Do you regularly review your business financial figures? And what do you do with this information? In four simple steps, you can learn how to review the financial performance of your business and make your financials work for you and your business.
STEP 1: Decide what you need to know
Financials – Business owners and managers need accurate and timely financial information to empower their decision making.
Answer these questions:
- How profitable is my business?
- How much can I borrow?
- Can I pay my bills as they fall due?
Decide what measures you need to have in place in order to feel comfortable about the performance of the business and put reporting processes in place.
Key Business Measures – Business owners and managers need to know the key numbers that drive the performance of their business. Find out what they are, and MEASURE THEM. They are the heartbeat of your business.
STEP 2: Measure what you need to know
Financials – Produce a Profit/Loss Statement, a Balance Sheet and a Cash Flow Statement regularly.
Key Business Performance Measures – Measure the heartbeat that drives the performance of your business.
STEP 3: Understand what you need to know
Empower yourself with information and understanding about your business. Review your financials and your key business measures regularly.
STEP 4: Act on what you have learnt
Make informed decisions and take action based on the understanding you have gained about your business. Ensure constant improvements to your business.
Outcomes for your business
- Well informed business owners and managers
- Good, pro-active decisions based on accurate and timely information
- A culture of constant improvement
- A profitable business.
Yes, by following these four simple steps in relation to your key business numbers: decide, measure, understand and act, you can regularly review your business financial performance and put your financials to work for your business.