How many companies really know where they stand financially? And how many of them can use the numbers as a tool for growth instead of letting them stress them out? Running a company by the numbers may sound dry, but trust me - when you do it well, it's like having a GPS that will lead you straight to success.
Most entrepreneurs underestimate financial management. They rely on the fact that as long as they have money in their account, everything is . But this is often an illusion. Too many companies live without realising it. And this is where the question comes in: Are you really in control of your numbers?Or are you just hoping that everything will work out somehow?
My guest today is Václav Nedvídek, the founder and owner of My Value Officer, a company that helps companies get their finances in order and set up a system that makes their numbers not only make sense, but also make money. Vasek specializes in outsourced CFO services and shows that even small and medium- sized companies can have financial management at the level of large corporations - without unnecessary bureaucracy, without chaos and without stress.
Over the past two years, Vasek has built a team of twenty experts and helped dozens of companies set up processes that have enabled them to grow, expand or even double their profits. In this interview, we get not only practical tips on how to make your finances more efficient, but also stories from the field that show just how much of a difference proper numbers management can make.
In this episode, we discussed:
🔸 How to know if your business is bleeding financially - and stop it immediately?
🔸 How to build a financial plan that puts you among the market leaders?
🔸 Why do most companies plan badly - and how to do it better?
🔸 How to use modern tools and artificial intelligence for effective management?
🔸 What to do before you hand over the company to your children or prepare it for expansion?
In addition, we've broken down the practical tools that make managing finances easier today and shown how automation and digital systems can save dozens of hours per month. Vasek also explained why it's important to have a financial partner in your company who will not only give you direction, but help you make better decisions based on real data.
If you want to grow in the company, but the numbers make your life rather difficult, stay until the end. This episode can open your eyes and show you the way to stop worrying about finances and start managing them.
FINANCE IS A HIDDEN WEAPON FOR COMPANY GROWTH. ARE YOU USING IT RIGHT? (INTERVIEW TRANSCRIPT)
Martin Hurych
Hello. I'm Martin Hurych and this is another Ignition. Today's one will be about finances, but before we get to them, I have a traditional request. If you like anything I do, consider signing up for my newsletter list, which I call My Notebook. At this point, more than 1,100 owners of engineering, technology and manufacturing companies subscribe to it. Today, it's going to be about finance, because I personally think this topic, at least in my bubble, is not well handled in all cases. I think if anything can move your company forward this year, it's finance. That's why I've brought on a guest from the most authoritative, today it's Vasek Nedvídek. Hi, Vasek.
Václav Nedvídek
Hi, Martin.
Introduction of the guest and what financial principle should his children understand as soon as possible?
Martin Hurych
Vasek is the founder, owner and director of My Value Officer. You have two kids, so I was wondering what financial principle would you want them to understand as quickly as possible to be successful in life?
Václav Nedvídek
I would like them to understand that they should have more income than expenditure and I think that is the basis.
What does My Value Officer do?
Martin Hurych
You've been around for about 2 years now, so for those who discovered me later and don't feel like going back in history, come tell us what you do at My Value Officer and how you got there.
Václav Nedvídek
My Value Officer is such a small group now, we primarily do external financial management. We have a number of external CFOs on our team, helping small and medium-sized businesses move their finances along. We set up reporting, schedules, forecasts, we help be that owner's right hand man, business partner, and help them run that company through the numbers. We've added a small accounting firm over 2 years, which we're now growing.
Martin Hurych
Your ambition is to have one of the largest consulting firms in the , is that ? Should the big four be afraid?
Václav Nedvídek
If we're talking about an external CFO, which we profile ourselves as, that makes us feel a little bit special, sure. I don't even think it's that hard there, I think if we find our blue ocean, we're probably top there, but we'd like to grow within consulting companies as well. The big four, that's a lot of hyperbole, but within the Czech Republic and within those other consultancies we would like to be seen.
Which numbers does an NGO look at when it wants to find out the state of a company?
Martin Hurych
Don't be modest, when you were first here you were alone, today there are about 20 of you. I sometimes trip over your clients in a positive way and I don't want to praise you too much, but the praise really comes from everywhere. As a business owner, if I said to myself that I'm going to understand these finances differently now, that I'm going to start understanding them and I'm going to check where my business is, I'd probably have to go through a very similar to the exercises do when you join a new company. What to look for first and foremost focus when you want to know what shape the company is in and if you even want to go for it?
