Strategies to Keep Your Business in the Green (with Chidi Egbujie)

Angela Frank: 00:00:00

Welcome to The Growth Pod.

Today on the podcast we have Chidi Egbujie, a seasoned expert in developing business growth strategies and optimizing tax efficiency for business owners.

In his time supporting business owners, he's noticed a trend of entrepreneurs being heads down in business operations while lacking strategic vision around their goals and plans.

This can get caught up with cash flow challenges as well as missing out on opportunities to reduce their tax bills and can lead to commercial complete failure in a business. Judy, welcome to the podcast.

Chidi Egbujie: 00:00:33

That's right. Hi Angela, thanks for having me.

Angela Frank: 00:00:36

I'm very excited. Today you're going to talk about strategies to keep your business in the green. So I'm very excited to get into the meat and potatoes.

But first, can you share a little bit about why you're the expert on this topic that we should be listening to?

Chidi Egbujie: 00:00:50

Yes, a good one. I I'm an accountant by a professional qualification, but I think my story kind of goes even before that.

So I started off working in sort of TV production, so doing working in finance departments within a TV production company. And so you get to see different parts of the organization. So you get to understand how a business works from the inside.

And then later on in my later career I then moved into financial services. So working in some of the big banks.

And what that taught me is really how the banks work virtually even before COVID but how they use data to make decisions.

And that's one of the things that you noticed, why I started to notice in businesses is not using the data or the power that they miss out in using data to make decisions. So that's something that it really that overarching view of finance really helps me to be able to share this knowledge and give advice.

Angela Frank: 00:01:53

I love that.

I think one of the biggest pain points when you hire on an accountant is they've been trained in accounting but don't necessarily have that in insider experience in a business learning how things work. So that's why I'm very excited to learn from you today. To get started, what's one piece of advice that you wish every entrepreneur knew about?

Maintaining financial health in their business?

Chidi Egbujie: 00:02:18

Well, so in terms of financial health, there's really one big thing that stands out and I'm passionate about and really that's behind the largest number of failures in business. So companies going down, the biggest number, the big driver behind that is cash flow.

So cash flow management, where we're talking about companies that make profit but they go under because they run out of cash. So that's something that business owners need to really keep their eyes on in terms of sort of survival.

Angela Frank: 00:02:55

So you're saying it's not enough just to be profitable, but you also need to pay attention to how much cash you have on hand, because that's a fatal flaw that you've seen in your experience that can cause a business to go under.

Chidi Egbujie: 00:03:07

No, that's right.

Because what happens with cash is a lot of people, and we're used to sort of living that way in our personal lives where you just think, okay, how much do I have? Just look at my bank account and you know how much you have. But when you.

When it comes to business, the volumes of transactions, it just grows bigger than your personal account would grow. And so looking in your bank statement, on your bank account, it's really not enough.

And on one hand, we're thinking about profits, so revenue, expenses, profit. That's what everyone's thinking, how much profit have I made?

But then when you start to take into account everything else, the loan payments, paying for your taxes, the equipment, the cars, and not just all of those things, but the timing of them, it then means that cash flow management is critical, because all of a sudden you can come on stock because people haven't paid you sooner than they should. Even though you've invoiced them, they haven't paid you.

And all these things you have to pay your staff and all these things, you have to pay on time. And then you just find yourself in a window where we actually run out of cash and profitable businesses can go under as a result.

Angela Frank: 00:04:18

I think this is such a critical topic. We had someone on the podcast, Richard Walsh, and he talks about how business owners can fall into this trap of, you know, living for next Friday.

And it really echoes what you were just saying. You may be invoicing people and they're not paying you.

And so it's creating this tension in your business where you don't have enough cash, even though you might be profitable.

So in your experience, what are some common mistakes that business owners make that can lead them into this really tense spot of lacking the cash that they need? And how can you create a growth plan that avoids this?

Chidi Egbujie: 00:04:59

You've actually mentioned one key word that growth plan, and at the heart of a business should be clear goals. It's all boils down to strategy, really.

But if you have clear goals, and those goals would start from the business owner, so the business owner would have their personal goals, and then they would then expect the business to deliver those goals. But without having that clarity, you're kind of just, you Find yourself.

Or business owners can find themselves going month to month, day to day, just kind of slumped in the operations of the business. But really taking that step back and saying, what do I want from my business? What do I. Where do I want to go? Where do I want to be with my family?

You know, once I have that goal clear, the business then needs to deliver that. And then, so now we have a goal for the business.

And the differences between having those things in place and not not having those, it's sort of light and day.

It just is the difference between a business owner that could retire and live where he or she wants to live and a business owner that just has this business that could potentially grind to a halt.

Angela Frank: 00:06:03

So in addition to making sure that we know what our goals are and making sure that our plans, our financial plans ladder up to those goals, what are some things that we need to keep in mind when planning out our cash flow?

Chidi Egbujie: 00:06:22

Well, so I would see those two things as sort of separate. So I'll give an example.

If I have a business owner, that's that when we, you know, when we sit down and we try and get to the bottom of what we want to achieve, the business owner says, okay, I need a hundred thousand dollars a year after tax to be paid yourself. Then it doesn't mean that your business makes a hundred thousand. Right.

Your business has to make a lot more to be able to pay all this costs, make profit, and then you can take your 100,000. So then we're now looking at a business, let's say, making 400k or 500k. Right. And so if you had.

I've been in a situation where I've had a business owner who's 10 over 80k and we have these conversations and then they realize that this is how this is. This is the kind of business I need to help me achieve my personal goals. So that then sets a different tone.

