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لماذا يكون معظم الرؤساء التنفيذيين محاسبين؟

Financial background, more precisely accountancy seems to be the starter pack for the perfect CEO portfolio. We say this because one out of every four CEOs is an accountant. The Financial Times Stock Exchange (FTSE) is a British financial organization that specializes in providing index offerings for the global financial markets. A recent survey shows nearly one quarter of FTSE 100 CEOs come from a background in accounting and 55% of all UK CEOs come from a finance background.  The numbers are surprising. No doubt finance is the life blood of a business, but what makes accountants so prone to leadership? When we think of accountants, we picture a person drowned in papers, scrunching numbers, and vigorously pressing buttons on a calculator. We assume accountants are uncreative beings that manage our bookkeeping, handle taxes, prepare invoices, construct financial reports and submit them to the leadership. Turns out we have been majorly underestimating accountants.  Accountants know the ins and outs of a business that enables them to make the most insightful decisions. There are a few skills that accountants inherently possess that makes them the best candidates for an executive role. Let’s see what these qualities are and why are they specific to accountants?  Why are accountants best-suited to the executive roles? 1. Strong Analytical and Financial Skills Starting off with the most obvious skill, accountants have the ability to provide insights from a financially strategic viewpoint. At the end of the day, you want your business to make you rich. Ideas are where it all starts, but smart financial moves are what makes your business profitable. “Being able to translate an idea into a financial impact that would help the bottom line of a business is incredibly important,” ~ Andrew Brushfield, Robert Half Australia director Traditionally, sales and marketing people made the best candidates for executive positions.  However, the global financial crisis in 2008 made the appointment of CEOs with accounting and finance skills vital as businesses have become more risk-averse.  2. Accountants are Innovators The technical accountants tend to be great innovators. Accountants often strive to accelerate the lengthy procedures, automate recurring tasks and increase clientele, such aims lead them to new ways to make their work more efficient.  “If you don’t understand the details of your business, you are going to fail. One of the only ways to get out of a tight box is to invent your way out.” Jeff Bezos Metric – a story of innovation Metric itself is a great example of the innovative mindset of accountants. A team consisting mainly of accountants through their consultation career, recognized the problem of small businesses failing to manage finances due to unavailability of accountants. Accountants have the potential to adapt their practices to suit the modern marketplace. Realising most of these startups and SMEs can’t afford to hire an accountant, they came up with a cheaper yet efficient digital alternative.  The team took the recent shift to mobile devices for research, calculations and operations, as an opportunity. Metric launched an accounting app that automates all financial processes, catering masses that prefer mobile over desktops for professional operations. Metric disrupts the common business models by giving streamlined, cloud-based accounting services for free.  3. Accountants are good with money matters If you research the top skills CEOs must have, you would definitely find risk management, budgeting, financial management, accounting and internal auditing. These are the exact skills finance professionals have learnt during their education and polished throughout their careers. This does not mean a CEO can function without communication skills, teamwork, collaboration or negotiation skills. But these soft skills complement the technical expertise that accountants already master.  4. Accountants are More Adaptable If COVID-19 has taught us one thing, it’s the importance of being able to adapt to change. While most businesses struggled to stay afloat, some greatly prospered changing their business model or services in accordance to the needs of the crisis. Changes in your industry, sector and business can have a profound impact on your strategy, priorities, and decisions. A good CEO should be able to change direction when necessary and adapt their role to the company requirements.  Accounting is a dynamic industry. With the frequent changes in tax laws, financial software and tools, and financial strategies, accountants are bound to quickly adapt to changes. They need to keep up with evolving trends that make them more adaptable to change of all sorts. Experienced accountants remain calm in stressful conditions, having the ability to adapt and determine alternative options to cope with change. 5. Accountants are Good in Decision-making “Decision-making is at the heart of my role. Weighing up data, analyzing consequences, and avoiding mistakes are all part of my job.” ~ Sir Martin Sorrell, the highest-paid CEO in the UK CEOs are on the roll, calling shots, taking risks, negotiating, taking decisions that make and sometimes break businesses. Quality and speedy decisions elevate the productivity of an organization. While taking a decision even in an emergency situation, a CEO must keep in mind the vision and productivity of the company, have the trust of employees, minimize conflict yet be quick. Isn’t this too much to ask?  These emergency decisions greatly affecting the businesses are the daily task of an accountant. Accountants are very experienced at balancing out biases, since they approach their work without bias consistently. Accountants are always consulted on all decisions to better suggest keeping the financial condition in mind. This extensive experience of decision making helps accountants remove the middleman and take up the executive position themselves.  What if you’re not an accountant turned CEO?  If you don’t have an accountancy or even a financial background, are you destined to fail in your business venture? Most definitely not! Even if accountants take up the most executive roles globally, companies without accountant founders or CEOs run equally fine. However, not having an accountant guidance in your business finances is the recipe of disaster.  As mentioned earlier, Metric app is an innovative product by

