• One key metric raised was your income to staff costs ratio – how much of your fee income is consumed by permanent and freelance staff costs. A good benchmark for this is 60%, any more than this will start to quickly eat into your profitability (70% and over spells trouble – get to the bottom of things and get advice).
• Keep at least 2 months worth of expenses in the bank (people and overheads). In these more challenging times, when clients may be pausing projects or taking longer to pay, up to 4 months would be prudent, with an additional 6 months in working capital. If cash reserves are less than this you risk making short-term decisions.
• If you spot red flags in your finances, beginning to just break-even or make a loss, make quick decisions. If you need to cut headcount, do it hard and do it once. Dragging decisions out risks destabilising the business and team even further. Don’t stick your head in the sand.
• Keeping a tight rein on what you should be aiming for by looking at the number of staff you have and your average charge out rates. Back of the envelope is fine as a check, but have the detail available so you can investigate the root cause of any issues. 
• Limit dependency on a single client to no more than 20% of fee income to manage risk. 
• If you are having to make cuts, take the opportunity to re-focus and bring in new skills. If new business is your issue, you’ll need to carefully review your value proposition. 
• Sometimes winning a new client needs an injection of cash to support the growth. There are growth capital options you can explore, or look into local grants – one member flagged these as a key to their recent growth in both skills and sustainability. Have proactive conversations before the need is too great for you to look less attractive to an investor.
• Consider the timings of major investments and expenses for tax reliefs. Ideally you want to be near the end of your tax year. If you’re not and timing is critical, consider moving your year end – Moore Kingston Smith can help with impartial advice. 
• Having an external non-executive director can help to remove the emotion from difficult decisions, someone who is just looking at the business and can take an objective view. 
• One member raised a challenge in getting invoices paid. Some suggestions to overcome this were to bill a small amount e.g. 25% on sign up, then regular staged billing, pausing halfway to get payments in and not leaving a big chunk to when the project has been delivered as that can leave you in a difficult situation. Your terms may be 30 days, but factor in 60 and 90 day payments in your planning.
• Another member recommended an invoice discounting service whereby 80% of an invoice is paid upfront – it’s an option that could be worth investigating to help to manage cashflow. The main high street banks all provide this service, do shop around.  
• In managing over-servicing, another behaviour that impacts profitability, education is key. Explain the context of why you’re charging what you are and what expectations are for that delivery. Set targets on utilisation and efficiency so everyone is on the same page. 

There was much, much more covered in the hour – I hope you find these notes helpful. Join our next meeting on Tuesday 6 August, 4-5pm BST, look out for an email with the details in a few weeks.

We’ve captured the conversation highlights from the all the Members’ Forums which have taken place and they can all be found here.