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In Focus Risk

In business, education is key

A good idea is great, but the owners of a company also need an education in their responsibilities and fundamental obligations

John Davies

CEO and founder, The Just Loans Group

American philosopher and educational reformer John Dewey is quoted as saying: “Education is not preparation for life; education is life itself.” I have long believed that company directors could greatly decrease failure rate, and improve their chances of business success, if they had some kind of business qualification prior to starting up in business.

Research findings

A recent study we conducted showed two thirds (63%) of business owners believed that fewer UK businesses would fail if owners had more knowledge of the world of business prior to taking the plunge and setting up. At Just Cash Flow, we have experienced a higher turndown rate than we expected, and one of the key reasons is business owners not fully understanding their own businesses and expansion plans.

Today, a key part of our underwriting involves understanding how well an applicant knows their business, financial position and future plans. If someone cannot tell you the difference between a P&L forecast and a cashflow forecast, it sets alarm bells ringing. Those that do not inspire confidence, are going to struggle to raise finance.

Key fundamentals

In over 30 years’ experience of running growing businesses, I have often thought about just how important it is to have a sound knowledge of key business fundamentals, especially how managing your cashflow is all important.

Nothing much has changed in today’s fast- moving economy and it would really help to have a national, university-led qualification for potential business owners that includes:  Employment responsibilities.  Finance.


Basics do matter, and learning this before starting up will be a great investment

 Role and responsibilities of directors and owners.  Sales and marketing.  Planning.

The best businesses are on top of all of this and, of course, well positioned to become much bigger ones. The main challenge a new owner faces is not knowing what they do not know.

We are not suggesting more bureaucracy that would stifle small businesses and the next generation of entrepreneurs. Quite the opposite – let us give creative talent the foundations to build successful firms.


Creativity and entrepreneurship are great attributes, but you still need to get the basics right. If you plan to see the sun rise each day,

but spend all your time running west, you are never going to achieve your goal. No matter how creative, enthusiastic, hardworking or bloody-minded you are, your plan needed a fundamental basic: head in an easterly direction. Basics do matter, and learning this before starting up will be a great investment. There are other ways to gain the insight needed to run a business. Just type into any search engine terms like ‘cashflow’, ‘KPIs’, ‘finance’, and ‘employment responsibilities’, and there is a wealth of information to point you in the right direction. Here are some other resources you might find useful, including paid courses:  The Institute of Directors.  The Institute of Chartered Secretaries and Administrators.

And other useful resources

 HMRC guidance.  Companies House guidance.  Insights.  HSBC Knowledge Centre. Knowledge and understanding mixed with one’s convictions and desire to achieve are indeed a true recipe for success. CCR

March 2017

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