I am lucky to live within earshot of my local cricket green and have spent many afternoons watching games. That said, I have never managed to figure out what the scoreboard and numbers are telling me. The only way I know who won is from the smiles or frowns on the teams faces when play concludes.
The same is true for many business owners. They only see the score after the game has finished (in many cases up to six months after the year end when the accountant produces statutory accounts). It is a much better idea to keep score as the year progresses so you can change your game plan if you are not achieving your budget (assuming you have set a budget so that you have a target to focus on).
I spent six years working for a leading supermarket chain where the store managers saw detailed daily sales numbers and a full profit & loss for their store every week!! All of this was analysed in detail including their variance to budget and to the previous year. Isn’t it about time you got control of your numbers?
The more you focus on your numbers the more you will see how patterns emerge and the law of averages begins to play out in your business. It even becomes fun after a while! Here are some strategies to get you started:
Set a monthly sales, gross profit and cost budget for your business. Give my office a call and we can run you through some ideas of how to do this – 01256 345526 or email: firstname.lastname@example.org
Based on your profit budget prepare a cash flow forecast so that you can predict and manage your cash position and make sure you have enough money to meet your liabilities.
As a minimum have a full profit & loss, cash flow and balance sheet prepared every month showing a comparison to budget and to last year (if that comparison is useful and available). This may require you to spend a bit more on a bookkeeper or accountant to which I have to say… get over it! Accept that this is a cost of doing business properly and the insights and control you will gain will soon pay for the investment.
Work out what are the vital signs you need to monitor for your business. Why not set up a dashboard that tells you the health of your business on a regular basis. Even better why not put it on the notice board and discuss it with the team.
Would you rather have ten minds focused on a problem or just yours?Share