Sangeeta Shankaran Sumesh - What the Finance: Easy-to-learn finance practices for entrepreneurs who want to achieve high performance

Notion Press

Old No. 38, New No. 6

McNichols Road, Chetpet

Chennai - 600 031

First Published by Notion Press 2019

Copyright Sangeeta Shankaran Sumesh 2019

Red Brick Green Back Consulting

All Rights Reserved.

eISBN 978-1-64546-797-7

This book has been published with all efforts taken to make the material error-free after the consent of the author. However, the author and the publisher do not assume and hereby disclaim any liability to any party for any loss, damage, or disruption caused by errors or omissions, whether such errors or omissions result from negligence, accident, or any other cause.

No part of this book may be used, reproduced in any manner whatsoever without written permission from the author, except in the case of brief quotations embodied in critical articles and reviews.

This book is dedicated to all entrepreneurs,

intrapreneurs and business heads,

who want to enhance their business performance.

WHAT THE AUTHOR HAS TO SAY

Why Read This Book?

How will I pay next months salaries?

How can I get [more] funding?

How are some entrepreneurs so successful in financial terms?

What are the meanings of the financial terms my investors keep referring to?

What is financial management all about?

How can I grow my profits further?

How can I get to know what I need to do to manage my businesss finances?

The above-mentioned are some of the common concerns raised by many entrepreneurs. It is indicative of their relative lack of knowledge about core financial concepts and, correspondingly, their superficial understanding of finance-related issuesboth of which have a direct bearing on their business operations. Put two and two together, and we find evidence for the oft-mentioned fact that many businesses fail due to poor financial management.

As a finance professional with over two decades of experience in financial management, I aim to make the lives of entrepreneurs/intrapreneurs easier by simplifying matters related to finance. This, I hope, will enable better understanding and help them make effective financial business decisions.

As an entrepreneur, you may have great business ideas but handling the finances of your business may not be your cup of tea. As your business grows, you realise that making profits is harder than expected (or believed). While revenue may be on a positive climb, making profits could be elusive. In order to succeed, you need to focus on your revenue, keep a tab on your costs and allow profits to be the driver of your business. Profits reflect the health of the business, and are required for better valuation of the business.

Thus, one of the key objectives of any business is to maximise profits. While it is well known that the difference between revenue and costs results in profits (or loss), the primary goal of a business is to be profitable and ensure sustainability. Profit is the core of any businessirrespective of the industry it pertains to. One might even say that profit is the very basis of the existence of a business.

Over my career, I have noticed that, while most entrepreneurs/business owners are extremely passionate about their product or service, they seem to face several problems when it comes to managing their businesss finances. This is a common issue in the start-up community, as budding entrepreneurs (sometimes) lack experience as entrepreneurs and/or are not familiar with handling financial matters.

The more I interacted with entrepreneurs, the greater the realisation that there was a common thread running amongst them, irrespective of the nature, size and type of industry they were dealing in: The challenge of handling the finances of their business . They found it too complex, too cumbersome, or downright boringif not, they lacked passion in handling the financial aspects pertaining to their entity. As a Finance Professional and a High Performance Coach, I felt that the best I could do to help this community was to simplify the subject of finance and provide some practical tips that would help them take greater strides towards the ultimate objective of maximising profits.

What Is This Book All About?

Given the above, I felt the need to demystify the subject of finance for entrepreneurs who find it dauntingas if it were the sword of Damocles hanging over them. As there are already a number of academic books on understanding finance and its concepts, I am not going to explain the concepts or the terms in depth. I am looking at making the subject simple and easier to grasp, with a focus on practical matters, and to present this book as a guide not only to young entrepreneurs but also to entrepreneurs who want to scale up to the next level. The ultimate objective of writing this book is to steer entrepreneurs towards utilising the full performance potential of their business, so as to maximise their profits.

Therefore, I am providing basic and simple ways by which profits can be maximised. I have also given some points for reflection at the end of most topics for entrepreneurs to ponder and think about points for reflection. This would aid a self-driven evaluation of their business and thereby trigger better performance.

I have also spiced up this book with the real-life, inspirational financial journeys of some successful entrepreneurs, who have shared their financial challenges, learnings and words of wisdom for the upcoming generation of entrepreneurs.

What Can You Gain From This Book?

How can profits grow? What are the ways and means through which a business can be made profitable? How can profits be maximised? This book touches on some simple steps that can be followed to maximise profits, irrespective of the business you are in. They are:

Enhancing revenue

Controlling costs

Adhering to applicable compliances

Maintaining financial discipline

Following best practices

Based on the above, I have sub-divided the above categories into smaller topics, which will act as pointers, and provided some suggestions on enhancing profits as well. Before delving into them further, I have also given some general best practices that can be followed, which will enable better financial discipline.

In the last section, I am also giving a gist of the financial journey of few successful entrepreneurs who have been there and done that. By reading these real-life lessons, you can avoid committing the same financial mistakes as them, and even learn some valuable lessons from their experience. These entrepreneurs have been kind enough to share the challenges that they encountered, what worked well for them, what did not and so on. They have further supplemented it with what they have learnt over time.

How To Read This Book?

Here are some suggestions on how you can read this book.

If you are not so familiar with basic financial terms, I suggest you first read of this book, as it provides a simple reference for some of the commonly used financial terms. Of course, feel free to refer to it at any point in time as well.

I am taking you through the business of a fictitious entitySRI Ventures, started by Sid, Ram and Isha. You may open the book and read any of the sub-section of each chapter, as per your preference. It is not necessary to the follow the sequence of the book, as each of the topics is independent of the other.

Read the topics that are applicable to your business and, if you want, feel free to skip the rest. If you feel you already know the topic, feel free to move on to the next topic.

Think about how you can use the reflections (at the end of each sub-section) to raise your business performance.