We’ve worked with two businesses in the last week, who for different reasons just aren’t using their most excellent management information to improve their business. (yes, we created it, so you can imagine we wanted to know why)
So why would you not use your accounts?
One client who we saw yesterday, was getting dragged into so much detail of the day to day running of the business that he just didn’t have time to stand back, look at the accounts in detail and see the bigger picture of where the business is going.
And the funny thing is his numbers reflected exactly that. Great turnover growth, but very little profit – lots of activity but not actually making the business any stronger. Not the results they deserve for all the hours and effort they put in.
So we started to craft a plan yesterday that will see their net profit quadruple in the next 12-18 months. And now he has a really strong reason to carefully review his accounts every month – he wants to know his plan is on track. His management accounts have now become mission critical, and we’re developing the KPIs that will his early warning system that each division of the business is delivering what it should be.
Exciting!
And as we wrapped up the strategy session my client said “I really wish I could have done this 30 years ago, things would be so different now if we had”.
What are your accounts trying to tell you?
The thing is that your habits, behaviours and actions (or lack of) are creating the results you’re getting. The first step in making our businesses more successful is taking the responsibility firmly on the chin for the results we’re getting.
And whatever’s going on in your business will show up in your numbers, if you’re looking in the right place and have the right information.
Somehow accountancy has become pretty disconnected from “the money your business makes” – it can hard to relate the profit and loss report to what you’ve been doing every day that month.
And just to be clear here – great information is not a print-out from Sage or Xero – this will never tell you all you need to know if you aspire to great, even radical financial results.
This is why having great management information that’s been tailored to reflect your individual company is a critical element in any successful business. Management information that works well should act like a giant mirror, – reflecting back to you exactly what’s going on in every part of your business. If yours doesn’t do this, then it’s definitely not doing its job.
But talking of doing its job, this is where you come in.…….
Firstly you have to look at your accounts, every month, properly. Ask questions if things don’t stack up, challenge them if they don’t look right, look to understand what you’re seeing and how it relates to what’s going on.
And then you’ve got to be prepared to deal with what you see – so if you prefer sticking your head under the covers rather than face your reality, then go ahead and keep ignoring your accounts!
If you’ve got the right information to run your business, it will even show up leadership and morale issues – everything that happens in any business will show up in the numbers – if you know where to look.
And if your information isn’t cutting it then talk to us – this is what we do best, making sure you’re in control of your finances and your future.