Your Financial Numbers Report on the Health of your Business!
If you are not feeling well, you go see a medical doctor. The doctor orders a series of blood tests to check your blood to see if there is anything out of order. Once the medical doctor has the results of the blood tests, the doctor can the diagnose and prescribe medicine or other procedures in order to cure your ailment.
The business consultant uses your financial numbers to check to see if there is anything out of order with your business. Like the blood tests that the medical doctor performs, the business consultant uses financial reports to analyze your business. Once the consultant has reviewed your finances, the consultant is able to give you solid advice on how to improve your business operations and profitability.
We participate in an economic development group designed to help businesses grow and prosper. A case that was recently presented to us revealed that the business owner did not understand his numbers or how they impacted his business operations. This is not uncommon with many business owners. Many business owners are very competent in performing the “core competency” of the business, but are much less adept at actually managing the business and making a profit. After all, is that not what we are in business for—- to make a profit?
Our firm is seeing more business owners that continue to struggle with possessing a good understanding of their financial picture. Finances are the real life blood of the business– and if the business owner does not have this in-depth understanding, the business will not grow and prosper.
If you are a business owner or non profit executive, the finances are the most important part of your business day. Learn to review those financial sheets every day, week and month. Spend some quality time with your accountant— plan on at least 3 hours per month initially to go over your numbers. Ask your accountant questions that may help you preclude tax liabilities later in the year.
Many business owners believe that if there is money in the check book, the business is making money. That may or may not be true– however, a good understanding of how your finances are developed will help the business owner make wise financial decisions.
Use a business consultant to review your finances. The business consultant will want to analyze the finances to see where you can reduce expenses and increase profits. The business consultant may discover trends that have previously gone unnoticed or not identified. The professional services fee of the business consultant is normally returned many times after a thorough review of a businesses financials. The added benefit of the business consultant is that many consultants deal with many different firms and industries and can provide the business owner with insight that can be valuable in making strategic financial decisions.