“Flying blind” is how Chris Pham would feel running his successful consultancy Mission Grow if he wasn’t able to use financial models to steer it.
A 16-year veteran in business advisory, most recently at The BlueRock before starting his own firm, Pham is focused on creating growth and value for the businesses he works with.
Mission Grow is a “phamily” which is a community driven group of advisors focused on empowering entrepreneurs. He founded it on that principle of family, as well as innovation and “No bullshit”.
Pham is a self-confessed nerd and advises holistically, covering sales, brand and marketing, people, operations, processes and procedures and finances.
Underpinning his straight-talking advice is the use of clear financial models, an essential in this kind of management consultancy.
Mission Grow right now
In our discussion, Pham opens a three-way model for September 2021. He reviews this monthly – a habit he says is essential for good business.
“I use one of Ravit Insights financial models to do a full three-way forecast,” Pham explains.
“We know, exactly how much work I have in my pipeline, what I refer to as my known work. I also have a budget for the year. This helps me model out how much revenue is coming in, what kind of work it is and if I have enough capacity for the work. I can see live what jobs are on the go, who is working on them and which clients I need to contact to bring in more work.
“The model helps me to make capacity decisions, cash flow decisions, if I need to hire people and shows the full margins on costs and employment. I know exactly how much money I will have all year.”
Pham also uses another report at a group level to report on the performance of the group of businesses as a whole as well as the overall valuation.
“That way if a group comes in and offers to buy us out for X, we will know without too much work whether we should buy or sell.”
Models many ways
Pham uses models in different ways to help businesses grow. For some it is understanding business fundamentals and revenue streams for growth, for others it’s to understand complex cash flow. He also helps raise captial, identify mergers and acquisitions and maximise company value for sale.
One key example is how he used it to forecast through the pandemic for a business with complex cash flow.
Cash flow delays
When cash flow drops off a cliff, it’s something you need to understand fast. One of Pham’s clients is a national solar panel supplier which sells and installs the panels.
“For them, cash flow is the biggest and most important thing to their business. It is very complex with a lot of money coming in and going out, and there are delays, particularly with government funding around the panels.”
“The timing delay between getting money and paying wages means a quiet month will likely hit their cash flow in three months time.”
“That’s why they need to plan 6 months ahead, and know exactly what the business is doing. The lockdowns in Melbourne and Sydney have hurt and we needed to use the models to come up with strategies to survive when the cash flow dropped off a cliff.”
The short version:
“If they didn’t use a financial model by the time they realised they’d run out of money, their business would have collapsed.”
Overall, Pham believes understanding financials is key for his main business values, particularly “no bullshit”. There is no hiding from the true picture of cash flow and fundamentals the businesses thriving under his umbrella get from the financial models.