This is not something that every new business owner will have down-pat from the beginning but rather, is something that is learned. And it’s important to have the right information at your fingertips so you can make good, informed business decisions along the way. If you’re a startup business in particular, great reporting is pivotal. Luckily, with cloud accounting software like Xero available to you in this new digital world, this helps give straightforward ways of running financial reports and tracking key metrics all at the touch of a button. This real data not only gives you an effective understanding of your finances but is what you can confidently base your decision-making on for growth opportunities, as well as future plans that’s good for the business. In this article we will outline some of the key recommendations our experienced team of business advisors at Fitzpatrick & Robinson Accounting often discuss with the myriad of like minded individuals and organisations we have the pleasure of working with throughout the greater Sydney and indeed interstate areas around Australia, to hone your business decision-making process.
Management Information Reports should be ran once a month
With modern cloud accounting software, you’ll be able to run detailed and up-to-date reporting on your financial position with the simple click of a button. You can generate numerous in-depth reports that show both your past and future position, and by doing this regularly – we suggest at least once a month – your decision-making and strategic thinking is better informed in real time.
Throughout the stages of your business’ lifecycle, important decisions will need to be made about next steps in order to continue growing. Thinking about the financial implications of any new projects or ventures, the amount of available cash in the business and any new sources of funding will help you plan effectively.
Make Informed Decision using Projections and Metrics
With various accounting apps available now, setting up a custom, tailored dashboard is straightforward enough and will serve you well in highlighting your most important and relevant metrics and key performance indicators (KPI’s). If you’re unsure on how to do this or which metrics you should regularly be monitoring, simply reach out to our team.
The key to managing your business financially is setting these clear targets and tracking them on a weekly basis. If the cashflow looks poor, consider freeing up some money by cutting costs or borrowing it if necessary. If revenue from sales is down, look at ways to boost your activity through new or different marketing campaigns that target specific products and/or services that are most profitable to your business.
Involving Key Stakeholders in Scenario Planning
Whether you’re the sole founder of your business, or part of an extensive team of co-founders and other key stakeholders, decision making doesn’t need to be a one-man job. By workshopping a challenge from all angles, or nutting out ways to perhaps grasp new opportunities for the business with a team, you can reach an effective consensus taking into consideration the invested input by all. And if Fitzpatrick & Robinson Accounting is your team, we’re with you every step of the way.
Working through a SWOT analysis is one great way to hash out any current threats or opportunities in the business and the potential resulting scenarios- i.e. what could the best-case scenario be and how can you achieve it? On the contrary, what’s the worst-case scenario, and how can you and your team prepare for it if things don’t go according to plan?
Working with an experienced external advisor
This can often be a clincher and our team at Fitzpatrick & Robinson Accounting often see it first-hand. When you’re busily investing your time and energy into the business 24/7, it’s difficult to look at things from an objective perspective. Nothing to be ashamed of since your blood sweat and tears often goes into your startup, but often judgment calls can become clouded by emotion and/or internal or political factors. By teaming up with an accountant or business advisor like our experienced team at F & R Accounting, we can help bring a fresh perspective to the business on all fronts – financially, strategically and emotionally. Not only can we help get your numbers straight, but with the wealth of knowledge and experience behind a professional team, we can work to steer your strategic thinking and decision-making in the direction you see fit for the business.
It’s incredibly rewarding to become a trusted sounding board for the many businesses we have the privilege of working with, and we often find our clientele opening up about their worries and aspirations for the business, and indeed sharing in the many positive milestones. Inherently, it should be a partnership, all working toward a common goal.
Goal Tracking- how are you measuring up?
By setting clear goals and targets and monitoring them regularly, you can make good business decisions depending on how you’re tracking against these goals. As in our first couple of points, referring back to your reporting on financials, key metrics and KPI’s, this can easily give you a pulse check over time to see how you’re measuring up. If progress is starting to slip, then perhaps it’s time to take action.
The key areas we suggest monitoring closely are:
- Your Cashflow Position – Making sure there’s enough cash in the business to keep your business moving in the right direction of your end goals
- Revenue and Sales Figures – Is your desired revenue being reached? Are you tracking where you should be against your sales targets?
- Your Expenses and Budgets – Be sure to check that you and your team are being conservative with outgoing expenses and overheads and that you’re not overspending
- Your Gross Margin Percentage – This is essential for ensuring you keep the business profitable and to meet your profit targets for a given period or year-end
- Your Growth against Targets – Are you meeting your growth target for the period? Is the business performing well and growing at your predicted or ideal rate?
As experienced business advisors, we understand that everyone is human. We’ve seen a few bad decisions being made in new ventures, but what separates the steadfast businesses from those who can’t withstand the test of time, is those who learn and grow from those mistakes. Having experienced business advisors on your side that can help monitor how you’re tracking against your performance and steering you in the right direction can make this journey simpler. Our team at Fitzpatrick & Robinson Accounting are ready and willing to hear all about your new venture and would love the opportunity to partner with you. Contact us today to arrange a coffee at our South West Sydney office conveniently located in Gregory Hills.