Václav Nedvídek
When we look at the health of a company, one of the boxes we look at is financial health. We look at the balance sheet, the income statement, we look at how the company is financed, if it's leveraged, if it's equity financed, if there's an investor hanging on to the money. It depends on what kind of industry it is, whether it has most of its money somewhere in receivables, in inventory or whether it has a lot of tangible assets, how profitable it is, what is the profitability of its assets, what is its working capital, what is its liquidity.
We don't just look at the most recent year, we usually take up to 3 periods, plus maybe even sometimes historically at least in some of the statements for the big numbers we look back 5, 10 years to have that long line there. I think that balance sheet is very underrated, that those companies don't look at that. If I say I'm an IT company and I'm in a light business, it's not important, but if I'm a manufacturing company or an e- commerce business and I'm buying a big chunk of inventory, it's of relative importance. So of course we look at the industry.
The second is the scoreboard. There it is important to really look at how sales are growing over time and how all other costs are growing in . That is, if, for example, the profitability is increasing, decreasing in absolute terms, in terms of ratio, what is the gross margin and what is the ratio of the costs of sales, marketing and how is it returning. That's the first one where we look at that financial health.
Then we put it into some context, for example, the financial management of the company. We look at the plans, we look at how it is achieving that and we look at what systems it has for processing documents, where it has all the data and whether the outputs make sense. We're looking at whether it has that in some managerial view and whether those associates or those key people are able to make decisions based on that.
We look at how the company is financially managed and how it's doing financially to see how far we can it. If it's a company that's a hundred million dollar company and it's got 40 million in profit, 50 million in profit, and it's got good financial management, obviously we can't get that company that far. On the other hand, if that company is growing, profitability is maybe a little bit down or limping, and the financial management is not in that shape, they don't have that data on a regular basis, monthly, weekly, the best practice ecosystem of financial management, reporting, planning is not there, then the opportunity for that company is huge. If that company is not doing that and has that potential there even in that financial health where it's a little bit lacking, the potential to get that company to some doubling of profitability within a year or two is huge.
What should I check as an owner?
Martin Hurych
I knew you were a pro because you've listed practically everything I've ever walked past here. Today is going to be a bit of a bonbon for all levels of my bubble. If I were somehow starting out with financial management and until recently I was running the whole company by looking at the account, are there any 5, 7 numbers that I should check to understand that I really need to call you or your people?
Václav Nedvídek
We've generated such a nice scorecard structure over the 2 years that I say the owner should see it. We already have a questionnaire for that where we ask for things like what is the gross margin, which I think is one of the basic metrics that that owner should know.But very often they don't know at the beginning. How much turnover my business generates minus some direct cost, I sell for 100, I buy for 50, or there's some production, so there's another cost, or I sell people, so I have a million dollar project.
If I add up the wage costs of the people who work on it for me, it's 600,000, so the margin is the difference, the 400,000, it's 40%. That number is terribly important to know, and then it's nice to know, which very often they don't know either, because in that accounting it gets lost in different accounts, the cost of sales and marketing. We also look at, for example, the time that those owners spend on it, because I think that's also important. When owners are dedicating half of their job and sometimes all of their job to the business and business development, that should be there too. You don't even see the normal costs, they dissolve it into some service type accounts where everybody is, typically there's the IT people on the I.T.O., there's the services that I need in the office, and there's those merchant costs. There's some commissions in there, so they don't see that detail.
So you need to see the gross margin beautifully, to see these productive costs because they contribute to something, they are clearly given to me. I invest in them because I want a higher return in the future, I want to sell more. Then it's the rest of it, those overheads, so in some reasonable detail, not in 150 lines, but some 6 basic items like rent, consultants, IT and at the bottom that profit. I should see the company in that simple business model and know how it works. I'm putting some money here to generate revenue, I have some long term goals, that's what it's working towards, that's why I'm doing it. Here I've got some costs to run the business, that's the overheads and here's the top end where I clearly want to deliver that service to that market as efficiently as possible compared to the competition.
