Most small business owners started their business to do what the business does.  They did not start a business to manage HR, deal with past due invoices, or figure out how to market on social websites.  They especially didn’t start a business for the ‘opportunity’ to manage financial reports.  Yet, these are the primary responsibilities of the owner and will determine the difference between success and failure.

Almost every business owner turns their financial information over to someone else to prepare financial statements.  If the only statements you receive are produced once a year by your CPA at tax time, shame on you.  That’s like flying a plane in the clouds without gauges.  You may get by for a while, but sooner or later you’re going to crash.  At a minimum you should be seeing quarterly statements.  Monthly statements are far better.

Don’t misunderstand, though.  It does you little good to look in the rear view mirror when you own a business.  You look at the financial reports to evaluate whether your tactics are working to achieve your goals.  The primary benefit for a business owner is the trend analysis developed with those financial statements that enables you to predict the future, and the operational changes you need to make to reach your objectives.

Ask your financial professional for assistance in developing a dashboard of key performance indicators for your company.  They should be able to help you.  If they look at you like a deer in the headlights, get another financial advisor or find a business advisor that can help you.  Just as the pilot doesn’t need to know where all the information comes from that displays on his dashboard, you only need to know how to read the “gauges” to know if you’re flying straight and true to your goals, or if you’re veering badly off course.

This entry was posted on Tuesday, February 24th, 2009 at 1:48 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.