Many business owners often struggle to find the time to focus on business growth. Instead of spending time working on their business, many spend their valuable time working in the business, solving trivial problems and expending energy and expertise that could be better spent. It’s a tricky cycle to get out of.
As a businessperson you will recognise the vital importance of financial control in sustaining and improving profitability.
Good financial control involves:
- Deciding which areas you need to monitor and how frequently
- Generating the numbers quickly and accurately
- Sharing the results with everyone who needs to know them
- Interpreting the numbers correctly
- Taking appropriate and timely action based on your interpretations
The starting point is to set up a system that enables you to generate accurate reports as quickly as possible – certainly no later than ten days after the month closes.
To be fully in control, you need information on what is happening to your business now, not what happened weeks or months ago.
Weekly and daily updates
In key areas, such as sales, debtors, cash position, trade creditors, and employment figures, you can’t afford to wait even for a month. Here you could consider setting up a system of weekly or even daily updates. These ‘flash reports’ will give you better control in the short term.
Make sure key managers receive the flash reports as well as the monthly reports quickly, and encourage them to share the results with the relevant employees.
Compare projections with results
One of the most valuable instruments of financial control is drawing regular comparisons between projections and results. Not only does this keep you up-to-date on how your business is doing, it also reveals how realistic your expectations are and how in touch you are with the essentials of your business.
For best results, you should draw up projections for a six-week period and then set new projections at the four-week point.
Bottom line results
The key to good financial control is to have an effective system for collecting data and generating accurate and timely reports that is tailored to your specific needs. In our experience, such a system can make a considerable difference to your bottom line results.
If you are looking for advice on financial control, forecasting or other aspects of your business, contact Gibson Hewitt the business growth specialists. We pride ourselves on providing professional advice and support so business owners can develop and grow their business and achieve their ambitions.
Our services are flexible, and can be called upon as and when you need them at an affordable fee.
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