SMEs can and should be using technology to help lift productivity further. This the message from many of those looking for ways to close the productivity gap between the UK and other countries.

This is primarily through ‘digital transformation’, in particular the automation of some activities, and the ability to use data to better engage with customers and find new customers further afield.

These advances have been written about for years. However, as reports such as that from the RSA Future Work Centre indicate (1), many businesses are not even close to being able to take on this challenge.

Those businesses who have adopted this technology have a big advantage. They have lower cost operations, more loyal customers who are also spending more, and the ability to find the right customer further afield.

But as an SME it’s easy to be held back – through a lack of skills, confusion and uncertainty about technology, insufficient funds or resources. And for business owners it’s reasonable to believe that barriers such as these will take years to overcome.

But that would be a mistake. Ground can be covered surprisingly fast. What matters is the clarity of your business strategy and your ability to identify the critical questions and extract the answers which will help propel your business forward.

E.g. say you are striving to always be price competitive. A key and obvious question might be – how do we take more cost out of the business?

This is difficult. You may already be at the minimum level of spend. Can you cut further without damaging the business?

An alternative question might be – how do we take steps out of our operation thereby reducing cost and speeding things up?

This is much more creative. A small amount of data could reveal the parts of the operation taking the greatest amount of time, and indicate whether automation could make a difference.

Another alternative question might be, simply, how do we become more price competitive?

A similarly focused set of data could help build your engagement with customers such that your services become better value for money than those from the competition.

Questions such as these form part of your ‘data strategy’ – a definition for the data and technology that will do most to accelerate your business forward.

By turning your business strategy into a set of critical ‘unanswered questions’ you can turn things on their head. Instead of surveying all available data and technology before making a choice, you are drawn to the specific elements that will make the biggest difference.

You will spend less, move quicker, and know what skills you need. Barriers will fall away with surprising speed and your business will be able take some big steps forward.

(1) RSA Future Work Centre report: Artificial intelligence, robotics and the future of low-skilled work:


Paul Clarke

Director, Develin Consulting

If you would like help in developing a data strategy or the data sources and intelligence that will propel your business forward, please contact us.

Many businesses are preparing to enter a new financial year.  As they do it is worth thinking about the importance of the financial forecast.

It’s primary role is to predict whether the business will have enough cash to keep going during the year to come.  And, as such, it is a vital source of information for business owners, lenders and investors.

Of course, it must be as accurate as possible.  But to be accurate you need to think of forecasting as, not just making financial projections at the start of the year, but as an exercise that you apply all throughout the year.

So, as we approach a new financial year, here are a few tips to help you to forecast as accurately as possible.

1. Forecast revenue, and budget costs.

Start by forecasting revenue.  Once you are as clear as you can be about your revenue forecast, you can then budget your costs in order to bring them in line with your revenue.

Many businesses use the words ‘forecast’ and ‘budget’ inter-changeably, but they mean different things.  Revenue depends upon factors many of which are out of your control (e.g. the economy).  So, a bit like the weather, this is something to be forecasted.

But expenditure lies very much within your control.  This is something that you can therefore budget for.  And by keeping your expenditure budget in line with your revenue forecast you can exercise control over how much cash you have in the business.

2. When you forecast revenue, use several scenarios.

Imagine you run Mrs Miggins chain of Patisserie and Coffee shops.  Your biggest ‘drivers’ of revenue will be the number of people who come into your shops and the amount they purchase.  Last year’s footfall figures will be helpful, however they can’t be used in isolation.  The local town centre may have changed, you might have a marketing campaign lined up, plus a new on-line service.

So it’s important to think about the ‘sales funnel’ and the ‘social media funnel’.  E.g. for sales in the shops:

  • Start by researching the size of your realistic market (the number of people who could be in walking distance of one of your shops plus the number of potential customers you are reaching out to with your marketing campaign).
  • Estimate the proportion within each group likely to walk into one of your shops.
  • Estimate of the likely purchases each group will make and the number of times they might return to repeat the purchase.

And, for the social media funnel, very much the same:

  • Start with the size of the on-line audience likely to see your advert;
  • Estimate the proportion likely to click to find out more;
  • Estimate the proportion of this group likely to purchase.

Taken together, this should bring you to an ‘expected value’ for revenue for the year.

That’s a good start, however, it’s a calculation based upon a series of assumptions, some of which might be overly-optimistic or overly-pessimistic.

