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Skip to 0 minutes and 4 seconds Welcome to week three of the Importance of Money In Business. This week our focus is on what happens when a business has an established position in its chosen industry. We’ll be exploring how a business can avoid going off track, and the critical role financial management plays in keeping an organisation healthy. So what do some of the people we interviewed for this course think is key to the day-to-day running of their business? I think the best skill that you can have is organisation, and a realistic things to do list. IT is probably the biggest thing to impact, or influence our jobs on day-to-day basis.

Skip to 0 minutes and 48 seconds As you can imagine, the inbox gets busy with requests for input into a project, or to start a new project. We always have to question does that fit with the goals that we set out to achieve this year, next year? Does it add value, or is it actually a “nice to have”? As we will see, a continuous cycle of planning, decision making, and measuring performance is at the heart of any successful organisation. Fundamental to this cycle are the finance team, and the effective use of financial data. The management team of any organisation needs key information to make decisions on a daily, weekly, monthly, and annual basis.

Skip to 1 minute and 33 seconds You have to preempt what your business needs to be able to grow, otherwise you will only end up cannibalise it. Also I guess reporting without accurate monthly management accounts, it’s impossible to know whether your business is profitable. It’s impossible to know what margin you generate for each of the products you sell. Therefore it’s impossible to make decisions. So I think the one thing that small businesses don’t do often enough is to prepare accurate information, enabling them to make the right decisions. But no matter who you talk to, and what decisions they are making, the importance of cash should never be underestimated. The business that we were starting was a software business with recurring revenue.

Skip to 2 minutes and 16 seconds And obviously to build that recurring revenue, you need sales and you need growth. But in order to be able to sustain that, you need cash. There is only one thing that can kill a business, and that’s essentially running out of cash.

The week ahead

Welcome to the third week of the course, where we’ll explore the role of financial management in making sure a business stays on track.

In this video, Peter is joined by a number of business experts. We asked them what they thought was key to the day-to-day running of their business. Together they introduce some of the factors that are critical for keeping an established business healthy and focused on its objectives.

What’s next?

As we’ll see this week, an on-going cycle of planning, decision-making and keeping track of business performance are crucial for any organisation. We’ll begin in the next step by considering the role of the finance team and financial data in the management of this cycle.

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This video is from the free online course:

The Importance of Money in Business

University of Leeds