1st Guiding Principle
Looking blankly at the neat and tidy folder your accountant gives you at the end of the financial year is not good!
Firstly, there’s a great deal of very useful information in that folder – you just need to know how to find the bits that are meaningful to you.
But, even more importantly, you should have been involved with the numbers that make up this end-of-year document every day or week or month.
Modern accounting can give you real-time information you can use to improve your business on a day-to-day basis.
Once the right system is in place you should be able to spend a minimal amount of time processing your financial information into your system. Then you can extract daily, weekly, monthly reports to check how things really are against how you expect them to be progressing.
This regular involvement lets you see the bigger picture and allows you to change and improve things along the way. It puts you in the frame of mind of ‘working on your business, not working in it’. This gives you confidence and that sweet feeling of control.
You need to know the things that are important to your business: How are my sales this week? How many quotes were accepted? Hmmm, are my prices a bit high or a bit low? Costs? Whoa, what’s going on with this one? I’ll get on to that straight away! How are those scarily clever ‘key performance indicators’ looking today?
Understanding your numbers can give you all of this control – and more. But it’s vital to make sure you know which are the relevant numbers for your business, and that they are quick and easy to access and compare.
With this sort of involvement in your numbers throughout the year, those end-of-year accounts are likely to look much more robust. Better still, because you’ve been hands-on each day, week, month, you’ll avoid any nasty surprises and you’ll understand what they mean with a new clarity.