Control Your Business by Demanding Sound Financials

Control Your Business by
Demanding Sound Financials

By
Joan M. Ridley, CFP™. CEPA, CBI

What business owner doesn’t want to be in control of his business, and his life for that matter. Isn’t that one of the main reasons you went into business in the first place? Having accurate financial information is the key to being in control. Financial record keeping for most business owners is a royal pain that you endure so your accountant can file your tax returns. Beyond that, correct account set up and data entry make it possible for you to determine where your company is performing well and areas that need improvement. Here is a very short list of key areas where your financials can reveal important clues:

Sales and marketing
Products and services
Profitability
Processes

Once you know where the problem areas are, you can begin to address them and make needed improvements.

Why Business Owners Ignore Their Financials

Most business owners are not trained to read financial statements much less how to access and hire the right people to be in charge of their record-keeping, including the bookkeeper, CFO, and the accountant. This is fairly common. You are good at what you do but are not trained in the ways of financial record-keeping. Maybe you started your business 20 years ago and gave the job of bookkeeper to your sister who had an accounting course in high school. Perhaps the CPA had to coach her a bit so that he had the data he needed to prepare your tax returns. Maybe, you judged your accountant’s performance by how little taxes you have had to pay over the years. And, maybe you do look at your financials from time to time, but don’t really understand what they are telling you, or not telling you. Your financials can be an excellent alert system, but only if the data is entered correctly. There is a good chance that you don’t really know:

Why revenues are trending upward or downward – the real reason might not be the economy
How company performance stacks up to the competition – buyers and lenders do care
If a bank would give you or your buyer a loan – if the answer is “no”, you become the banker
What your company is worth – poor records result in an inaccurate or no value assessment

Good Financial Records are the Key to Working Less and Making More

With good financial record-keeping you can drive performance by making critical and strategic changes. You can also get your employees actively involved in performance improvement. They usually can tell you why your company is under-performing in their areas and make suggestions for improvements. Get your employees on board with your vision and goals and you will work less and make more. Am I making this sound more simple than it really is? Maybe. But we can show you how to work less and make more by taking the steps we have outlined. Call us today at 214-692-9192 for a complimentary consultation. For an example of how of how we can help please go to What You See Is Not What You Get.

Joan M. Ridley is a Certified Financial Planner™, a Certified Exit Planning Advisor, and a Certified Business Intermediary. She is President of Business Wealth Solutions, a Dallas-based hands-on business coaching firm that focuses on performance improvement and exit planning for lower mid-market business owners. Joan sits on the Board of Governors of the Exit Planning Institute. Please call 214-692-9192 and visit our website www.bwsllc.net.