Financial accounts show much, much more than how much you made this year vs last year, what you own and owe, and how much tax you’ll have to pay. Did you know that your financial data are also telling you a story? A look into your business numbers, where the art and science of finances unite, can illuminate all kinds of intel about your business.
Intel that can make all the difference between just getting by in business (or even doing well), and having a thriving business that fully supports your goals. When you aren’t fully utilising this strategic financial perspective, you just don’t know what you’re leaving on the table (though you may have a niggling doubt about it that you’ve been pushing to the back of your mind).
Your business needs to do two things for you:
- act as a springboard to opportunities (it’s not doing this if it’s demanding your focus/time/energy instead of feeding you); and
- it should act as a catcher’s mitt to capitalise on all those opportunities.
Let’s be clear.
I’m not talking about improving your bookkeeping skills or learning accounting for your own business, useful as those may be. This is about looking at important trends in your finances, combined with your business’ key metrics, to find out how you can have your business working for YOU.
An analysis of your business data will turn your numbers into a meaningful story of your company’s overall condition and illuminate the potential areas for improvement. So that your efforts aren’t falling through the cracks.
Here are seven things your business data are trying to tell you:
1. How your business could be simpler
- Where to best spend your time for most profit and enjoyability, stop wearing all the hats, reduce your outgoings, improve cash flow, go straight to running the kind of business you really want
2. How your business could be more profitable
- increase your revenue, find and stop the money leaks, know where your best revenue is coming from, reduce the time you spend in your business, make sure more of your revenue gets to your bottom line
3. Discover which data are important to help you grow
- bring your business to scale in a smart way, know the important trends to look out for in your P&L, know if your business is becoming more, or less, efficient over time, take on more help without losing profitability, where to spend more money in your business
4. Reach your personal goals
- pay yourself a consistent salary, know how much to take out for savings, investments and lifestyle, build a machine that works for YOU
5. Help with cash planning
- taking the stress out of paying bills, making purchases, hiring contractors, doing maintenance, and investing in professional development
6. Check against your assumptions about your business
- where is the value in your business, who are your best clients, which activities will give you the biggest return on investment of time, money and energy
7. Clarity in decision making
- show the projected outcomes of possible options and help you make empowered decisions about where to spend your valuable time and resources, find the fastest path to your goal