The fact that I have a gross margin of 60% and the competition has 40% means I'm doing something right.Either I have good contacts or I buy cheap, sell expensive or have a super technological process and do it better. That way I have to see the business, I have to know what volumes it's working at, where the tipping point is, where I want to go, what my goal is and what's driving me to that goal and where I can save somewhere based on that goal, where I can keep that overhead going all the time, where it's going to go up and where I need to add. That perspective is terribly important.
How often does the owner not include his time in the cost of the business?
Martin Hurych
I'd like to suggest that this podcast will also result in a bonus, where there is a little bit more structure and it can be used, but we'll definitely come back to that bonus. How often do you get owners' time not in the accounts at all and because of that, they misrepresent their own company's performance quite dramatically and they like they've got a Porsche underneath them and if they included all the costs , it would be a Dacia?
Václav Nedvídek
I can't tell you the number, but it's very common. One owner wanted to sell the company, thought he had about 30 million in profit and he was going to get 7x that and was happy to be at zero. But there can also be e-commerce business where for example cash flow versus profit is very different and there is a negative. So very often we come into a business where maybe it's the other way around, that the owner thinks he's in big trouble, but its not. He has the money tied up somewhere, for example typically in inventory, it's not completely unsaleable, he just has a business model that is not well thought out in terms of cash flow, but otherwise the business is profitable.
Sometimes it's the other way around, the business is cash positive, typically some SaaS business. That business has cash, it can make decisions based on that cash flow or based on that bank account, but the business model is not well built and at some point it will catch up with it.
Why have an idea of the financial path to fulfilling the corporate vision?
Martin Hurych
We're both in Scaleupboard, where we guide people to have a BHAG, a Polaris, a goal, a vision, everyone names it something different. Quite often I see that we push those people to do that, they draw in front of them what they want to do, how they want to do it, where they want to take it, but think they have no idea of the financial side of the journey to that given goal. Am I seeing it wrong?
Václav Nedvídek
That's right. It's one thing to give yourself that big high-flying goal that in three years I want to have five times sales and that's half a billion and 20% profitability. The other thing is to then plan for a year, a year and a half, for months in detail and then maybe for 3 years in perspective and put in all the strategic projects that I'm planning, all the hirings and all the investments. I have to plan what I expect from them, how much it's going to cost me, where I'm going to have to tighten up a little bit on cash flow and get funding. I have to address that in advance because you can't address it on the day. If it's a bank, I have to be for it somehow, if 's an investor, I have to be prepared for it in a different way. That's relatively sophisticated and I think it's always a boulder that the owner doesn't want to deal with. He'll say he has this goal and he'll plan it out, but it's kind of very rough. Again, I don't want to put it down, somebody might have a more sophisticated financial plan, but it's a discipline to make a good financial plan so that you have those built based on that.
Everybody thinks it's important to hit it. I don't plan because I'm never going to hit it, I've never hit it in my life, so I'm not going to do it, but it's important to have the parameters behind it there. Why would it be +10 million some year? Because I wanted to invest in business, in sales people and they were going to bring me something or in marketing and that was going to me something. It has to go down to the detail and that's when I'm able to figure out why maybe it didn't work out. Here I've got the wrong onboarding of the marketers and now I've got to call Martin Hurych and he's going to fix it for me. I'll miss it again, but I can make a forecast, refine it and move on. The magic of it is that if I plot it, then I can deal with it in time. That's always the biggest problem, that they don't know, so they address it late and 6 months later you run out of costs, you go in a different direction and you don't do those quick actions.
Martin Hurych
I'm of the generation that still remembers the 5 year olds, everything planned for 5 years. I laughed so hard at that and then I came to the Anglo-American corporation and the first big surprise was that in the corporation you plan much more precisely and for much longer. The younger generation today will tell you that there's no point in planning because the world is changing so fast that you don't really know what to do. What would you say to these naysayers? How to treat such a plan?
Václav Nedvídek
It's one thing to have a personal mindset that someone doesn't enjoy planning personal things, so they're not going to have a positive approach to it. But when it's a business, I think the business is an existing entity, we're in business to make a profit and that profit in itself is a measurable quantity and I break that down into all the revenues and costs. I'm able to go into that detail and if I want to run a business at that level in my opinion, I just have to do it, otherwise I can't.