So, it is worth listing out all the assumptions that you have made (e.g. the size of each realistic market) and, for each, provide both an optimistic estimate and a pessimistic estimate.

Repeat the forecast calculations using both sets of estimates for each assumption.

You should end up with a range of forecast values.  The number at the top of the range represents the most optimistic view of the year ahead.  And the number at the bottom, the most pessimistic view.  The expected value is still your forecast, but the size of the range indicates how much confidence you can have in that value.

If the range is large, revisit each of the assumptions involved and gather as much intelligence as you can to refine the numbers involved.

3. Create an expenditure budget.

With a revenue forecast in place it should be much easier to predict your expenditure.  Firstly, some costs (e.g. product costs) will be closely linked to your drivers of revenue.  Others will be relatively fixed, e.g. premises and equipment lease costs.

Start with a budget that reflects the most pessimistic view of the year, and then add to it the additional expenditure required should the year turn out to be better.  This will help you plan ahead to delay spending in more discretionary areas should unforeseen circumstances strike and the year turns out to be less favourable than you had hoped.

4. Keep a note of all your assumptions, and check for credibility.

The forecast needs to be maintained as the year progresses.  It helps therefore to always keep a note of your assumptions handy, and whenever an unexpected event happens (bad weather, regulation change, transport disruption) check to see whether your assumptions still hold true.

If they don’t, then work through the forecast again, but this time with a revised set of assumptions.

There will also be key ratios that relate to your business, most of them financial in nature.  E.g. revenue per square metre, gross margin per customer, stock turnover, mean order quantity.

Once forecast and budget are in place, calculate these ratios for the year ahead and compare them with other businesses within the sector, and with past performance.  If they seem to be out of line, check your assumptions once more.

5. Regularly re-evaluate.

Every month or every quarter throughout the year compare your actual revenue and expenditure with your forecast for that point in the year.

If there is a sizeable difference in either revenue or expenditure, either positive or negative, investigate why and be prepared to re-forecast.

This is when the discipline you exercised when creating your first forecast will reap benefits.  If the exercise had remained at a very high level and didn’t involve analysis of the drivers of revenue and cost in the business you will find it hard to know what to do when gaps between forecast and actuals emerge.

However, if you have that depth of understanding then differences between the forecast and actuals can be highly instructive.  Your existing assumptions might need to be changed.  Or you might have experienced events that you hadn’t planned for.  Either way you will be equipped to figure out what their impact means for the remainder of the year and you will be able to adjust your expectations accordingly.

In othe words, you will be maintaining a highly relevant and accurate forecast.


Paul Clarke

Paul is a presenter on the professional development programmes for BPP, CIMA and ICAS on subjects ranging from forecasting analytics and budgeting practice to data visualisation and machine learning.  He is also a Business Intelligence specialist providing Management Information and Business Intelligence solutions for organisations across all sectors.

If we can help you to develop your budgeting and forecasting practice, in developing financial models to support your strategic planning, or in making better use of data with which to predict the future, then please contact us:

T:  +44 (0)333 8000 825

Where does all the profit go

The infographic above explains why an engineering and maintenance company was experiencing threadbare profits on one of its major contracts with a corporate client.

This information could have been presented in a report.   But it would probably have been barely noticed.

However, because it was expressed through an infographic, people across the business, from all sorts of backgrounds and disciplines, have quickly grasped the key points.

This is one of many visualisations of data that we have used to help people see clearly the things that matter.

Paul Clarke
Develin Consulting

We have long experience of using visual methods to help teams to see what is going on within their business. If we can do the same for you, then please give us a ring.

Datavis ideas

According to research at Sheffield Hallam University, comics are a better educational resource than traditional textbooks.   When information was presented to Undergraduate students using cartoon infographics they remembered more of it than when it was presented in a traditional text book format.

It’s long been known that we respond better to visual images than the written word or number.   Ask someone whether the difference between one pair of numbers is greater than the difference between another pair, they will stop to think awhile.

But show the differences as lines on a page and the answer becomes obvious.

More importantly, however, when comic cartoons are used, the effort involved in digesting everything down into a few key points shifts from the viewer to the illustrator.   They, rather than the viewer, translate the pages of text into the salient points that need to be remembered.   This is because they need to design infographics capable of explaining those points with as few words as possible.   In short, they are handing the story over to the viewer on a plate.

