THE closer you are to your business numbers the better the decisions you will make for. Sounds simple and I suppose it really is, but it is incredible the number of businesses that are running their businesses in the dark. Sometimes you just don’t know what you don’t know, and many business owners and managers fall into this trap.
Set Budget and Target
MANY don’t set budgets or targets for the business, they don’t track their numbers on a daily, weekly or monthly basis and they fail to realise the importance of having such numbers to revert to unless there is a problem, which is often too late.
Produce Profit & Loss Quarterly
WHEN was the last time you produced or had an accountant produce a Profit & Loss A/C for your business? Your year-end accounts do not count! Although talking of year-end figures, when did you sign off your year-end December 2017 accounts? Was it within the first quarter this year? What about the second quarter? How many businesses didn’t sign off last years accounts until a month before the deadline, which would have been in the last month or so? If you do fall into the latter option, why did you leave it so long? What could you have done to affect the numbers from last year? What could you have learned from last years figures which could have been actioned much earlier in the year had you signed them off in the first quarter of the year?
GETTING back to my initial point on producing regular profit and loss a/c. Ideally every month but at a minimum every quarter you should produce a P&L for the business. Why I hear you ask? Because it will enable you to drill into your figures and challenge some of your numbers. What margin did we make? Is this what we expected? Do you know the margin of every product or service that you sell? What are your expenses? Could they be reduced? Have you reviewed your largest bills, Light, Heat & Power or Insurance? Did you hit your sales target for the period? What areas are underperforming or indeed overperforming and in need of additional resources?
Set Out Cash Flow Position for the Next Quarter
DO you produce a Cash Flow for the business, which sets out your Cash position for the next quarter? What sales are projected for the next 90 days? What expenditure do we have coming up weekly for the next 90 days? Are there times when your cash position goes into a negative? Is there anything you can think of to address that challenge?
WHAT about your Creditors? You have to stay really close to those that owe you money. Never ever apologise when you ask someone to pay you the money you are owed for products or services that you have already supplied. It’s Your money and you have already earned it!! Do you have a system which tracks the money that you are owed on a monthly basis? Have you ever challenged or changed your payment terms, particularly for newer businesses to reduce any Cash Gap you might have?
As I said at the very start, THE closer you are to your numbers the better the decisions you will make for your business. As I said, it’s pretty simple to identify successes and challenges when you have the information in front of you. This task is even easier if you can create your “Dashboard” with a number of key figures for the business, Number of customers, Numbers of leads in the pipeline, Actual Sales for a Period or Margins over a certain period. The numbers on your Dashboard can be entirely relevant to your business but like the dashboard on your car, needs to be checked regularly to notice and warning lights which need your attention.
6 Steps to Business Mastery
At ActionCOACH, looking at the reporting systems of the business is only one of the many areas of business expertise we look at with our clients. Money Mastery is just one area within one of our Six Steps to Business Mastery which also includes areas such as Destination Mastery (Where are you looking to go), Time Mastery (How are you investing your Time) and Delivery Mastery (How consistently do you and your team service your customers)
For more information on how we can help you with your business challenges drop me a mail at firstname.lastname@example.org or head over to our website www.ActionCOACH.ie for further information.