What's nice to add to that is, it's not just planning for planning's sake, but I can plan capacity based on that, assign responsibilities to those people and set KPIs. I actually run the whole business through that and I can't really imagine not doing that and we're a small company. I don't know how I would manage that at all, how I would manage those people, what I would tell them is going to happen that next year. We're going to do this project and hopefully it will work out. I think we could ask for +5 million from it or improve our gross margin. If I don't put that KPI in there, now the gross margin is 40 and I'd like to have 45 at the end of the year and next year 50, and I don't give that responsibility to the person who's going to that key project, that's kind of a blind ride. It might be better, I'm not saying it can't work out, that there's some possibility of chance or it happens differently. It happened to us, we hit it, but we got there differently because where we hoped it would be more, it was less, and where we didn't count on it, it was more. That happens and you can break it down and that information is terribly valuable for the next year and for that planning. It's so much valuable information, and just the process of creating that, when you include those other people, it's a great exercise.
How to have financial insight but not be a drag?
Martin Hurych
I see it the way, I say I'm alone and I have a team of satellites. I can't imagine doing this exercise. My P&L is about 120 lines long because I want to know what's going on in the company, and the fact that it's not coming out at the end of February means I at least know where to pull the brakes or where to step up. What I also observe that often holds back business owners is that finances are the last thing that is often put out of hand. How do I build, say, competencies in my team or financial management so that I don't feel like I'm missing the train? A lot of people feel like if I manage the financials, if I keep the bank, if I keep this reporting, I actually know what's going on in my company. How do I get away from that, how do I get more time myself, how do I give it to the pros but still have my finger on the pulse of the times?
Václav Nedvídek
We always have a liaison officer on our contracts, which may not be the owner, but the key person is the owner, the management, who we talk to and need to discuss it with. It's not that somebody is going to completely decide it for him, but I think what he needs to do is say he has a plan, some options, historically it's been like that and then he decides. That's the partner and that's what I think everybody needs. It's nice to have someone there to give you that challenge, and that's the role that we do through the external CFO. There are owners who want to know the bigger detail, some people who really just want to know the high- level dashboard, but there are owners who want to go into the detail and vice versa even further below that income statement. They want to know what's loss making, what's profitable, why that is, and that's about that owner's mindset. But it should always be that he gets some report, some information and he's the one who decides it, he just has that partner there to deal with it. He doesn't completely let it go.
Martin Hurych
At the strategic level, he can't actually let it go. What I see is that many times the owner is dealing with really day-to-day operational stuff for a long time, signatures, piles of stuff all the way to the bank. How do I get it done on that day-to-day level so that I have confidence that nothing is going anywhere, my business is going where it's supposed to go, and I can really focus on, say, monthly or quarterly, those big decisions?
Václav Nedvídek
It's about the procedural side of things, setting up some sort of approval mechanism. We talked about it today, digitisation is working, automation is working, we have systems for that, Wflow, Digitoo, Taxy, Capitain.
Martin Hurych
We'll get to that. So what would it look like for you for a manufacturing company, say, 100 million turnover, what would you suggest there? How could the owner theoretically set it up procedurally so that 's not too difficult for them?
Václav Nedvídek
You need to set up some sort of process of what you approve, to what extent. They always have to probably give somebody some level of delegation that under a certain amount I don't care, it helps a lot. If he doesn't want that too, he'll approve everything, but the idea is to at least make it automated. It should be in some sort of system, some sort of idea in front of the ERP that they'll see all the receipts. I'll approve the receipts one day a week, someone tells me or it to me, someone prepares the payments, they're ready in the bank and I just authorize it. I'll maybe do a spot check or I'll set up a checking mechanism beforehand and it's about setting up the process so that I don't miss something in there somewhere.
It's about making sure that the accountant hasn't set something up in there somewhere and I haven't authorized some payment that goes to somebody else, so that I don't miss a big invoice. It's just a matter of setting up a procedural mechanism, which nowadays is relatively easy to transfer to a very small company thanks to modern technology. I'd be dealing with enough of that too if I didn't have it automated and didn't have somebody there to chew on it and have some control. It would take me a hell of a lot of time already, it would be dozens of hours. With automation and these procedures, I get it done within an hour or two a month.
Martin Hurych
How realistic is this already established practice and how is it still science fiction? You see companies across different industries, that's why I'm asking this question, because what I see in manufacturing, for example, is that the digitization of paperwork is definitely not progressing as fast as the digitization of, say, commerce.
