The following transcript was made earlier this week at Woods Squared with one of the firm’s prospective new clients, Father Christmas. With support from analytic software provider Panalitix, partner Alan Woods has allowed AccountingWEB members to eavesdrop on his initial consultation.
Alan Woods: Good afternoon Mr Christmas.
Father Christmas: Oh, do call me Nick. And may I call you Alan? There’s no need to hide behind formalities. I already know whether you’ve been bad or good this year. I’m looking forward to serving you in my professional capacity on the 25th and am interested to hear whether you can do the same for me.
AW: Indeed - I think it’s definitely worth exploring the possibilities. It’s been difficult to get hold of you this week and I appreciate you making the time to meet me.
FC: My diary does get very packed at this time of year but I know I need to see the woods more than the trees. You struck me as the perfect man for the job.
AW: Maybe we should start by finding out what brought you here. Are there any particular issues bothering you?
FC: Christmas comes but once a year, but it’s becoming a permanent headache for me. I like to make people happy and bring a bit of magic and good cheer into their lives at this time, but now I’ve got competitors coming at me from every direction. They don’t have the same standards as me, but people don’t seem to mind - demand shows no sign of dropping. It gets harder and harder every year to keep up. Can you help me?
AW: I think so. First it might help to find out a little more about your revenue. How exactly are you funding this operation?
FC: Ah yes, that’s something of a mixed bag, as you might expect from a man in my position. My main sources are the royalty and licence payments I get from the likes of Coca Cola and Hallmark. Then there are donations from a number of wealthy benefactors, some of which go back quite some time. The main problem is that my revenue is pretty variable and doesn’t really match all the outgoings. Some years are good. Some are bad. I really need to find a way out of this hand-to-mouth situation.
AW: Every person has to manage cash flow, but for you it is clearly a huge headache. Seasonality is more important for you than many other businesses because everything happens at once. Managing those cashflow expectations when there is no guaranteed income is going to add stress to what is already a difficult business to keep a handle on.
FC: You can say that again. I generally tell my people “God will provide”, but you can’t always rely on his timing.
AW: No, particularly when you look at what you have to pay in terms of wages. A big cost comes with employing people and there’s a big change coming in April when the national living wage starts to apply. That could be a problem if you’re going to have to wait 8-9 months before you start getting income next year. And if you’re not aware of auto enrolment, you may need to start thinking about pensions for employees.
FC: Perhaps less so since we changed the organisational structure to a limited liability partnership. As part of that process my adviser suggested we switch a lot of the workforce into independent contractors.
AW: If they are elf employed, that’s not so much of an issue, but you’ll need to make sure they are not still legally employed with you. Whatever happens on this front there are clearly going to be some financial peaks and troughs to negotiate. We could put in place a 12-month forecast for you and plan for any gaps to take some of the stress away from you. We’ve got some software called Panalitix that’s fantastic for that.
FC: Interesting. I must confess that I sometimes have to rely on a few banking arrangements to tide me over. That can take up a lot of time and like everyone else these days, they’re always asking for more information and paperwork. What kinds of things could you do for me in this area?
AW: We could start by looking at alternatives routes such as invoice finance on your royalties and sponsorship income. Other options may well be to look at crowdfunding. Maybe they would be interested in the larger opportunity that you could offer, or we could even put them on a subscription basis, so you get a regularity factor rather than having to rely on big, occasional donations.
We’ve got connections who can help in all these areas, from managing the cash you’ve got coming in, but also maybe speaking to your suppliers and elves to see if they’d be more flexible with payment terms.
FC: I like some of those ideas. Can you tell me more?
AW: I was going to suggest you may want to consider some joint ventures with other similar types of business: the Easter Bunny, Guy Fawkes… perhaps they could share some of the costs and overheads with you.
The other option we could explore would be to see if any of you little helpers would be interested in some form of franchise. They could help with your activities and make sure you are able cover a wide geography in a short time.
FC: I like the drift of your like of your thinking, but what would my role be in this new idea?
AW: You could oversee it and set the conditions of the licences to include guarantees depending on achieving a level of quality. We could undertake an independent survey on your behalf to gauge the values of your potential partners and what their processes are to see if they are consistent with what you want to deliver.
If you went down that route we could look at the goals you want to achieve and put measures in place. You would then become the quality champion. We could use the latest cloud technology to report and feedback to you if there are any deviations that need attention. But that wouldn’t have to take up all of your time.
FC: What kind of measures are we talking about?
AW: The emphasis would clearly be on the quality aspect to make sure it’s not diminished in any way. We can monitor error and rejection rates and measure them as key performance indicators.
FC: Have you seen my warehouse in January? I certainly end up with a surplus of knitwear and other rejects.
AW: We could explore secondary markets for those products. The Easter Bunny or your elvish partners may be able to purchase them from you.
FC: Christmas jumpers for Easter? I’ve got my doubts about that.
AW: Obviously kinitwear may not work in some markets, such as sunnier climes. But it depends on the times when they hit the market. It’s all about knowing the different geographies and demographics.
FC: You mentioned cloud technology. I’ve obviously got some expertise in that area, but how would you use it to make my life better?
AW: It’s like quality indicators. At the touch of a button you can see all sorts of measures: how many toys have been built and need to be built, and how much time there is left to do it in. From a financial point of view we can show you what the cash position is.
FC: If it all boils down to numbers, won’t you take the magic out of Christmas for me?
AW: Hopefully we’ll put it back. If the numbers take care of themselves you’ll spend less time worrying about them and more time doing what you like best, which is making presents and delivering them to children.
FC: What’s our next step?
AW: Well put together a couple of actions and suggestions about what we talked about today. At this time of year maybe we’ll look to put something in place so we can plan the next 12 months after Christmas and have these systems in place for next year.
FC: I don’t know how aware you are of my business arrangements with suppliers, but how flexible are you on fees?
AW: I’m sure we could come up with an arrangement. We want to help the magic of Christmas, not damage it. We’ve said this many times before - for us it’s always more important to make a difference than make a profit.
FC: It’s been a pleasure talking to you, Alan. You’ve opened my eyes to a couple of things I haven’t thought about before. I can see you’re a man who shares my values and likes to make people happy.
AW: We like to make sure every client is delighted and happy with the service we provide.
This article is sponsored by Panalitix. If you want to make 2016 your best year ever, click here to see this 7 point approach.
