Scrutiny can be helpful

There’s a critical point in an organisations life, when its internal accounts and forecasts are opened up to external scrutiny.  This occurs for example when a business secures external funding, from a lender or an investor. 

No matter how good internal governance may have been prior to this point, there is something about external scrutiny that sometimes results in negative feelings.

There is a realisation that monthly internal reporting of numbers now has an external audience.  After all, if we’ve got millions of somebody else’s money sitting in our bank, they are going to want to see how we’re delivering on our forecast. 

When we have to spend hours each month updating the forecast to show plan vs actual, that’s time that takes us away from recruiting the additional people we need to deliver the plan, keeping the existing team on track, growing the customer base and maintaining the culture, even more of a challenge in a COVID-era.

It’s unlikely we created a business to spend our time on financial reporting and yet now there is no escaping it.  There’s no surprise that the initial euphoria of doing the deal is often quickly replaced by a feeling of oh s**t! when the responsibility of living up to the promises kicks in, with the added fear of losing face in front of the investors if our team is unable to deliver.

It’s a bit like that feeling just before you put yourself out front, whether that be on stage at a performance, when you publish your ideas, or you stand up in front of a room and make a presentation.  That fear that what you are going to say or do will not be well received.

At the extremes, this external scrutiny can result in two sets of reports, one for external consumption and then the ‘real’ numbers.   No matter how tempting this may be, it’s the wrong path to take.

The time spent in generating two different sets of reports would be far better spent in value creation activities. 

Being honest and transparent with investors will help them stay onside, safe and supportive.  They may have suggestions that can help navigate tricky times, if only they know what is going on.

The purposeful planning programme helps tech scale-ups to create transaparent operational plans that keep investors feeling safe, secure and supportive.