Václav Nedvídek
We think everybody has it because we're in that bubble and those companies that are digitizing, automating, everybody has it around. The reality is that when you go out to the , that's not the case. Honestly, even the larger companies, of course, it's hard because they've been living in processes that are analogue for a long time, they're not digitised and they have a harder time implementing it than I do implementing it in a small company without any big assets and processes. It's harder for that company, but I can see them tackling it later than they could.
Then when you've got a $350 million manufacturing company and they're just now migrating from Cool, is an accounting software that's typical for small companies and has big limitations, and they don't have that approval mechanism in there, for example, it's hard. To some extent, it's justified by the fact that the company is already big and it's a big to put it in. The other thing is the mindset of the people who have been doing it there for a long time. It's not easy because the tools are there, somebody has to apply them and those people don't want to. It's a typical human mentality that if you do something the old fashioned way and you're used to it and even if it takes you longer, you don't want to do something new. If you're an employee, you don't really care, you're more afraid that it will take your job away from you.
Martin Hurych
We also talked about the fact that people don't like two things, one is status quo and one is change and how difficult change management is. I had a cheeky question ready here about whether the blacksmith's mare goes barefoot, but it looks like you have the process properly tuned in your company.
Václav Nedvídek
I don't think I'm doing anything unnecessarily extra. There are definitely things that I could automate, digitize, I'm doing podcasts now and I don't have it all worked out like you do.
What can modern digital financial management look like?
Martin Hurych
So what does it look like for the pros? Let's show those who are still walking around with their binders what modern financial management can look like in terms processes and tools. We were talking about artificial intelligence before the show, and I'm going to use that as an example. I often don't really know what it can be used for and what to expect from it, where the boundaries or the limits are. When I have shenanigans and I have no idea and when I listen to you, I'm like this Vashik guy is crazy, this is something that works in America, come tell us how you have it set up.
Václav Nedvídek
That financial management is a process from the processing of documents through some processing of the data that comes out of that into some piles, into some reporting, ideally management reporting. Of course, that produces reports and then there are some plans, that's on top of that. Then there's somebody who interprets it and that's the whole cycle of that financial management. I can help in certain parts, but I always need a human hand there. That's why we talked about the fact that I think you always need that human element there.
A lot of the activities will disappear, so the role might be clustered into maybe one person, but typically at the beginning I'll help myself a lot because there are systems like Digitoo, Wflow, now the new Taxy and Capitain. Those are systems that typically have that artificial intelligence, neural network that reads those documents and finds that information from them. There will be other systems learning this, they'll all have it as some sort of further integration because it's simply easier to do this. It was still relatively complicated 5 years ago when it started, it's not as complicated now, the AI is further along. You read the information and the data goes into your system, on top of that it gets accounted for because the system has already it. Somebody just unchecks it, the accountant gives it that check, but they save themselves a ton of time, so that's one thing.
The sophisticated accounting remains, some accounting for reserves and contingencies, theoretically this will also be worked on, but for now it remains. What you'll save though is that what happens in that business, which is the template for that accounting document that copies that to you, it gets into the system very quickly. You've got the data in there, it can go straight to some centres, you've got to put somewhere Directive, how it gets there, who checks it, who splits the centres, but then the AI learns. You still need that human intervention, someone to figure it out, someone to coordinate it, but a lot of those routine activities you get into the system. The same way it is with sales, someone the CRM and you've got that data somewhere, those systems can already do that.
The second thing is to take it and if you have the data well categorized into centers, what salesman did what where, some detail by region, what is marketing, what is sales, then it's very easy to pull it up and aggregate it. I don't even think that's anything completely sophisticated that you need AI for, but that's the reporting. But again, somebody's got to figure out what that's going to look like and that's where I think you need a more sophisticated finance person already, but very quickly you'll that. It's always the worst job to get it sorted at the beginning and you pull it out anywhere.
The third part is financial planning that looks to the future. That's where artificial intelligence based on history can help, but for me still imperfectly. At least in the small, medium-sized business world, every year is so different and there are new things and projects that the AI can't read from historical data. But it does help itself in the sense that it's not that complicated, ChatGPT already suggests it to you and you're just plugging in some new hints of yours. Above that is the interpretation, where I don't think the AI is perfect yet, and the human is still interpreting it better. He sees the business, he has overlaps, which the AI can't do yet, plus he does the follow-up, he communicates, etc. That's the role of the CFO. But in that whole process, you're going to get help from automation, artificial intelligence, you can use robots somewhere in there and automate any part of that process.
