Chris West - Professional Writer

I’m not an expert on Finance. And finance is an essential skill for every entrepreneur. I don’t mean Big Finance, derivatives, city takeovers etc., but the basics of day-to-day accounting, cashflow, finding funding, dealing with the bank…

Luckily, two expert Finance Directors got in touch with me expressing the desire to write this book. Stephen King and Jeff Macklin ran FDUK, a business that provided ‘virtual’ Finance Directors to SMEs. They were fans of Beermat Entrepreneur, understanding that the book fitted their business exactly: what they were providing were finance cornerstones.

Something I had not really understood until meeting Steve and Jeff was the difference between the traditional accountant, who is someone who essentially keeps the score (and gets jokes made about them about ‘driving a car looking in the rear-view mirror’) and a genuine Finance Director, who does all the score-keeping but also looks firmly ahead, at the future needs of the business and at the economic environment in which those needs must be met. A true FD is a right-hand man (or woman) to the entrepreneur - one of their most important functions is to run a financial rule over any and every idea that the entrepreneur comes up with. They will also come up with ideas and business models themselves. They are truly a part of a forward-looking, dynamic team.

A classic difference between a proper FD and the classic joke accountant is that the latter says ‘You can’t do that. It says in Rule 45B’, while the FD says ‘This is what we need to do to get round Rule 45B’.

Another thing I had not understood was the degree to which many competent, intelligent people have a kind of phobia about finance. I guess they think it’s amazingly complex - but I soon learnt that the principles are really quite simple.

As with all my books, I try and keep the sense of sequence - we start with what matters at the beginning, for the ‘seedling’ business, then move on to the key issues for the growing ‘sapling’, then look at really fast growth and the possibilities of an eventual sale. Looking at these in more detail…

Even if you get a cornerstone early on, you still need to understand the basics of finance. The book has a chapter on simple accounting - double entry bookkeeping, the P and L and balance sheets - which AS Wright, a highly respected trainer, kindly (and completely unprompted) described as ‘the easiest to understand exposition I have read in 20 years’. It has a chapter on Tax and Law.

Getting the right financial culture is important from the start. Steve and Jeff had two mantras: ‘think cash’ and ‘stay flexible’. Like many business mantras (‘we are customer focused’), these often get trotted out but not from the heart. The book shows how to say these things and show you really mean it. What you do is… Well, I’ll let you read it in the book, in full.

It’s when growth begins to accelerate that the FD really comes into his or her own. But even if you have such a person in place, how do you know what questions to ask them? Many entrepreneurs underuse their FDs, because they don’t understand what a really good FD is capable of.

If the business does well, or even if it just gets to a nice plateau, the entrepreneur may want to sell. Sadly, I’ve never been in the position of selling a business for lots of money - but Steve and Jeff had, or rather had worked alongside people in this fortunate (no, hard-earned) position. Writing the chapter on how to sell was particularly enjoyable. Selling, I learnt, is not an event but a process, that begins long before anyone starts talking seriously to buyers, and can (if mishandled) can drag on long after papers are signed. In other words, it’s another narrative, another process, another story, and I enjoyed taking myself and the reader through it.

The book concludes with a copy of those dull statutory accounts that you have to file every year, with various terms explained for laypeople. Then there is a business plan template.

In many ways, I enjoyed writing this book more than any other of the Beermats. I knew embarrassingly little about finance, and learnt loads in creating this book. And what I learnt, I feel, is right at the heart of good business practice. Sometimes I think that this is the most ‘grown-up’ of the Beermat books. Sales is fun; I really enjoy marketing; the original Beermat Entrepreneur was a tremendous insight into the tribal buzz of living a start-up. But unless someone - and if you are a one-person business, that somone has to be you - is in charge of the financial side of things, the business will fail. But there is no need for that to happen. Finance for the small business is not ‘rocket science’, and is actually rather interesting. Enjoy!