At the recent AFR Business Summit 2016 (15 & 16th March), the impact of rapid change on the business environment was a major topic. We are living in a time of massive economic change which is being driven by a number of factors including: readjusting from the mining boom, rapid technological changes and the rise of the Asian middle class[1]. Businesses cannot avoid the risks that are presented by this pace of change. Neither can they rely on how things have been done in the past. They need to innovate and adapt to the environment. Success or failure can [...]

Gross profit margin - The elephant in the room Do you fully appreciate the importance of gross profit margin (GPM) in your business? I am sure you do, but let me test you on this. For retailers and wholesalers measuring GPM is not so difficult. However, if you run a manufacturing, jobbing or service delivery business, measuring GPM can be very difficult. In fact, without well set up business management systems and skilled financial management resources it can be just too hard. So the question about whether you fully appreciate the importance of GPM to your business could be [...]

We all plan to succeed. But do we make realistic assessments of how that success will impact on our scarce resources? For your achievements to be translated into financial success you need to understand the demands on your resources and ensure that you can accommodate the changes without significant failures in your business. How will success impact on working capital Q:   How much will my working capital needs increase by? A:     Your virtual CFO will quantify the changes using known parameters such as debtor days, stock turns and creditor days. Q:   How will we fund the increased demands? A:     [...]