How to set up financial reporting for and after M&A?
Martin Hurych
We've discussed elementary and middle school. I two questions from college. I'm being accused of being that I'm being very pessimistic here, but I can't help that what's happening is happening. In a lot of sectors.
I can see that maybe the last couple of years have not been a complete hit parade and because of that, those who have been successful in the last couple of years and have money are going to consolidate, make acquisitions and take advantage of it. There's a lot of market consolidation going on in a lot of industries. So let's say I'm in the fortunate position of being able to buy somebody and consolidate. How do I, for example, set up my financial management structure in advance to able to quickly integrate a company and start looking for the synergies that I'm actually doing all this for?
Václav Nedvídek
As part of that process, you're doing some due diligence. Initially, you know why you're buying the company from some high-level perspective, that you're expecting some synergies there, either in cost somewhere or that you're they'll help. You've got an idea behind it, and I think you'll check that out beforehand in due diligence, when you get to know how the company works. You're looking at some procedural financial management, how financially sound the company is, and you're checking those assumptions a little bit to see if it's working the way you thought it would.
Martin Hurych
I think we've both experienced in corporations that when the ownership changed and someone was sold or bought somewhere, within hours or days the new CFO would be sitting there implementing a new structure. So how do we move quickly, is it a good thing that those corporates are doing, whether to push for immediate change and adjustment, for example, even within the financial year, or how do we approach it more politically?
Václav Nedvídek
I would definitely not push the small and medium-sized enterprises so hard. The corporates have their for doing it, but I think they are also breaking the knee unnecessarily. It's good to get at least some basic things in place, which is some reporting structure. It depends on what type of acquisition it is, but let's say somebody consolidates it, or one person gets it, the new CFO, who needs to look at it. So they'll consolidate some structure, that can be done relatively well at least manually, and I would leave some big process of migrating that to the same ERP and so on until ad 2. I don't think it's important at all at that point.
What is important in finance to pass the business on to the next generation?
Martin Hurych
I guess I have a similar question. What do you think is important when I want to pass the company on to my children, for example, in terms of financial management? Is there anything that you would recommend?
Václav Nedvídek
From my point of view, I would always like to have that company à la best practice financial management. It seems terrible that it's automated, but I've been thinking about it a little bit, that always those owners are saying they need to change their sales, their marketing, their mindset, and have a leadership coach. Those are things are very hard, that are very hard to copy, that I would want to be like Chupr and be this good of an entrepreneur or have great sales. There's room for improvement but it's in incremental steps and I don't think you'll ever reach that top level anyway, plus it's different in every company, there's different people. So it's good to improve everything, but it's very slow.
With numbers, I think it's relatively simple. I think you can put in place really nice financial management à la best practice and you can reach the level that Rohlik or some other big company has. In the same way, I would probably recommend in any situation to have that in there, to have that management scorecard in there monthly, to have those plans, to compare, to do regular forecasts and to have those meetings on that. It's good to have that measurable structure there, have some KPIs tied to that so everybody knows where they're going. It's relatively easy to set that foundation, it's just a matter of time. Some companies have a big mess, so the project takes 8 months, some are small, so we do it in 3.
But getting to that corporate level with all the apps and simplifications is relatively easy for me. I often wonder why those companies don't do it. The numbers don't compete with those other segments because I look at the whole company through the numbers and I'm able to measure the business, the performance, the marketing, as well as the gross margin or profitability. I look through the numbers at the whole company and move it forward very easily.
So if I wanted to give to children, I need to have all this ready so they know what they are getting. Typically those kids, maybe there's more than one, or there's family, or there's cousins, and everybody has a different perspective. Having that history nicely, knowing that detail of what's going on, what's a revenue business, what's pulling that business down a little bit maybe, and having that financial plan is important. It's a nice thing that then everybody can agree on some future direction. It's also about where the company is in the future, what it's going to look like in 3 years.
