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Jabu Matiko (Managing Director at Running Business Today) and Kristine Tudhope (Founder at UPvisor) were joined by Thobeka Poswa (Host from the EPI, Christoff Oosthuysen (Producer from the EPI), Bongi Msibi (Materials Development, Sourcing & Training Coordination Manager at SEDA), Bonny Mbukelwa (Curriculum Design and Materials Development Specialist at SEDA), Derrick Ndzavi (IBASA Acting Managing Director) and Terence Knott-Craig (IBASA Chair).

Why is it that many small business owners are reluctant to use financial information to solve the challenges faced by their businesses? And how can the practitioners supporting business owners help them to improve their businesses through the use of management accounts and dashboard financial metrics?

These were the main questions addressed during a recent episode of the Small Business Support Practitioner Webinar Series, offered through a partnership between the Small Business Development Agency (SEDA), the Institute of Business Advisors Southern Africa (IBASA) and the Entrepreneurial Planning Institute (EPI). The panellists on the webinar were Jabu Matiko, Managing Director of Running Business Today, and Kristine Tudhope, Founder of UPvisor.

Matiko initiated the discussion by noting that the most productive approach is to understand the context of the business owner.

“When we support small business owners we need to understand who they are… there was a time in this country when people could not run businesses, particularly black people; but obviously, that legislation could not stop people running businesses that were informal and survivalist,” he said.

Today, many businesses are continuing to operate as informal entities and they resist record-keeping and are not seeing the value of financial reports. They view bookkeeping as a requirement by the government to collect taxes and they do not see the benefits of using financial information to solve problems.



“We are still finding the old ways of doing things. People are able to run a saloon, sell cakes, be a childminder, or have a taxi business. The business owner is involved in everything, but recording nothing, except to look at what cash is in the bank at the end of the month,” Matiko said. 

This, Matiko explained, created a culture of running businesses where source documents and formal recording of transactions are resisted, and where a mindset developed that limits the growth of the businesses.

“The problem with culture is that you cannot tell people to change. You cannot go and say: Okay, I’m running a three-day course… you need to come out of this course understanding that you need to change your culture,” Matiko said.

Matiko explained that in their training programmes and support services to small business owners, they find that the best approach is to take their clients through learning by doing. In this way, they help their clients to go through the business process and start to use financial information to understand how to solve problems.

“It is not productive to jump in with income statements, balance sheets and cash flow reports. The methodology must be based on practical, discovery learning so that the business owner understands how source documents fit into the business process,” he said.

Matiko suggests that practitioners demystify financial reports by using easy to understand terms. For instance, on the balance sheet they can replace “total assets” with “what have you got” and “equity and liabilities” with “where does the money come from”. On the income statement, they may focus on the most important metrics, which are sales, cost of sales, gross profit, expenditure, and operating profit, rather than try to get business owners to understand all the details available in the financial reports. “We can demystify these reports by focusing on the useful information,” he said.



In her presentation, Tudhope focussed on ways to identify and use meaningful information that small business owners can easily interpret and apply in their planning for improvement and growth.

As a chartered accountant, who works with small businesses, Tudhope adopted an approach to provide her clients access to the most important metrics in a dashboard format, rather than using full sets of management accounts that may be intimidating at first.

“One of the challenges our clients are facing, is the fact that they’re actually too busy to be focusing on the financials, and I think this is something that we really need to be helping our clients with to find ways in which they can free up time to be able to focus on the things that matter the most,” she said.

Tudhope explained that business support practitioners and accountants have the responsibility to train their clients, so that they understand the value of keeping accurate accounts and being able to analyse financial information.

She said that when she launched UPvisor, she was quite worried about the fact that so many of their clients were only reviewing the financials on an annual basis. “That means that they don’t understand why they need to do it,” she said. “We should be reviewing our financials, at least on a quarterly basis, but ideally on a monthly basis, because we can then start making more accurate and more relevant decisions based on those numbers.”

Small business owners are often struggling with the accuracy of their financial records, and as a result they are not getting the right information to be able to make decisions, Tudhope noted. “We need to help them to be able to get to the point where the information is manageable, it makes sense, it’s accurate, and it’s up to date,” she said.

When a business owner is able to trust the accuracy of the captured financial information, their management accounts may be used as a tool in analysing the business performance and to identify areas that are in need of attention. Accurate record-keeping will allow an accurate income statement, balance sheet and cash flow statement, which will, in turn, allow building up dashboard reports focussing on specific information and targets.



“Using dashboards allows clients to really start making better decisions about what’s going on in their businesses. So once we’ve got the information, we can go about analysing it on a line by line basis. Looking at really big outliers will help to identify fluctuations that indicate which issues to address,” she said.

Tudhope emphasised that the dashboard items selected must be useful for the business owner client. For instance, for service-based businesses solvency and inventory may not be that important, but keeping a close eye on the cash flow may be key to the business’s ability to grow.

Another key consideration is not to view statistics in isolation, but to follow trends from one year to the other and benchmark the information against industry trends. Such a scorecard will be specific to an individual business and will allow them to quickly identify where there are problems to focus on.

“We need to make sure that we choose the right ratios for our clients (to include in the scorecard), considering the industry and the stage that they are in,” Tudhope said.

At UPvisor, they identify the key measures to include in the scorecard of a specific business and then colour code them. Green items meeting the standard, yellow items are showing signs of trouble, and red items are in need of attention. Tudhope presented an example of a scorecard they use, covering key financial ratios (see image).

Tudhope concluded: “Our clients are often overwhelmed with too much information. So we try to simplify it by pulling out the key components within their financials that are the most relevant to them.”