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How do you make sure you are not in a situation with your business finances where you don't see the wood for the trees? This 6 Envelope strategy is a beautiful, simple strategy that can be adopted by businesses to make sure day by day, week by week and from one business plan review to another YOU are fully aware of where the money that comes in goes out. YOU are in charge of your finances .. what an amazing position this will give you. Want to know more ..

What's on your pad?

Tell us your challenge

As someone who grew up in the 50s, this was an essential strategy for us as a family and for my Mum to be able to run the household successfully. Just to give some background –

  • We were a large family of 8;
  • We did not have a bank account;
  • We did not have a post office account;
  • There were no credit card facilities in those days;
  • Everything was done CASH only; and
  • CASH was king.
“If you can't afford to buy it with CASH; you can't afford it”
HYWEL'S DAD *In 1960 he had enough for his first ever car.

Every Friday, my Dad would come home, pass the week’s wages to my Mum, who then divided the money into the 6envelopes she had on the kitchen table. The envelopes were for –

  1. Food for the week;
  2. Clothes when required;
  3. To pay for a holiday once a year;
  4. To pay for hobbies for the children (for example I was receiving piano lessons etc);
  5. Savings for a rainy day if any left over; and
  6. Bits and pieces in case required.

This is a strategy we at YourBigPic are using to help our clients get a more focused approach to their financial planning.

So, what envelopes might benefit you as a business and what would you put in them? This is what we have determined having used the BIG PICTURE Board as our brainstorming tool.

  1. Income Allocation
    • This is YourBigPic’s Money In/Money Out strategic approach. Use this envelope to understand what money you have that you can use on your business.
    • Cash Flow Forecast, part of a) above.
    • Fixed and Variable Expenses; part of your Breakeven Analysis approach. For this, make sure you are familiar with all your business requirements on a daily, monthly or quarterly basis.
  2. Risk Management
    • Make sure you have the means to pay if there are any risks associated with the business; so you complete a full risk management analysis.
    • This would include payments for your insurance policies; IT Security analysis and GDPR; this is where you would ensure the funds are available for any fines that may ensue if there happens to be any non-compliance.
  3. Tax Planning
    • Understand the situation regarding Corporate Tax; personal tax for all your staff; pensions information for all staff and VAT (if relevant) and make sure the necessary funds are available.
  4. Corporate Finance
    • This envelope is where you will ensure the cash is available for budgeting; completing a full financial analysis; financial statement development to work with your accountants/bookkeepers; the capital budget status and dividend policies.
  5. Investment for Growth
    • This is where you would be saving for specific growth goals.
    • Completing a Business Plan with Finance Goal sections will help to ensure you are aware of what cash needs to be made available for the growth you desire.
  6. Exit Strategy
    • Plans should be made for an exit strategy for every business. This is where the financial means would be made available for you to use an expert to help with the exit proposal to ensure the exit is successful and financially viable.

Using a strategy of this nature may be a big ask – however any business that employs a Finance Director (or equivalent) would benefit from using ideas of this nature, especially in view of the current climate.

Being on top of the financials within a business could be the best way to get through the turmoil that is around us at this time. The discussion would (and should) be shared with all other area/departments within the business – because any Finance issue touches every corner of your company.

YourBigPic is here to help you negotiate this turmoil; and these are some of the questions we will be happy to talk to you about …

What are the best financial strategies to grow your business?After analysing your business we can discuss dividends, director’s loans or entrepreneurial relief strategies amongst others.
How do I grow my business in the current climate?YourBigPic would help you keep an eye on the competition; define a growth strategy and build a finance team.
What are the top financial challenges for businesses in the current climate?YourBigPic would look at your cash flow; budget and breakeven; raising capital strategies and your debt strategy amongst others.
“FINANCIAL FREEDOM for your business is being in the position to determine your OWN life/work balance.”