This might not be what we want for our students (we would like them to do some work after all).   But for our organisations this is exactly what’s required.

We need people from different backgrounds, with a wide variety of roles and experience, to quickly gain the same understanding of a problem or an issue.   And simple, well designed infographics are ideal for this purpose.

In the following example each of the boxes is a department or a team within a business.   And starting with the ‘funds in’ at the top, the lines illustrate how the money in the budget is allocated down through the organisation.   The wider the line, the larger the sum of money involved.

Budget allocations

There is little detail to see unless you drill down.   But little of the detail is needed.   The shapes and lines are sufficient for everyone to understand ‘at a glance’ where the money goes – essential for the day when people have to think quickly and creatively about how to make the money go further.

Similar infographics can be developed in other areas. E.g.

  • To illustrate the similarities and differences between two organisations being merged.
  • To highlight the areas in which you are at risk of being non-compliant.
  • To pinpoint the reasons why costs at the end of the year are so wide of those forecast.
  • To spot breaches in your IT network through which hackers may gain entry.

With the right infographics to hand, those who have to grapple with challenges such as these will be able to understand the issues and make decisions more quickly than they would without them.

And the task of creating them is becoming easier.

Not only are our comic book illustrators demonstrating how to create ‘a story on a plate’, but new technology, such as that used to explain the budget above, is making it much easier to turn the text and numbers within which the stories are buried into something clear, engaging, and elegant.

So, if our students are turning to comic book heroes to explain the inner workings of the body, or the finer points of mathematics, why shouldn’t our business leaders be able to do something similar.

Maybe there’s a different way to explain what’s in the 90 page company report.

And some very good technology is starting to appear.   Not another algorithm to replenish the fridge or add a song to a playlist, but something that can look into the vast lakes of text and numbers filling up within businesses and, using as few words as possible, explain what’s going on.

Paul Clarke
Develin Consulting

We have long experience of using visual methods to help teams to see what is going on within their business. If we can do the same for you, then please give us a ring.

A recent post of ours on LinkedIn received some welcome ‘likes’ in response.    It was good to know that it was well received.

The post referred to an article recently published which was co-written with Jamie Stentaford from the Affinity Sutton Group.    It was called ‘Management Accountants as catalysts for change’.    Those who liked the piece were almost certainly Accountants.    Hopefully each was thinking    ‘a catalyst for change. YES!! That is exactly who I am and what I do!’.

A nice thought but perhaps a little optimistic.

It’s more likely they were thinking    ‘YES! That’s exactly who .. er .. I would like to be.  I just need more time in the day, greater access to better data and better tools, the right set of skills, better support from the rest of the business, stronger candidates coming through to fill vacancies .. etc’

The article was about a management accounting team that has definitely earned the title ‘catalyst for change’.    But the subtext within the article, and probably the reason that it was published, was that examples such as this are still few and far between.

The Author of this blog teaches Mastercourses for the Chartered Institute of Management Accountants (CIMA).    In the classroom we explore what’s needed for the Finance Team to become stronger ‘agents of change’, in particular the skills needed to provide the business with better insights from its data.

It’s clear from our delegates that expectations in this area are rising.    Their colleagues back in the office are becoming increasingly aware that better access to data and more powerful tools with which to manipulate it should mean analytical insights not hitherto seen before e.g. segmentation of customers, trends in demand, predictions for step changes in economic outlook.

Our delegates would love to be able to provide them.    But, unless more time can be made available to develop and introduce the necessary techniques, nothing much is going to change.

Even then it will take time.    Affinity Sutton formed a new vision for their service over two years ago.    It’s taken them until now to get fully into their stride.

To make more time available Finance need to either pass work on for others to do or cut back on stuff.    In the classroom we perform a simple exercise using an old technique to illustrate how this can be done.  There is no pretence that it’s easy.    But its meant to encourage delegates to believe that it can be done and to have a go when they get back to the office.

The technique is drawn from a practice that is long out of fashion – zero based budgeting.    In short this involves reducing service levels to quickly release time (and possibly save money).

Delegates list as many of the outputs from Finance to the rest of the business as possible.    They plot each output on a grid.    One axis is for ‘service level’ i.e. the scope of each output, the level of accuracy, the amount of detail, the frequency, timeliness .. the key elements of delivery that define the overall quality.

The other axis is ‘level of value to the recipient’ (i.e. the person who makes use of the output).

