Small businesses have or should have financial statements that provide a health measurement of the business and whether they are profitable or not. Your business financial can include data on business income, balance sheets, cash flow, and most importantly how cash is controlled. Do you have the right management team, tools, and culture in place to drive your business financials in the right direction?
It is crucial that you are constantly analyzing your business financials and the controls in place to drive the financials in the right direction. Most small businesses have bookkeepers or even accountants and/or tax advisers who manage the business financial numbers. They often make sure that the financial numbers are accurate and report error-free using accounting software such as QuickBooks. It is crucial that you analyze your business financials even if you have someone else who does the financial work such as your bookkeeper or accountant. You will be able to verify that all information is correct to the best of your knowledge and make any necessary business decisions to steer your business in the correct direction.
Consistently analyzing your financial data will encourage accountability with your managers and employees who have a direct part of the bottom line. Reviewing your financial statements, yourself gives you the chance to validate that no there is no embezzlement occurring in your business. Depending on whether you contract with an outside accountant or you have someone in your business crunch the financial numbers, analyzing your financial statements after your accountant or inside financial person may also ensure accountability.
When growing your business or just running your business financial statements themselves will not make the ultimate business decisions necessary. Between yourself, as a business owner and with your management team you can discern what actions and management decisions to make based on the financial data. As an example, if you are looking through your financial data and it points to an overlap of departments that is cutting into your bottom line, then you may want to consider laying off or moving people around and consolidating departments. You may also want to go to the extent of doing a resource load to ensure you have the correct amount of people depending on your current business needs.
Besides just analyzing your financial data, what drives the data is the most important part of your business decisions that drive the bottom line. Success in any business happens from successful employees, and with that, you must have strong managers. A strong manager is one of the most critical mechanisms to successful employees. As in most if not all businesses, employees leave managers and not companies.
It is crucial that you focus directly on managers as a lever of engagement to hire, retain, and encourage the most important assets of your business, the employees, To do this, you must provide the necessary tools for your managers to be successful rather than expecting them to be successful. An example of this is strong manager performance in acknowledging good employee performance increases better productivity and quality of work. This will lead to improved customer service and with better customer service comes more loyal customers.
You must have the correct tools in place to empower the managers to engage with their team on a daily basis which will allow them to provide the necessary feedback where needed. Leaders, using recognition, provide a new perspective with the correct data. Managers are enabled to make the right business decisions. Ensuring that you have the right tools in place that connect to your bottom lines will provide the system you need to manage the financial status of your business in the right direction.
At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information: