By Rich Bond
When you have to go somewhere new, how do you know how to get there? Do you just “follow your nose”? Look at a paper map? Or do you ask your GPS system?
What do you do when stuck in traffic? Do you use Waze or Google Maps to do a work around?
What do you do when steering your business to new goals? Do you really know where you’re going? Whom do you turn to? What tools do you use?
Most business owners I’ve worked with don’t realize that their financial information can be their GPS. When the CFO, controller, or even bookkeeper shows them a spreadsheet or financial statement, their eyes glaze over.
It doesn’t have to be this way! Finance doesn’t need to be complicated; it needs to be relevant and indicative of what’s happening in your business.
Think about this: Your company’s future P&L is determined by things that are occurring today. These things – like sales and costs – can easily be measured and communicated but are often ignored.
In one case, the owners of a high-end photography studio serving the beauty industry thought they needed a quarterly reporting software package to tell them if they were on their way to achieving their goal. But they already had the information in hand. Their accepted bid sheets showed them expected revenues. They also detailed the costs associated with each project. That let them calculate the gross margins on each job. As long as the gross margins stayed above 40%, they could cover overhead and meet or exceed their goals.
They had an accurate information source that was a leading indicator of their financial results, but they didn’t realize it.
If you’re ignoring the financial side of your business, it’s time to think again. Finance can really be your GPS – your guide to your future goals.