Taking control: Why Finance?
September was the first event that focused on finance in our nine years of running dawn. It’s a topic we’ve had many requests for from within the dawn community and some may be wondering why it has taken so long for us to put an event together that focuses on it.
Understanding of finance is vital for career progression and personal independence for both men and women, yet there are few resources available for young entrants into the industry whose training may have had a more creative bent, not encompassing financial qualifications. Indeed, when researching the event as a committee we were surprised as to how difficult it was to find information that provided introductory guides on how to approach professional financial responsibilities, guides on how to go about raising business capital and where to start with the personal finance of navigating ISAs, pensions and house deposits.
To begin to tackle this area dawn put together a panel with a wide range of experience; Karen Choong Commercial Director of Amplifi, Lana Elie CEO of Floom who has navigated setting up, pitching for and received funding for her business, Hannah Philp Director of Marketing of investment fund the Witan Investment Trust and Elizabeth Hunter CFO of UK, You & Mr Jones.
It’s a huge area with different levels of understanding, and to caveat we’re not giving financial advice. As with all dawn events our invited speakers are sharing their perspective and experiences, not their recommendations
Finance in the workplace
Regardless of your field, specialism or role, to progress you have to understand the finance process and the financial language of your business, as Karen Choong sagely pointed out “if the company isn’t profitable, then you don’t get paid”.
In Karen’s role as Commercial Director she has responsibility for the flow of revenue into the business and the validity of the deals being done by the staff. She believes that “accounting is the language of business” and one that every employee needs to have an understanding of. This was echoed by Hannah Philp who stressed the importance of understanding the stories behind the numbers and finding your own language to explain them; if you don’t understand financial terminology find someone who can explain it and then find your own language and way of communicating what the numbers are saying.
From Karen and Hannah’s perspective, every employee needs to be aware of and understand two key areas:
- Profitability – Focus on profitable sales that to contribute to the sustainable growth of your company – you’re all in it together and if the company isn’t turning a profit, there is no business
- Cash – The sale is incomplete until you’ve collected the cash. Stay on top of your receivables and invoice immediately on deals and chase for payment. It isn’t the finance team’s responsibility to chase down your deals or clients, make sure you keep the finance team in loop if you have a difficult deal or there is a threat of a payment default
How to pitch for business start-up funding
After a communications career that saw her work with Burberry and Gucci Lana Elie founded floristry business Floom in 2015. Lana received £300K in start up capital in 2016 and raised a further £450K via CrowdCube in 2017.
With no start-up or investment experience Lana was firstly advised to look for “warm leads” from her personal and business network to raise capital for her business. Without these contacts in London she instead researched businesses that were similar to hers and targeted their investors.
This lead to cold calling a number of potential investors who had been pre-qualified to understand the gap in the market her business was looking to address, and also understood the demands and requirements of building a digital business. As a result a number of Lana’s initial investors have also been involved in other innovative start ups such as Deliveroo.
Lana highlighted that the two most important financial indicators for anyone investing in a new business is a five year revenue projection and budget.
- Budget – Be ruthless with your budget; put fat on your numbers as you will always need more than you think. Make sure you break every cost down line by line and be realistic about where you are going to be spending your capital
- Projections – These are not just about what you say you are going to achieve but how big you see your business becoming; what is the size of the opportunity? This is the ambition you are asking your investor to buy into so eb bold with where it could lead
The gender pay gap and pay rises
It’s well documented that women are paid on average 30% less than men for doing the same job, and collectively women are more reticent about asking for pay rises compared to a more bullish approach from male counterparts. Naturally with a finance focused session here were a large number of questions from our audience on the best means of negotiating a pay rise.
- Know your value – The importance of going into negotiations and meetings with your manager with relevant data was stressed by all. This encapsulates everything from your pitch as to why you deserve a pay rise, your achievements against your annual objectives, the revenue you’ve brought into the business and how your current salary tracks against the industry benchmarks
- Prepare for debate – Don’t assume that if you you have a solid argument your manager will automatically agree and give you a pay rise. What may they challenge you on? What is the financial context for your business, can they afford pay rises?
- Don’t wait – In her role as CFO Elizabeth Hunter offered vital practical guidance; “don’t wait until review time or the end of the financial year – by then, the decisions on who gets a pay rise have been made”
Where to start with personal finance
Personal finance is complicated and each person has a different level of understanding and experience. As Elizabeth Hunter highlighted there is no “golden bullet” to personal financial security but there are certain principles that act as a useful initial guide.
- Debts – Take control of any debts and get rid of them before you do anything else; there is no point in saving if you’re also paying interest on credit cards
- Know your spending – No one needs to document every penny but take the time to look back over a three month period and ask where was your biggest expense? Rent, clothes, travel or socialising? Many people are surprised where they actually spend their money compared to where they perceive they spend their money. Once you know where it really goes, if you need to cut costs you know where will make a difference
- Pension and ISAs – If you have money to invest take advantage of your pension and ISA allowance first. The tax break you receive by putting money into these saving classes loosely amounts to free money from the government as an incentive to save. Your workplace legally has to offer you a pension and any high street bank has an ISA product, so they are easy to access
- Government schemes – If you are looking to buy a house look at schemes such as Help to Buy offered by the government; they can boost your savings by 25%
For those looking at the next level of investment Hannah direction was to do some research online, amongst friends and with your parents. Use tools on the stock market and try to invest across different geographies, sectors, industries and also in different classes of shares. Importantly however, never invest in something you don’t understand. Everything comes with risk and you need to understand what they are and where they could come from.
Many of our attendees asked for further guidance on finance events and information, which the dawn committee will continue collate and share; make sure you follow us on our social channels for more information.