It makes you have a whole complete different chain of decisions that you have to make around your revenue, your loans, if you have to hire more staff, your marketing budget. So it's things like that that actually could potentially change the path of a business owner.

Angela Frank: 00:07:37

Yeah, I think as you go into business, this is something that you really don't realize. When I started my first business, I actually just found some goals that I had written for myself.

And one thing was that I wanted to make $5,000 a month.

And now, many years later, I look at that, and when you think about all of the taxes and the fees and everything that come out of that, that's not a livable wage or a livable income. And so I think that's such an important point. But you also brought up something which is everyone's favorite subject and that is taxes.

So how do tax efficiency plans play into what we've been talking about today? And what should we keep in mind as we are trying to run profitable, cash flow positive businesses?

Chidi Egbujie: 00:08:24

So tax in itself, right? It's not a complex. There's opportunities to save money or pay less tax. But when I think of tax efficiency, I think of the base.

The base is the bookkeeping. So accurate, timely record keeping, that means that I can see, and you'll be surprised how many business owners don't have sight of their financials.

So their records are not up to date. And so that then means that you can't see how you're performing.

So the opportunity to save tax, they're very limited because you don't know how much you're spending.

But also once you have that kind of structure in place, then there's opportunities around planning around making sure that all your obligations or compliance regulations are satisfied on time, but also being able to then sit down with your accountant and work out ways of reducing your tax.

Angela Frank: 00:09:25

So do you recommend then that we hire an accountant right off the bat or is that something that you generally recommend? Business owners wait until they reach a certain revenue milestone. How does an accountant play into our plan and our financial success?

Chidi Egbujie: 00:09:39

I've always been one for advising business owners that want to grow. It's really just learning to delegate. I always use this analogy of a surgeon.

Now a surgeon comes in, ready, wash their hands, put it through, go straight, operate, come out, take the gown off, wash their hands, and they're off. That's just how I think about it. A business owner put away the things that you shouldn't be doing so you can focus on the business.

So don't be doing your bookkeeping because you should get, get a bookkeeper to do it. And you can focus on what you do best, which is building and growing your business and looking after your family.

So that's kind of the structure that I think about when I think of an accountant is just, is a bit too complex for business owner who is not trained to do so to be trying to do your accounts. And you're not, you're not making the right decisions or you're not aware of all the tips.

So the right accountant can actually save you money, which you wouldn't save if you were doing it on your own.

Angela Frank: 00:10:37

I love that so, okay, I'm bought in. I want to hire an accountant. What should I, as a small business owner, expect from my accountant?

Chidi Egbujie: 00:10:46

It's a good question. I think accountants at a base level should do one thing.

This is, this is the minimum, is that all of your obligations should be done timely, your account should be filed on time, and you should be tax efficient. So that means that you should have the most tax efficient way of getting money out of your company.

Not breaking the law, but really the most tax efficient way of a business owner paying yourself. That should be organized by your accountant.

And then after that, they then come some of the sweet spots, which is around cashflow forecasting, helping you with your planning and sort of doing your management reporting to work out how you can chase targets, grow your revenue, reduce your expenses, and so on. So that's like a level you can expect from your accountant.

But the base level, which I talked about, you should get, every accountant should deliver that 100%.

Angela Frank: 00:11:42

Okay.

So at minimum, they should be finding, closing the books in a timely manner, making sure things are done very timely, and also finding how we can efficiently take money out of the business. But more ideally, they would be working with you as a partner and really being an extension of your team. Is that what I mean?

Chidi Egbujie: 00:12:02

That's right. That's right. And one thing to add onto that base level is making it simple.

Obviously, we're trained in this game and some of the complexities we've gotten used to. Some accountants would just try and sound a bit heavy and a bit intelligent, but really you just want an accountant that just trying to break.

Breaks it down as simple as possible. So you can understand that you both know where you stand, right?

Angela Frank: 00:12:28

You want someone who will meet you where you're at instead of making you feel like you can't ask questions or like you're stupid for not knowing something. I love the way that you've put that.

Chidi Egbujie: 00:12:38

Exactly. Exactly.

Angela Frank: 00:12:40

Amazing. So I'm really curious, what's next for you?

Chidi Egbujie: 00:12:45

So I think you know the journey of sharing, and I feel like I'm contributing positively to the industry. And so he's just looking to do that more, serve more clients, meeting ambitious entrepreneurs that want to grow and achieve more.

I've been part of that journey with them, so I'm looking forward to doing more. More of that.

Angela Frank: 00:13:08

Amazing.

If there is an ambitious entrepreneur listening and they want to learn more about you, keep up with you online, or work with you, where can they do that so easy?

Chidi Egbujie: 00:13:19

First, my LinkedIn. So Chidi Egbujie is my LinkedIn.

They can find me on there, but also my company virtual focus accountants.co.uk they can connect with me, they can email me and I share a few bits online about strategies, things business owners should avoid, tax tips. I do share quite a bit, so you can always consume my information and just reach out and connect.

Angela Frank: 00:13:45

Amazing. And if anybody is listening and they want to follow up with any of the resources you just mentioned, everything will be linked in the show notes.

Chidi, thank you so much for joining us today. I really enjoyed our conversation and got a lot out of it.

Chidi Egbujie: 00:13:59

Thanks Angela. It's been a pleasure.

Angela Frank: 00:14:01

Thank you so much for listening to this episode of The Growth Pod. If you enjoyed this episode, please leave us a review and I look forward to seeing you in the next one.