The financial plan can then serve that purpose, that can agree on that and it's a direction that's clear. We agree it somewhere on the board and go for it. There are those strategic projects behind it, we know what has worked in that company and that's the answer for me. In fact, that's what every company should be working towards and it's relatively simple.
And what to do when expanding internationally?
Martin Hurych
That said, if I haven't cleaned up my act financially for myself, I should at least do that before I hand it over to the kids so they know what they're getting. Since I understand that cleaning out those bowels is important no matter what you do, the following question is a bit redundant. What to do in financial management if I want to expand out? Do I just need to multiply the rows or tabs in Excel and add another country in there?
Václav Nedvídek
For me, it's another business case that I just need the data that I might already have and I'm just thinking about what synergies I can use. When I go from the Czech Republic, I already have some of my headquarters here, so what am I going to use from that headquarters for those synergies and calculate that business case and have those numbers accurate. Quite often the cost of that expansion is underestimated. If I want to expand into Poland and it's going to cost me a million, it usually doesn't, so it's more about the challenge of the financier for me there. You have to tell yourself those scenarios and there are more of those bottlenecks I thought I was doing well in the Czech Republic, so Poland will be just as easy and it's a bigger market. That's usually the case, so it takes a big challenge. It's hard up front, of course, but at least I can evaluate early on how I'm doing, what's working, what's not, where the costs are going.
Do companies have 2025 planned yet?
Martin Hurych
It's the beginning of the , when you look , no doubt you have everything planned. What do you think it looks like in companies, is it really fully planned at the beginning of January?
Václav Nedvídek
I think not completely, but the important thing for me is at least that it is in progress, that the process is there. Now the Christmas holidays were 14 days away and ideally by the time we'd all gone and left for them, you'd have a financial plan in place. Apologies are accepted for small businesses where the business is awfully fast and doesn't get done, you just need to be in progress and get it done in the first half of January. However, I know of larger companies where they are planning for the end of March.
Bonus - structure of the management income statement
Martin Hurych
That was my donkey's bridge to the bonus you set up, because for those of us who are fired up for financial planning today and don't know which way to go, you set something up. What that , I'll leave it to you to tell us about.
Václav Nedvídek
I was talking about the structure of the management scorecard, so it's actually a nice Excel template to work with. With those Excel spreadsheets, it's always terribly difficult to fit it to that particular company's business. Either you're an IT company that has 10 huge contracts and gets 2 a year, or you're just an e- commerce business that has a thousand customers. I tend to have it more for the service business, but those parameters can be applied anywhere. The result is a nice management scorecard and you can play with that. If you're smart, you can see from that how we might be thinking about it and you can play with it. You can use it to plan capacity for the whole year, for example.
What are the NGOs' plans for 2025?
Martin Hurych
You guys are smart so you understand how Vasek thinks and I can confirm that it's a nice Excel and makes me a bit nostalgic for my corporate days. To kind of wrap things up, 2 years ago you were alone, 2 years later you are 20, when I invite you back in another 2 years where will you be? Are you gonna be competing with the big four?
Václav Nedvídek
I don't think so. We have some growth planned in our financial plan. We plan next year in relative detail and then we have some kind of growth derived there. It's not like we have a project every month and we've been tracking that. If I say 2 years ago there was a revenue month there's a fivefold revenue month and if it's like this in another two years, I'll be happy. The growth will be less, maybe it will be threefold not at all, but that's the beauty of this business, but it's in the plans. If it doesn't work, we'll find out why, where it's leaking.
Martin Hurych
It's terribly simple, you either have to sell more or cut costs. I wish you get where you've drawn, even though the paths may be different than you've drawn. Thank you so much for this insight and I hope to have you back here again in 2 years.
Václav Nedvídek
I'll be glad to, thank you very much.
Martin Hurych
As I said, you are smart, you can read Excel, because you are mostly technicians, analysts, so it won't be a problem. If today Vasek and I got you excited and fired up for better financial management and you want to rock it this year, you have the perfect opportunity. The bonus that Vasek and I talked about is already stuck wherever you're currently listening or watching at the moment. If you enjoyed this or any other episode, give subscriptions and likes. Be sure to consider signing up for My Notebook, which is a newsletter that over 1,100 owners, directors of engineering, technology, and manufacturing companies subscribe to at this point. I'll just keep my fingers crossed and wish you success in more than just financial management, thanks.
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