Why every year-end should be a beginning
‘Year-end’ – just who is it good for? Absolutely no one – except perhaps the IRD and accountants. ‘Year-end’ exists for tax purposes only, is set by governments and is purely to determine your tax liabilities. It is a necessary compliance exercise, normally done by an accountant on your behalf, who may well have no connection to you as a business owner. The irony is that the numbers we report at ‘year-end’ – often several months afterwards – document our ‘history’ and are not the ones we need if we want to really understand our business.
Every ‘year-end’ should be a beginning. We should keep our eyes on the numbers every day and those numbers should speak to us all the time. Get them to pop off the page and tap us on the shoulder so we pay attention and know what they’re up to.
When a small business is born, the focus tends to fall primarily on cash flow, sales and immediate costs which means some indicators as to business health are missed, ignored or simply unknown. It’s easy to get caught up in jargon but there are a ‘number of numbers’ to consider. Labour efficiency ratios, for example, may sound complicated but they help us to understand productivity and the value and return achieved for every dollar invested in wages. Looking at our figures on a rolling twelve-month basis allows us to keep our finger on the pulse, build confidence and make strategic, proactive decisions.
Here at The Alternative Board, we have the tools to help you understand your numbers so you can make sound and timely decisions about your business. Advice on tracking your numbers, your business performance and business improvement is how we help you make a new beginning and a fresh start every month.
The reality for business owners is that keeping a close watch on your numbers will not only help you predict sales, trends and downturns, it will help you prepare for a crisis, develop business continuity plans, allow you to ‘expect the unexpected’ and deal with it accordingly.
Our dynamic tool to help track your historic and forecast financials is one I would highly recommend. It provides a current and accurate picture of where a business owner is now so the right decisions can be made. Rolling reports show trends and highlight the numbers that matter every day.
In April – alert level changes permitting – I’ll be running a workshop for business owners interested in getting to the root of their numbers. If you would like to come along, get in touch and let’s start a new beginning together.