The recipient isn’t in the classroom so on the day we have only a one sided view of things.    Nevertheless once all the services are plotted mismatches quickly become apparent.    An output might be given a high service level score (a great deal of detail is presented with meticulous care), but a low score for its value to the recipient (it typically attracts little interest).

A finding such as this will often trigger a meaningful debate about the relative value of different outputs and how it should be possible to cut back on some to release time for something better.

The Finance Team within a large Logistics client conducted this exercise.    They released so much time they celebrated by giving the entire Finance Team a day’s holiday a week after Year End.

It works, and an exercise such as this might be the best present that Finance can give to their business.    People will get less of what they don’t need and more of what they do.

That said, the key message that we leave our delegates with is that they can free time up for better things, but it shouldn’t be down to Finance to do this alone.    This is all about upskilling Finance to allow them to do much more to drive up value in the business.

If our delegates can pass that message on once they are back in the office, and make it loud and clear so that the whole business hears it, then they too might receive a few ‘likes’.    And if things are going really well they might also get a reply from the rest of the business along the lines of ‘how can we help?’


Paul Clarke
Develin Consulting

Scary questions

Back in January of this year the journal ‘Third Sector’ posted an article containing an uncomfortable suggestion. It was that Charities in the UK should ask themselves a series of searching questions in order to test their fitness to survive.

The sort of questions that the Author had in mind included ‘are you prepared to be taken over?’ and ‘are you prepared to hold on to just your brightest and best and let others go?’

The point behind the questions was that times are hard within the sector and a great many charities have to face an unpalatable truth. If they don’t switch up a gear and find ways to adapt to tough challenges ahead then they may as well call it a day and let someone else take them over.

A scary future

Funding is the central issue. In the UK rules about how you do it have tightened dramatically. And events such as the closure of Kids Company have raised hard questions about the quality of the management and governance processes operating across the sector.

The reason for mentioning this is a small but significant announcement from The Foundation for Social Improvement. Their quarterly Small Charity Index indicates that 60 per cent of small charities reported an increase in demand for their services in the period from December to February’.

Many of these Charities step in to help people unable to get the support they need from state provided front line services. Demand for many of those services is climbing. It’s inevitable that Charities providing relevant services will also see an increase in demand.

For some this means more funding. Happy days! For the majority however it won’t. They will simply see their costs rise at a time when income streams are more uncertain than ever. For the Boards of Trustees and Management Teams it will feel a bit like steering a ship faced with an outgoing tide and knowing there are rocks close by under the surface.

In our experience, when faced with this situation three things matter above all else – information, strategy and strong governance.

They are closely related. Information points to where the rocks are hidden. Finance Directors need to know that, whatever the level of demand, their charity is not undertaking activities that it can’t afford. The information needed describes how income and costs will move under different patterns of demand and where the limits to affordability lie.

Strategy has to explain how to steer around the rocks. If funding is tight it will mean finding ways to get more value from everything that the Charity does – e.g. by finding simpler ways to deliver services, expanding capacity in ways that are affordable, stopping activities if their value is questionable.

And strong governance provides the necessary drive and joins everything together.

Time for some boundaries to be crossed

If the right Trustees have been appointed to the Board then they should have the experience needed to help Charities navigate around the rocks. But if their remit is to simply turn up for Board meetings and to make decisions based upon a few Board papers then their experience may be wasted.

It’s a painful prospect for all parties but the right outcomes are more likely to happen if Trustees are prepared to roll their sleeves up, wade in, tread on a few toes, and sit alongside managers to find out in detail how things are working.

Managers have enough on their plates delivering the day to day services. They may also lack the experience needed to turn things around. We therefore need the Trustees to get under the bonnet, to find the weaknesses and be hands on in helping to straighten them out. And we need them to help out with some of the day to day management tasks. This is to give managers a bit of time and space to step back from the coal face and to take a hard look at how things are done.

This takes time and commitment from Trustees and if too heavy handed risks alienating managers. But if the alternative is people being afraid to make decisions because they are worried about unseen rocks, or making cavalier decisions because they can’t see any rocks, then it is a price worth paying.

We have seen a team of Trustees, appointed because of their commercial experience, step in and turn things around. It has created the problems mentioned above. But it has also led to a much more dynamic, purposeful, decision oriented and information rich working relationship between Trustees and Managers. This in turn has led to more confident approaches to grant providers and philanthropists as well as better prepared tenders for outsourced services from larger agencies.

