American musician and songwriter Frank Zappa once said: “Without deviation from the norm, progress is not possible.” For many companies, that progress comes by looking for ways to expand. It’s tapping into growth opportunities as they present themselves, and learning whether they’re right for your business. For many South African companies, it means weighing up the current growth opportunity on the rest of the continent. Often, it means taking a decision to grow into Africa.
If your company has decided to take that leap, the next steps often seem overwhelming. How do you determine where to expand, how receptive the market is, and how to set up operations? Business owners often doubt whether they have sufficient insight into the new market to understand whether setting up shop is indeed a good idea. For this reason, you’ll probably consider bringing on a project manager to assist you in this quest. This person will have the skills and time for the successful planning and execution of an expansion project. He or she will be integral to the process. At the same time, we recommend that you bring on a project accountant as part of your management team. This role is not often emphasized in the same way that a project manager may be, but we’re of the firm belief that it is just as integral. Your project accountant will partner with the project manager in providing a firm foundation for expansion into the continent. They will help ensure that your company expands into the right part of Africa at a time that will ensure maximum returns and minimum risk for your business. If you’re wondering how they’ll do that, here is a list of ways.
A project accountant helps you get a realistic idea of your future returns
The first step to any expansion venture involves taking a long, hard look at what returns your investment might yield. Your project manager might have a good idea of your product and the market you’re entering. Your project accountant has a handle on both of these, and understands the numbers as well. The two of them should work together on the inputs. Your project accountant will then determine timelines around expected margins, profit levels and give you an idea of how many years it will take before your investments start to yield returns.
A project accountant helps you understand the risk you’re undertaking
A project accountant brings together an understanding of the competitive environment you will be facing, the buying power of your target market and the economic environment you will be entering. Considering those factors together, he or she will give you a feel for the risks you’ll be taking on in the new market, before you enter it.
A project accountant helps you understand the cost implications of your project upfront
It goes without saying that expansion is a costly endeavour. It helps to get a realistic picture of how much the project will actually cost, rather than having a nasty surprise at the end of the quarter or when your project manager reports back. Get a feel for how much things will really cost so that you can plan for dips in cash flow and ensure you have adequate savings before you execute your expansion plans.
A project accountant will help provide insight into how efficiently money is spent
A good project accountant will track how each cost centre on the project is performing. She’ll be able to pinpoint where money is being used well and where it seems to be presenting low returns. Not only will this enable better management of the project, it provides useful hindsight for the next venture.
Your expansion project into Africa will be both exciting and stretching. It has the potential to be the start of something extraordinary, or something that can act as a drain on the company coffers and ultimately fail. To ensure your venture is a success, have the right financial leadership on your side. Contact The Finance Team to find out more about our team of interim and part time project accountants to help you do that.