I think there are a number of us who have never been able to save any money at Lamana. But perhaps that can be termed as more of an investment in ones memories with friends. Okay I’m being a bit misleading here because this post is not really about Lamana but more about financial management.
On Tuesday and Wednesday this week I attended a Financial Management course at… you guessed it, Lamana. The free course was sponsored by Westpac and AusAid and was conducted by a facilitator from Australia.
But a bit of history first. Westpac is the only bank in Australia (and most likely PNG as well), that has a financial education division. They’ve been running this division for 10 years now in Australia and since June last year, in partnership with AusAid, they’ve begun running the free courses in PNG as well. (You have to be invited however and you have to be a Westpac customer).
Westpac also runs free ‘Financial First Steps’ education for women in business as well. So I’d say any bank that runs free financial training in PNG deserves a round of applause. And especially considering that I don’t bank with them and more so because they don’t force me to love them like other banks.
So what did I learn? Well I’ve always known about Profit & Loss Statements and Balance Sheets etc etc and to be honest I know that I know how to make money here and there, but I cannot stand looking at numbers. But for the first time in my life it finally became clear to me how all these reports brought our different aspects of the business and more importantly how it could help with trouble shooting for the business.
We had to study 5 modules over the 2 days and I particularly enjoyed the modules on ratio measurements for business. I know some of you are wondering how I’ve managed to run a business for 9 years and not know about these measurements or even how to do it and use it. So I’m absolutely pumped now about trying to work out ratios to measure different financial aspects of my business. Because God knows I need it with the number of projects that I end up getting into. Especially when I learned that because there is no relationship between cash and profits you can keep running around like a headless chook while not actually making any net profits. (There see, now I can sound smart too using those accountants language).
But some really important lessons for me:
- The life of a loan should always match the life of the asset
- Focusing on gross profits alone will not help in analysing how you can improve your business
- Cash is King therefore the cash cycle in your business must always be turning.
- Benchmarking, I can now bench mark with ratios against myself but how can we benchmark against other companies in PNG in the same industry. (I think Bank of PNG might have something on this, hopefully?).
Well for a bank with a number of firsts I also want to add that Westpac is the first bank to reach 100 years in PNG, not ANZ. It was explained to us by their marketing people that ANZ opened up 6 weeks after Westpac. Looks like watching every number has its benefits.