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8 طرق فعالة لتقليل تكاليف الأعباء العلوية

Your overhead costs are parasites eating up your business little by little if not kept in check. Those forgotten subscriptions, unnecessarily high rents, inefficient employees, and internet charges leak all your revenue without you even realizing it. You certainly need to spend money to earn money, but you can avoid these pitfalls that hamper your company’s growth. There are many ways to decrease overhead expenses, increase profit margins, avoid cash flow problems, and keep your business afloat even through economic downturns like the one we’re experiencing these days. All of your business’s recurring costs that do not directly impact the production are overhead costs. Office rent, maintenance, employee payrolls, management and marketing charges come under the tag of overhead costs. It is a good practice to keep your overhead costs in check throughout the year, but economically unstable times and low revenue seasons, require more action on cutting overhead expenses to a minimum. Let’s dive deep into ways to reduce overhead costs without damaging your growth or quality. 1. Analyze A Deep Analysis of your Business’s Revenue Before you get on a layoff spree, do an in-depth analysis of your revenue model and your bottom line. Go through your profit and loss statement line by line, and examine what might be a waste of money. This would allow you to cut out funds going towards things you don’t necessarily need. Metric develops the profit-loss statements for you while giving weekly, monthly and yearly cash flow reports, which limits this lengthy procedure to merely minutes. This occasional check keeps you aware of your financial health and spending trajectory. Revisit Costs After a period of big growth and profits, be careful to revisit all costs and make decisions based on updated data. While reviewing, mark off items that you consider expensive, that can be made more efficient, or those that are simply not needed anymore. All such items can be eliminated when the company requires.  Scale Down Variable Costs Desperate times call for desperate measures. During low sale periods or a global recession, you must scale down on variable costs that are acceptable and even preferred in normal business operations. Once you’ve reviewed your costs, you can cut down on some unneeded liabilities and temporarily stop a few services. This step might require a change of strategy or even a different mode of work for employees but would greatly benefit in saving the company’s revenue in hard times.  2. Automate Automate Payments Suppose you keep forgetting the bill payment due dates and always end up paying fine charges. This might seem like a small amount but when added every month costs you a great deal which could easily be avoided by timely payments. Metric helps you optimize your cash flow by paying invoices on their due date thus saving you from overdue bills.  Automate Administrative Tasks Automating generic tasks like invoicing, appointments, scheduling, client follow-ups and others of the sort through apps like Metric, takes so much off your plate. Companies hire separate employees for these functions which costs you an extra expense. Mostly, founders try to do it themselves with their already hectic schedules, this burns them out and greatly increases the risks of error.  3. Invest in an Accountant You’re laying off your visiting staff, and we’re suggesting a new hire! Regardless of how ridiculous it might sound to you now, you’ll thank us later. Tough times require accountancy support like never before. Taking the right decision, saving your revenue, and keeping your company afloat, all while dealing with a recession is not something you could manage alone. With all other things, you need the support of an accountant for cutting overhead costs and helping you with the layoff if needed.  Metric’s “Growing” plan offers you automated generic tasks along with professional accountant support. However, if you’re a small company and can no way invest in an accountant right now, then Metric’s free plan works best for you. It facilitates you through insights and cloud-based real-time financial dashboards that assist you in making the right move in your business.  4. Re-evaluate Office Space and Equipment Expenses  Cost-Effective Office Space A larger part of your revenue goes into office space rent. A great office location undoubtedly reduces turnover rates and absenteeism, both of which can be sources of great financial loss. However, if your company is going through hard times, it’s always a good idea to reevaluate your office size and location. If your operations and productivity don’t get affected by a different location or a smaller office, it’s time to move.  Rent not Buy Equipment For your operations, you might need a few pieces of equipment once a month or even less. For a small business, it’s not smart to invest in buying equipment that you would use this rarely. Reach out to suppliers renting those pieces of equipment, make a contract of monthly renting for a few days, and save your precious capital.  5. Smart Employee Management  Trim Excess Staff When your business was growing and spreading, you might have hired a larger workforce than you require. Employee wages are one of the highest contributing factors to your overhead cost. Low performers are a drain on the company but layoffs certainly do impact the morale and productivity of the employees left. Thus ideally, it’s always better to make smarter hiring choices and go for multi-skilled candidates that could be used in other roles when needed.  Invest to Reduce Turnover  The company invests a huge amount of capital, time and effort in recruiting and training a single employee. According to this report, Voluntary employee turnover costs U.S. businesses $1 trillion per year. Even if you have other important expenses, setting an amount to maintain a healthy work environment and incentives for staff to stay is a must. IN economic downturns or company’s hard times, you can go for cheap alternatives to have the team refreshed and entertained. It is always a good choice to involve your team in the

