Growing a business is tough — there are a lot of moving parts and information coming at you. All too often, we come across situations where people have made decisions without knowing their true financial situation. In such a case, it generally does not turn out to have been a good decision. Sure, they may see how much money they have in their bank account, but other than that, they don’t have systems and processes in place to provide them with accurate financial data. In other instances, a business owner learns the financial performance of their business when they have their income tax returns prepared. Neither way is a good way to run a business, as data that is available is not being used to make decisions.  

So how do you get the best financial data with which to make decisions?

1. Select and setup an accounting system.  You need a professional accounting system as a foundation for your business. While spreadsheets may have worked when you started and had little income or expenses, they aren’t dual entry accounting systems which are in place to ensure that you don’t miss any deductions and have accurate books. We recommend a cloud based system, such as Quickboooks Online, so that the appropriate people from your internal and external teams can access your books from anywhere at any time. Cloud systems also integrate with online bank accounts and make data recording and reconciliation quicker and easier.
2. Update your accounting data regularly.  A common problem we see is an entrepreneur having an accounting system in place but not having a rhythm and schedule for updating the data. Once they get behind, they rarely catch up and it can become an overwhelming process. Without timely updates and timely data, the data is less useful.
3. Do periodic reviews of your financial data.  Again, you should get on some sort of rhythm. Optimally, a quick daily review, weekly review in a little more detail, and an in depth monthly, quarterly, and annual review. You’ll spot places to save money and/or work less by identifying areas you are wasting money, could be operating more efficiently,  and parts of your business that aren’t performing like they should be.
4. Discuss and share financial data with your team.  A lot of people may be afraid to go to this level of transparency, but you can always choose the level of details that you want to share. Whatever level that may be, if you are pursuing growth we believe it is important. You need it to share growth progress and how things are going. You need profit to support future growth and opportunities for both your organization and your team and your team needs to understand that.
5. Have forward looking financial data.  Generally, financial data is backward looking but you also need forward looking data in order to get the best results. Most accounting systems have budgeting functions and subsequent reports where you can compare budget to actual. Dumb down a few financial metrics to Key Performance (KPI) indicators to track. Continue to tweak and hone with time as the year progresses.