead we have a handy new feature for MyCake users.
You can add notes to individual bank accounts. We hope this will enable you to easily administer your accounts and have a central source for any information you need for your bank accounts such as SWIFT or IBAN numbers. You can add notes by going to the bank section and clicking the edit details for the account you would like to add a note to.
London Fashion Week giveaway
Today is the start of London Fashion Week, and this season you can check out the shows live online. For the first time LFW is streaming film of the catwalks ~ see LFW TV for the schedule.
To celebrate we have two copies of Form, Fit and Fashion
This book lifts the skirt of the fashion industry and guides the fashion designer through the entire design process, from conceiving a garment to marketing it. With all the details you need to know but can never find, it’s a valuable first-stop resource for your studio.
It’s simple to enter ~ just leave a comment below telling us (or better still add a picture) what has been your best fashion investment ~ before the end of Fashion Week on Wednesday 24th February.
Are your figures under-dressed?
High fashion businesses are often a money pit in the early years. Those first few seasons might only result in £3-5,000 of orders per season and yet the cost of sampling and PR let alone catwalk shows and salons will certainly exceed this income.
So how does anyone get going? There are several answers to this depending on which bit of the fashion sector you are in. If you are aiming to be the next Alexander McQueen then many would say that you need passion, commitment and to get noticed. Many would infer from this that your finance skills are less important. Indeed if you find a financial backer who will cushion you from the ups and downs in seasonal cashflow then indeed this can be the true. Camilla Staerke is one example of a name backed by an investor.
If however you want to build your own label independently or indeed if you want to maintain easy communications with your investors it pays to understand your numbers. There are a couple of key angles to this. You need to understand garment costing so that you know precisely what the unit cost is of each design you create. We rate F2IT as the best solution for independent labels … just looking at their customer list shows you that the likes of Christopher Kane, Eley Kishimoto and Erdem agree.
But production costing is not enough. You need to be able to make forecasts as to where your sales will come from next season and target the retailers who you feel would be a good fit for your brand. You probably need to hang out in some of those retail spaces to to get a real idea of how sales happen and why.
You also need to get a handle on the mix between online and offline sales. With such a huge growth in online fashion retailing you need to work out pretty early on whether you’re going to run your own store or whether you’re aiming to get stocked by one of the existing online retailers.
Sounds like a lot to handle, well yeah, kinda but honestly … you gotta be business savvy as well as creatively brilliant. Don’t just take our word for that, here’s Wendy Malem of the Centre for Fashion Enterprise explaining why business development matters as much as creative development … in particular check out her views on the finance needs of companies growing from creatively applauded but financially fragile to more robust global brands.
Wendy Malem speaking at Investment Matters in 2008 courtesy of CIDA and the ECCE project
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Look out for our fashion related giveaway later today…
What business risks should you care about? free planning tool
How can you work out what the threats to your business are, how to recognise it if they happen and make plans to minimise the impact of these risks? Here are some tips from MyCake on conducting a risk assessment, and look out for the free download at the end of the post.
Most large businesses plan for such eventualities and put processes in place to lessen the impact should they occur. Sometimes this means training of staff, succession planning for senior roles and sometimes it means building a financial reserve to pay the costs of rectifying a situation should it arise. The principle applies to small businesses as well though the processes are probably a little simpler. Here’s how we suggest you go about it….
What are the risks your business faces?
- What or who does your future depend upon for success?
- Which of these do you have control over? … consider both factors which are internal to the business and those which are external (you probably have less control over the external ones)
- Are these factors stable or in flux? (i.e. is it actually a risk or is it stable)
- For those in flux what are the chances of a change for the better or worse? (i.e. risk level)
- What are the impacts of worse? (i.e. potential impact)
What can you do about these risks?
- How would you know if it were heading that way (i.e. what are the markers?)
- How could it be averted?
- What is the contingency plan?
- What would the costs be if you had to rectify these challenges? (consider what it would cost if you nipped it in the bud vs. if you caught it later on)
Here is a Risk Assessment Table for you to make use of so that you can look at all your risks, prioritise the ones you need to prepare a solution or contingency plans for and share the plans with your team. You could also use this approach to brainstorm the risks with your team as you might perceive the risks and solutions very differently.
Managing your sales pipeline of new work ~ free tool
How do you gain an overview of the forward pipeline of work for your business and therefore work out what the priorities are for winning new work vs. research & development vs. admin vs. time for a holiday?
We’re fans of online CRM systems such as Tactile but if you’d rather there is a more manual way of doing things.
First of all you need a long list of all the possible clients for each of your products and services. Depending on how long this list is (i.e. 10′s vs 100′s) you might want to prioritise them according to how easy you think it would be for you to sell to them and the volume or scale of work they might buy/commission.
It is a good idea to do some homework on each of these to see what they already buy that overlaps with what you offer … so if they’ve just placed a large order with someone else or recently signed a contract with a competing agency then they’ll probably end up lower down your priority list.
Once you have a shortlist of priorities it is mostly about being clear as to what you’d like them to buy and tracking the stages of conversation you’re having with them. Here is a client status and planning tool that you might find useful. See the yellow notes for our thoughts on how to fill in each column. You might also want to add a column where you record your thoughts on the chances of winning the work (one way to show this is the % chance of the project/sale happening).
On the second sheet in the tool you’ll find a layout for you to use to track the phone calls and emails you make to each potential client. This means that not only can you track your activities but if others in the firm speak to them you can track this too.
You might also like to consider how long the list of possible sales needs to be in order for you to win enough to stay at the same level of business revenue vs grow the company? If you track all your leads over time you’ll be able to spot what percentage you tend to win … and therefore how many new leads you need in order to win enough work. In the service based creative sectors this is probably somewhere between 15-25% of all early stage conversations … just as a very very rough guide. If you’ve been receiving a lot of press coverage for your work of course this percentage will probably increase but you might not want to build in a higher win rate as necessary to fund the costs of the business!
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