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What is a “Cap table” and what mistakes should you avoid?

Here is everything you need to know about creating a cap table for your Pakistani startup, and the three mistakes that all new businesses should avoid. When you’re starting a new business, there is a lot to consider. Gathering capital, selecting investors, and hiring employees are all essential activities for new startups. However, it is important to be cognizant of your funds, assets, capital, and fair market values. Many new Pakistani business owners dive in head first without taking a minute to organize their finances. However, taking a step back to create and maintain an accurate cap table can prevent a lot of trouble in the long-run. What is a Cap Table? A capitalization table, commonly referred to simply as a cap table, is a list of all the securities your company has issued and who owns them. Securities include common equity shares, preferred equity shares, stock, convertible notes, warrants, and equity grants.  In the simplest terms, a cap table is a record of who owns what inside of your business, including stock, shares and assets. Typically, a cap table will include the following information: Names of shareholders Number of shares (both common and preferred) Fully diluted shares Percent ownership Stock class Price per share Value At the same time, the capitalization table will also show a breakdown of the total number of shares in the company, including: Authorized shares Outstanding shares Unissued Shares Shares reserved for stock option plan Having a neat and organized cap table is very useful. Firstly, it is used to show investors before they put any money towards your company for their due diligence. It also makes valuation of your business and its financial position much easier. By maintaining a neat and organized cap table, you can see how many shares you have available in your option pool at any given time.  It prevents you from overselling or underselling shares. Cap Table Mistakes to Avoid Now that you understand what a capitalization table is, and its importance for your Pakistani startup, let us take a look at the major cap table mistakes that every new business should avoid. 1. Not Regularly Maintaining the Table As a rule of thumb, you should update your capitalization table any time there is a chance in the stock ownership of your company. Failing to maintain this record in real time can create a lot of confusion and headaches down the road. To avoid this mistake, update your cap table after any of the following events: Financing Liquidity changes Employee grants Option exercises Employee termination 2. Not Using Proper Software Tools When you first start out, it may seem simple enough to maintain the record on a standard Excel spreadsheet. However, as your business grows there will be many financing changes, and manually maintaining the table will become too difficult. Therefore, you should look into getting a proper software tool early on. This will allow you to automatically update the table whenever there are changes, and will reduce the risk of inaccuracies. 3. Entering Inaccurate Information We cannot stress enough on how important it is to enter complete, accurate information in your capitalization table. Failure to do so can cause a lot of wasted time tracking down the correct information in the future. Therefore, be very conscious of entering true and accurate information. This includes correct financial information, as well as complete shareholder names and data. Need more help with drawing up a capitalization table? We can help you! Here at Metric, we offer the best virtual CFO, financial modeling, valuation, accounting & taxation, investor due diligence, and policy control design services. Contact us now!

What is a “Cap table” and what mistakes should you avoid? Read More »