In this episode of the I Hate Numbers podcast, we explore how planning can transform your business's future. Discover how planning reduces anxiety, empowers decision-making, and boosts profitability.

Why Business Owners Overlook Planning

Many business owners neglect planning, missing out on its benefits like looking ahead, cash flow forecasts, and clear goals. In the following sections, we have a look at the reasons behind this oversight and provide actionable tips to make planning an essential part of your business.

Unlocking the Benefits of Planning

Lack of Awareness:

Business owners often resist change until they understand the benefits that planning brings, such as effective cash flow management.

Fear of the Unknown:

Embracing uncertainty and adapting to market changes are critical for proactive decision-making and also staying ahead of the competition.

Perceived Lack of Skills:

Contrary to common belief, planning doesn't require specialized expertise. Your deep business knowledge and experience are invaluable in creating a successful plan.

Short-Term Gratification:

To stay motivated throughout the planning process, it's important to celebrate milestones and recognize the rewards that come with each step forward.

Clear Objectives and Goals:

Clearly defining your goals, articulating desired outcomes, and making them tangible will drive your planning efforts and keep you focused on success.

Access to Data:

Moreover, leveraging digital solutions and accounting software to gather accurate and up-to-date data, provides a solid foundation for informed decision-making.

Effective Communication and Collaboration:

Improving team communication and fostering collaboration within your organization significantly enhances the planning process and ensures everyone is aligned towards shared goals.

Prioritizing Cash Flow and Profitability

While profitability is essential, maintaining a healthy cash flow is crucial for the long-term sustainability of your business.

By reducing anxiety, empowering decision-making, and boosting profitability, planning becomes an invaluable tool. Don't overlook its benefits. Remember, a goal without a plan is just a wish.

If you found this episode helpful, we encourage you to share it with others who can benefit from it. Let's empower business owners worldwide to embrace planning and unlock their true potential. Don't forget to subscribe to the I Hate Numbers podcast and join our community. And remember folks Plan it, Do it, Profit!

A goal without a plan is just a wish. For several decades, I've been a massive believer in the power of planning, and the power of planning in your business to transform your future, to reduce your anxiety, to help you make stronger, more confident decisions, and that plan is also a cash flow plan, then you've got the world at your fingertips and you can kick stress into touch.

Having said that, I don't need to be convinced, and there are thousands of business owners in the UK and around the world, if not millions, that do not entertain the idea of planning. Do not even do a cashflow forecast. So, in this week's I Hate Numbers Podcast, I'm going to explore the reasons why many business owners do not engage with planning, the reasons behind that, and also give some tips as how we can make that better, improve that, and move towards an era where planning becomes an endemic part of your business practice.

You are listening to the I Hate Numbers Podcast with Mahmood Reza. The I Hate Numbers podcast mission is to help your business survive and thrive by you better understanding and connecting with your numbers. Number love and care is what it's about. Tune in every week. Now, here's your host, Mahmood Reza.

Hi, folks. Welcome to another episode of I Hate Numbers. This is the podcast with a mission to increase your financial awareness, help you make more money, convert that hobby business into something more sustainable, reduce your stress, save tax and time. Plan it. Do it. Profit. Let's crack on with the podcast. Now, in no particular order of importance,

I believe that one of the reasons why business owners do not engage with planning looking ahead at least 12 months, if not more, why they do not produce cash flow forecasts is they're not fully cognizant of the benefits that it brings. Just as much any habits that we have already, we don't change them until a disaster strikes, until we can see why we should have

better diets, why we should exercise, why we should be kinder to people. If we don't understand, and empathise, and appreciate those benefits, we're never going to change. We're going to carry on being mean. We're going to carry on having poor diets. We're not going to exercise. We're going to consume too much, by the way, of alcohol and cigarettes.

So, unless we can see the reasons for changing, it’s not going to happen. And that lack of understanding for ourselves and our team members can be a hindrance. If you don't appreciate that once you run out of cash, for example, that do not pass-go, do not collect 200 pounds, your business will not survive, then we don't appreciate how important cash flow actually is.

What are the other reasons? Planning by nature has a fear of the unknown, the uncertainty, the change that planning requires. As business owners, we need to embrace uncertainty and adapt to changes in our marketplace. In our industrial sector, whether that's a social-enterprise sector, whether that's an art sector, a private business, whether it's a freelance environment, doesn't matter.

All businesses are susceptible to change, and it's a challenge to anticipate those future trends and to make those proactive decisions. The fear of that uncertainty can discourage us from engaging in that planning activity. Another reason is we may perceive we don't have the skills, the expertise to go down the route of planning.

