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By regularly checking the performance of your business, you are taking steps to ensure that you’re protecting it against any financial or organisational problems that might arise.
But where do you start? Do you know what success looks like to your business? Is it cashflow, new business wins, number of clients, or even how many visitors your website receives?
For your accountant, the fundamental starting point of success measurement would be against set metrics. To effectively measure progress, having clear, strategic metrics and strong data collecting and reporting tools are key.
These metrics could be in the form of your management accounts, a financial report providing business owners or senior managers with valuable insight on the financial performance of the company.
If you are serious about growing your business, then management accounts are an essential tool. Even if you are a small business, management accounts will help you run your business better and will give you better information on which to base your decisions.
Better decisions generally result in better actions and better results!
As management accounts can help you secure the future of your business and can help you improve your results, it is important to produce them consistently, because they turn your financial performance data into analysis you can act on.
Here’s how they can help your business:
· Measuring how you are performing throughout your financial year
· Make it possible for you to spot when things aren’t working out as you expected
· Identifying which areas of your business provide opportunities for further improvement
· Helping you act earlier. And earlier action so often protects your business, maximises your profitability and cash flows and your capital value
· In times of tough lending from banks, accurate, believable management accounts will help keep your lenders on your side too
Planning for a successful future
In our recent survey looking at business confidence a year into the pandemic, we were encouraged to hear that 80% of respondents said that they are ‘very confident’ that their company had a positive future.
So, here at Blue Rocket, we want to help set you on the path to business success and our SOAR(Set Objectives, Achieve Results) methodology encourages you to put the resources in place enabling you to assess each area of your business including how best to create and act upon your management accounts.
Here’s how we help you to measure success:
Step1: Your business plan
This is based on the idea of the balanced scorecard, a way of measuring performance by looking at various internal business functions and their outcomes. This step encourages you to consider the overall vision you have for your business, as well as create key performance indicators (KPIs) for each area.
Step 2: The benchmarking report
Ever wondered how you’re performing against your competitors? A benchmarking report looks at your industry and will give you an idea of where you might be falling short, and suggested target areas to work on within your business. Benchmarking is good way to create a baseline for performance improvement and will help you develop your strategy.
Step 3: The profit improvement worksheet
Again, this is about breaking your business into small sections to allow you to focus on one area at a time. One example could be looking at the process you have in place for cross selling, are your customers aware of all the services or products you offer? Cross selling should help a customer solve a problem, which in turn builds loyalty and improves your profitability.
Commenting on the importance of setting business goals for the year ahead, Blue Rocket’s Miguel Calabrese comments, “Sometimes we find that it’s only after a bad spell of business that small business owners realise the true value of management accounts. But by putting the right steps in place, it might have been possible to avoid the bad spell in the first place. Through practices such as benchmarking,the profit improvement worksheet and preparation of regular management accounts,you will be able to better manage your business and make more informed decisions.”
Book your place on the next free SOAR event now – a fast-paced seminar sharing how to put the three steps above into practice.
To find out more about the management accounts services we provide, visit our Services page. For a 'no obligation' chat, call us on 01322555442, or email happytohelp@bluerocketaccounting.com
