What is the 'Financial Dynamics’ approach?
‘Financial Dynamics’ is a practical and innovative approach to financial management and control designed to help CEO’s, business owners and key-managers of small and medium sized enterprises and other organisations, to understand and improve their financial performance, pursue profitable and sustainable growth strategies and build businesses of real net worth. The techniques have been introduced to literally thousands of independent businesses and business advisers over the past few years with overwhelming and unanimously positive feedback and response.
The benefits of using the 'Financial Dynamics' approach are equally appropriate for business advisers and intermediaries who have adopted them with enthusiasm following over a hundred workshops held at Durham University Business School and across the world.
Background & Context
Independent, small and medium sized businesses (SME’s) are the 'engine room' of the economy, however, far too few realise their true commercial potential. Only an estimated 4% achieve significant growth in terms of wealth or employment creation, whilst many struggle to monitor their financial performance effectively, or use essential key performance indicators to improve their operations
As a result, many:
- have too low profitability and too high working capital requirements
- adopt tax minimisation strategies that restrict future growth plans
- are pre-occupied with survival, rather than growth; and they rarely build 'balance sheet' strength than will support sustained profitable growth
The Development of ‘Financial Dynamics’
‘Financial Dynamics’ has evolved in response to these issues. The concepts were first outlined in: “The Genghis Khan Guide to Business – Dynamic Benchmarking” by Brian Warnes, first published in 1984, and were subsequently, developed and rendered more accessible by Geoff Potts whilst at Durham University Business School. Here he successfully promoted this innovative approach to over 1000 business advisers, 2000 bankers and 500 SME’s.
Principal corporate clients include: Business Link, UK Trade & Investment, NatWest Bank plc and Coutts & Co.
‘Financial Dynamics’ is not a product ‘per se’ but, rather, an approach and set of principles and techniques to help CEO’s, business owners and mangers to understand and improve their financial performance.
The Concept of ‘Financial Dynamics’
‘Financial Dynamics’ comprises a set of principles, approaches and techniques designed to help CEO’s, business owners, key staff and business intermediaries to:
- Keep a finger on the financial 'pulse' of a business
- Exercise the optimum degree of control, and
- Plan for the future
There are 4 inter-related themes:
- Reducing Breakeven
- Maximizing Profitability
- Controlling Cash & Reducing Working Capital Requirements
- Controlled Incremental Growth
Importantly, the 'Financial Dynamics' approach is highly practical, simple, accurate and based upon information that is easy to maintain.
Benefits of the 'Financial Dynamics' approach
‘Financial Dynamics’ empowers CEOs, owner-mangers and others to:
- Analyse their current operations with a view to improving performance
- Use financial information for strategic planning, business improvement and decision-making purposes
- Improve profitability
- Manage cash-flow more effectively
- Identify and control working capital requirements
- Calculate the total funding requirements of their business, and (if appropriate) true borrowing needs
- Understand the main sources of funding available and the essential criteria adopted by lenders and investors
- Identify and monitor ‘Key Performance Indicators’ that are relevant to their businesses
- Control the growth of their businesses and build a strong balance sheet
- Understand the 'basics' of business valuation, and the actions required to build 'net worth' within a business, and
- Take control of their business (and future) and pursue sustainable and profitable growth strategies
Target Audiences for ‘Financial Dynamics’
- CEOs, directors, owner-managers and key-mangers of independent growth-orientated businesses.
- ‘Financial Dynamics’ is equally applicable to start up businesses as well as small, micro and home based enterprises and medium sized businesses
- Business support practitioners, advisers, mentors and coaches working with independent clients
- Accountants wishing to 'add further value' to their clients and expand their operations beyond a compliance base
- Banks and, in particular business and relationship managers, who aspire to increase both market-share and profitability by differentiating themselves within the 'premium small' and 'mid-corporate' business sectors
- Venture capitalists and business angels wishing to improve their investment return.
For further information please contact Geoff Potts at firstname.lastname@example.org