We may think it requires an MBA, a degree, a certain level of professional proficiency in order to engage in a planning activity, and that's certainly not the case. With the thousands of clients that I've helped over the years in producing their financial forecasts, in producing their financial strategies,

I take a slightly different viewpoint to this. You know your business very well. You understand where you want to go. You understand the customers that you deal with. You understand the skills that you have and what makes you unique compared to other business owners. Forecasting, planning requires as much for you to have a coherent story,

an end-destination point, a route map as to how you get there, and then the financials are overlaid. If you don't feel you have those skills and expertises, then you've got people in your network. Use the services of an accountant. Cough. Cough. I Hate Numbers is there at your disposal. Talk your accountant.

Recruit buying those skills, you will find it'll pay off. Now, in addition, the process itself is one that becomes a stumbling block for many business owners. We as human beings prefer short-term gratification over long-term gratification. We prefer those shorter wins, those quicker wins, and if we can't see the immediate benefits of planning, unfolding, and if they're in long term, in the long grass, we may not necessarily connect with that

as a primary benefit of doing that. However, the whole planning process, the whole translating your vision into a document, a reality, a financial forecast brings immense benefits with it. Each step, each milestone that you complete in that process brings that little shot of adrenaline, that little dopamine rush, and that's a good thing.

Other reasons would be about objectives and clarity of goals and outcomes. If you have no real perception, if you cannot articulate what that future looks like for you, then you'll find it very difficult to engage in that planning process. However, that's not the end of it. Think about your goals. Make them sure they're smart.

Think about your outcomes. Think about your destination point. Describe it. Articulate it. Taste it, smell it, and that'll make it much easier for you to define what those clear goals and objectives are for your business. Other reasons worthy of mention. A lot of business owners feel they don't have the data around them.

They don't have that information to feed into the system, but that's fine. Accurate and up-to-date data certainly is crucial for informed decision making and effective planning, and if you do feel you've got the existing data-collection systems, then make sure you go digital. So, for many hundreds of our clients here, we digitise their businesses.

We install a software like Xero, which is a very powerful tool. Set them up, instruct them, train them, show them how to capture data efficiently and effectively digitise, automate the process, gather all that data in from all the different feeder systems, from your website, from your bank statements, from your financial activities, and you have that then at your fingertips.

Having said that, insufficient data will severely impact your ability to make decisions, let alone making plans. Within your business team, it's essential that you've got good communication and collaboration. If your culture is one that your managers, your team do not communicate with each other, there's working in silos, then you've got to find it very difficult to formulate a plan.

But all these things can be solved. Communication lines can be improved. It is possible for people to participate more actively, helping set those targets, set those plans, and a movement forward in communication protocols will certainly be a very powerful force. Folks, we're not quite there yet. Let me throw in some more.

Now, producing a cash flow forecast, for example, is only the first step. Having produced it, the moment you agree at, the moment you see it, it's out of date. It’s really critical that we monitor and review our progress forwards and measure that against the reference point of our plan. Our cash flow plan, our financial plan may be modified, may have to change, but we need to measure what we are doing against the progression of that plan.

Now, again, if you don't have the systems in-house at the moment, that's all very fixable with a good digital system, and as a little shout out, Numbers Know How, my sister’s company, has an online financial-planning tool that talks to your accounting systems. That is a very powerful tool in its own right, whereby you can input information, you can look at it in a variety of ways, look at it graphically, and all other ways.

The data entry is nice and smooth. More of that later on. Check out the show notes for a link to check it out for yourself. Have a couple of things here to mention before we round up. Many business owners look at revenue generation and profitability, and they forget the cash flow. It's very possible and it's very likely, and it's the reality of these things that in the short term, profitability is not likely to be generated in great spades.

Focusing on profitability, certainly, is a key financial metric, but if you don't have the cash flow, if you burn through cash very quickly, however viable your product is, however wonderful it is, however brilliant your services are, once you run out of cash, you will not be able to sustain that business. So, by all means, have profitability as a key metric.

Revenue, to my mind, is a bit of a vanity metric. Profitability and cash flows are the key things to do. Now, if you feel uncomfortable about forecasting cash flows, especially if it's a new product, a new pivot, matter not, fear, not. You can make assumptions. You can do these things and armed with a good business finance coach, cough, cough, armed with the software, then people in your network, your accountants, whoever you used to, that task is made much easier.

With the right tools, the right knowledge base, then you can produce yourself a very powerful cash flow forecast, a financial plan. And take it from me, folks. Having a good plan at your fingertips, having that planning mindset will power your business forward. It'll reduce your stress and anxiety. It's likely to make you more money, and not having one, and you're likely to get your destination point much faster and more efficiently than if no plan existed in the first place.

I hope you got some value from this podcast. I’d love it if you could share, give me some feedback. Tell me what your own thoughts are. Do you have a plan in your organisation? If not, do you have plans to have a plan? Until next week, folks, I'll see you on the other side. We hope you enjoyed this episode and appreciate you taking the time to listen to the show.

We hope you got some value. If you did, then we'd love it if you shared the episode. We look forward to you joining us next week for another I Hate Numbers episode.