Meaningful management information isn’t something you can glean from a quick glance at the dashboard of whatever cloud accounting system you use. It takes skill to compile – and goes far deeper than that. There are, of course, lots of factors you’ll need to consider. But at the very least, you need to know not only how profitable your business is every month now, but also what cashflow is going to look like next month. And what about the month after that?
Quite often, there can understandably be some personal nervousness about interrogating your numbers like this – and that seems to be the case especially among business owners of smaller SMEs. Maybe you don’t really want to acknowledge the starkness of a particular situation, or you’re reticent about the idea of borrowing money and exposing yourself to that kind of risk. Fair enough (and we’ve all been there at some point in our entrepreneurial lives).
If you feel this way, spin it around and look at it from the positive perspective: those business owners who make sure they get and understand the monthly management information they really need are the ones who sleep better at night – simply because they know what all their options are. They can see what’s coming and plan accordingly. The value of that? Priceless.
What will your business look like in 3 or 6 months?
It’s time to do some serious thinking. So here are 3 key things to consider over the next fortnight…
- Your cost base.
- Your cashflow.
- Your business set-up.
Each of these considerations will help you get a better feel for where your business is heading – and the decisions you may need to make.
Start by taking time to reassess your cost base. Do you need to be spending what you are? Is there anything you can trim from your ongoing expenditure? Working life has changed (and continues to change) for all of us. With so many more people now more used to working from home, do you really need all the office space you have? Could you perhaps share an office with another business?
Make sure that you have a really good updating cashflow forecast – for 3 months, 6 months and beyond. This is something that you need to have to hand every month (potentially every week) as the wider business landscape continues to shift and we all start to move forward. So make sure your day-to-day accounting data feeds into it and that it automatically updates to show real business performance.
Finally (for now!), give considered thought to the way you run your business. The market is shifting in terms of how organisations of all sizes choose to access the resources they need to be successful. So what expertise do you need in your business – and how will you secure that?
At YRH, we’ve experienced a significant increase in the number of clients wanting to talk to us about insourcing over the past year – and for good reason. SME business owners are recognising that they can (quite rightly) challenge the old resourcing models. That they don’t need to carry the cost of employing a full-time finance team when they can simply access the talent and best practice they need on a part-time basis. That they can dump the overhead while benefiting from more experienced people, who will help them implement a back-office function that looks more like a profit centre than a cost centre.
That’s obviously great for our business. But it could prove to be the winning mentality for yours, too.
For an informal chat and to find out more about how we can help you access the meaningful management information you need for your business contact us today.
Ready to chat? We’d love to hear how you’re doing and see where we can help