The smaller Charities in particular need help. They have typically been set up to resolve an issue and because they focus just upon raising money and serving their clients they can quickly find themselves in a difficult situation if the world suddenly changes around them.

They probably can’t afford external advice but they still need some sort of navigational help to find deeper waters. We think that it should be Trustees who step up to play the pivotal role. Indeed this should be their finest hour.


Paul Clarke
Develin Consulting

Develin Consulting specialises in helping Third Sector organisations to build business intelligence with which to make strategic choices.

A huge thank you to those from the six Housing Associations who came together at the Paradigm Housing Group on Friday 15 Nov to share ideas about continuous improvement. (Plus a massive thank you to Paradigm for hosting it). I was privileged to represent the Network Housing Group (NHG) and as such glean some really smart ideas about how lean and systems thinking might be introduced into the change programme underway at NHG.

We were of course competitors. But we are also part of an industry that needs to raise its game collectively if the right housing is to be available for those who need it. So it makes sense for organisations, who are all seeking similar aims in terms of more efficient and effective ways of working, to meet to share ideas.

Key themes discussed:
Introducing lean and continuous improvement methods is tough. It takes perseverance on the part of knowledgeable and determined individuals. But once the first couple of projects are under your belt (and they don’t have to be big to get heads to turn) attention is captured and support grows.

Having said that, stories abounded about the difficulties in rolling out successes to other parts of the organisation. Reluctance to engage took many forms – e.g. ‘our income collection performance is good therefore we can’t see what an improvement programme would achieve’, ‘our resident satisfaction survey responses are over 90% so we must be pretty good already’.

Systems matter, but much more important is the need for rigorous thinking about processes before going anywhere near a systems solution. Plenty of examples of what seemed to be the right systems choice (CRM featured much within this discussion) only to discover that the process issues that existed before remained stubbornly in place.

Metrics are vital. What metrics do we need if we are to use measurement as a way of embedding changes to processes? How is the data captured and presented? How do you cope with metrics needing to change, with some being in vogue one moment, and others coming to the fore as attention shifts from one issue to another.

Invest in improving employee engagement and real benefits will be realised. (A fascinating presentation from the Radian Housing Group – check them out for amazing outcomes in relation to employee engagement).

And finally, my own speciality – understanding and driving improvement in costs. At NHG, because we have a major change initiative underway with structural and organisational implications, we have invested in knowing the cost of every activity across the Group. It’s been a great foundation for major decisions about organisational change. But can these be used for the ‘opportunity cost’ of change to processes, in other words, for calculating the benefit from a process improvement in terms of both actual cost savings and the opportunity cost of staff doing something different with freed time? Plenty of examples of benefits from process change but a struggle to see them appear on the bottom line.

The group is meeting again in the New Year, and if, as a Consultant, I can remain involved, I will look forward to it. In the meantime, much to do.

Paul Clarke
Develin Consulting

It was with great pride and pleasure that I spoke at the Malta Institute of Management Finance conference in October. My topic was better forecasting and budgeting. I had some misgivings. The island can be traversed in minutes (traffic permitting). What sort of businesses are there on the island and how relevant would my budgeting and forecasting story be for them?
Continue reading “The Maltese method of management”

Leadership will be the vital ingredient in the change that lies ahead for many of our great institutions – e.g. education, health, social housing. With luck the right leaders will be there when it matters, however the creation of leaders within our organisations is something that often appears to be left to chance. We put effort into building management skills, developing management teams, exploring an individual’s management potential, but we focus less upon leadership, due perhaps to a belief that a good manager is, by definition, capable of being a good leader. Continue reading “Leadership: we are not sheep”

As a business development and marketing specialist Paula Finch found her experience as a parent visiting Universities with her son a real eye opener. We asked Paula to share these experiences plus her top tips for getting it right on the day …

  1. Preparation is vital
  • The information made available to us ahead of our visits differed from University to University. Some sent everything I could possibly require which I found particularly useful. I found practical information such as directions, parking facilities, recommended overnight accommodation. I could also explore the list of presentations and plan a time-efficient itinerary with my son.

Some sent welcome communication to my son, either in the post or via email, confirming attendance and including subject-specific presentation booking information. This usually directed us to their website for more information.

Continue reading “Universities need open days to work. Here are some top tips for getting them right.”