Is your capital investment planning PROACTIVE or REACTIVE?

Our experience has been that the majority of SME businesses undertake their capital investment (capex) planning on a reactive, needs based basis. The need to meet growing capacity demands, the need to replace ageing equipment, or the need for additional facilities may be pressing demands and require near-term responses. Alternatively, the need for better systems or the goal of reducing costs through automation or other means may seem more optional but are likely to improve business performance. Many SME businesses don’t commence the review and planning processes until the investment is planned to be undertaken in the [...]

By |2023-02-22T14:35:42+10:00February 15th, 2023|Articles|

How important is long-term capital investment planning for your WEALTH ENGINE?

Are you proactive or reactive in your planning? Having a long-term strategic investment plan is a key element of creating wealth. Are you likely to create a high value business by responding to pressing needs? There are many competing demands for capital investment in every business. These include: The need for more capacity The need to reduce costs of production/delivery (e.g. automation) The need to have a deeper knowledge of the drivers of profit The need to create new product/service lines The need to enter new markets The need to make acquisitions If these demands are addressed [...]

By |2023-02-21T09:08:36+10:00January 4th, 2023|Articles|

Cash is not King when you’ve got your WEALTH ENGINE

What you are told Anyone who reads business advice has heard the saying “Revenue is vanity, profit is sanity, but cash is king”. You will be told “Cash is King” time and time again. Political campaigns have been condemned because of the use of “three-word slogans”. This is a three-word slogan. Yes, there is some merit in it. But the danger is that it will cause management to place too much focus on the short-term management of cash reserves. The reality We need to reinforce the reality. Cash is not King. It is the complete opposite. It [...]

By |2023-02-21T09:08:39+10:00January 4th, 2023|Articles|

Have you planned for working capital growth in your WEALTH ENGINE?

Why working capital will grow If you are a growing business, you will be experiencing increasing demands to fund higher levels of working capital. Some businesses have a higher working capital burden than others. For example, manufacturers may carry high levels of inventory as well as high levels of receivables. Service companies will generally have a lower level of working capital, but it is still a funding issue. The ceefo Wealth Engine program forecasts working capital growth over a 5-year outlook period. Our clients are always surprised at how much additional capital will be required to fund [...]

By |2023-02-21T08:45:28+10:00January 4th, 2023|Articles|

What management style is needed to manage your WEALTH ENGINE?

Your wealth engine We refer to your business as a WEALTH ENGINE when it can meet two critical criteria. The first is achieving a high return on equity (ROE). The target will be different for different styles of business depending on how capital intensive the business is and its risk profile. The other criterium is the reinvestment ratio (RIR). This is the proportion of net profit after tax that is reinvested into the business. Once again, the appropriate proportion will vary depending on a range of factors. The key requirement is that a high proportion of profits [...]

By |2023-04-03T15:01:41+10:00October 5th, 2022|Articles|

Your business WEALTH ENGINE – do you know how much you have invested?

Business as a wealth engine is a simple concept. You have invested capital in your business (equity or net assets). You get a return on your investment from the business’ profits. This is represented by your NPAT (net profit after tax). Your return on equity (ROE) is measured as NPAT/Equity. You will take some of the profits out of the business (dividends or distributions) and you will reinvest the remainder of the profits into the business. This increases the amount of capital invested in the business and then requires a higher NPAT to maintain the previous return [...]

By |2023-02-21T09:08:51+10:00October 4th, 2022|Articles|

How to build your business as a WEALTH ENGINE

Do you think of your business as a financial investment? Do you make time to review your strategic progress? Do you have clear measures by which to measure your strategic progress? Are you clear about the short-term, medium-term, and long-term objectives of your strategic plan? Do you see your strategic plan as a series of strategic projects, or do you see it in terms of the overall growth and wealth creation objectives? Ultimately, your business is a financial investment, and the objective of financial investments is to achieve a financial return. Taking an investment management approach to your [...]

By |2022-10-06T16:32:10+10:00October 4th, 2022|Articles|

Have you got your business WEALTH ENGINE turned on?

Investing in a business is a risky venture. It can take many personal sacrifices to build a business and achieve success. These efforts are generally accepted and profits expected but few people appreciate the ownership of their business itself as a 'wealth engine'. Learn more about this concept to empower your business decision-making and maximise the value you're gaining from your business. Business as a wealth engine is a simple concept. You have invested capital in your business (equity or net assets). You get a return on your investment from the business’ profits. This is represented by your [...]

By |2023-04-03T15:01:14+10:00October 4th, 2022|Articles|

How expert financial reporting helped Detector Inspector grow quickly from micro to major-sized business

Often the most successful business ideas are founded on the simple premise of identifying a need or gap in the market and developing a service offering that fills it. Detector Inspector have done just that and grown into a multi-million dollar business within about ten years. Rapid growth can be challenging for business owners and in 2014 directors Jordan Kagan Gescheit and Jason Radolnik engaged the services of Colin Wright as their freelance CFO (“ceefo”) to help guide them through this time of great challenge and opportunity. This is their story. Tell us a little about yourselves [...]

By |2023-04-03T15:13:44+10:00January 29th, 2019|Articles, Testimonials|

The 3 BIGGEST REASONS why your monthly reports are MISLEADING you!

Ceefo has worked with numerous small and medium sized businesses over many years. Without exception the first few months tend to always the same. When we review their financial reports at the end of each month, it’s very common to find that their financial results are inconsistent. So we ask a range of questions about how their business is handling a number of basic accounting requirements. In most cases, we find that the inconsistent results are an outcome caused by incorrect accounting treatments. How big an issue is this? It is a huge issue. All too often [...]

By |2023-04-03T15:16:42+10:00November 20th, 2018|Articles, Biggest mistakes made by small business owners|
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