Go Beyond the Numbers
If you want to shape the future of your business, it pays to think like a Financial Director would. This means using your financial data not just to record history, but to plan, forecast, and make smarter business decisions. In this article we try to help you make this change by giving you some tips and guidance on what you need to do to make your financial data work for you. It’s what we do whenever we coach our new client business owners! So here’s our four-step plan to help you start to make that change.
Step 1. Bookkeepers Record History — You need to shape the Future
A bookkeeper ensures your financial records are complete and accurate. That’s very important but you need to look at those numbers strategically and ask and answer key questions like:
- Which customers or products generate the most profit for us?
- How much cash will we need over the next six months to avoid payment problems?
- Where should we invest resources to get the greatest impact and profit?
Asking questions like these turns’ numbers into insights, helping you move from reacting to situations to planning with confidence.
Step 2. The Core Financial Skills Every Business Owner Can Learn
You don’t need a finance qualification to understand what you need to do to make your financial data work for you. By mastering a few key skills, you can gain clarity and control over your financial and in turn general business decisions. Here’s a few that you can start with:
Financial Literacy – start with an understanding of the basics:
- Read and get to understand your Monthly Profit & Loss, Balance Sheet and Cash Flow reports. Try and get them monthly if you don’t already and as soon as you can after each month end.
- The analysis of these needs to become your roadmap for tracking performance and spotting opportunities.
Forecasting & Budgeting – once you have a handle on the financial literacy basics use the information they contain to predict what might happen in the future. This forecasting helps make your future clearer, gives you and your team performance targets and provides focus for reporting results.
- Start predicting/forecasting sales income, business overheads, and build in seasonal trends.
- Anticipate any challenges before they arise using your predictions, for example how seasonality can affect cashflow.
Track your key metrics – look at what’s key to your business performance and monitor these closely. There are some classics like sales analysis but each business usually has some less common metrics like raw material or bought in goods prices.
- Focus on the numbers that drive your results. Here are some examples but draw up your own lists.
- Cash flow
- Profit margins gross and net
- Customer acquisition costs
- Make your decisions based on data, not just instinct. Try and combine the two, it’s what makes a good entrepreneur.
Risk Awareness – every business has risks associated with it. These are either risks the business owns or ones that the economy or marketplace place upon it. Get to know what these are.
- Identify financial risks early, things like late-paying customers or exceeding budget on investment projects.
- Not being aware or taking into account risks can have a big negative difference on your business.
- Improving one area of risk can have a powerful ripple effect across your business.
Step 3. Start Small, Affect Big
Building financial confidence doesn’t require complex software or tools. Begin with simple, practical habits:
- Check your cash flow weekly.
- Review profit margins by product/service monthly.
- Set clear financial goals each quarter.
These small steps over time will give you stronger financial insight and long-term confidence.
Step 4. The Bottom Line
Treating finance as a chore to be avoided keeps you in the dark. So, move to a position where thinking about and controlling finance helps you:
- Take control of your business direction
- Gain clarity on what’s working and what’s not
- Builds confidence in your decision-making
Changing your business mindset to one that makes you more financially aware of whats happening in your business isn’t hard. You don’t have to tread this path alone, at Kaizen we can help you gain an insight into what’s needed to become more financially focussed as an individual and as a business. In addition a new and fresh perspective can make the numbers clearer and the decisions easier. If you’d like a sounding board to help you step back, see the bigger picture and plan with confidence, then Kaizen are here to help facilitate that. Contact us on 01482 772271 or email info@kaizengroup.uk to get a free consultation.