{"id":22856,"date":"2023-06-01T16:34:49","date_gmt":"2023-06-01T21:34:49","guid":{"rendered":"https:\/\/www.cfosimplified.com\/?p=22856"},"modified":"2023-06-05T13:21:13","modified_gmt":"2023-06-05T18:21:13","slug":"how-serious-are-you-about-your-companys-financial-success","status":"publish","type":"post","link":"https:\/\/www.cfosimplified.com\/goals\/how-serious-are-you-about-your-companys-financial-success\/","title":{"rendered":"How Serious Are You About Your Company\u2019s Financial Success?"},"content":{"rendered":"
Most business owners get financial reports monthly: Profit and Loss, Balance Sheet, Statement of Cash Flows. Some look at them in detail, and others look at a couple of distinct numbers. The problem is, those monthly reports show your financial performance in the past \u2014 what has already occurred in your business.<\/p>\n
The bigger issue? How you use the information<\/em> you get to go forward and drive profitability.<\/p>\n Ask yourself, \u201cWhat information am I using on a regular basis, and how does it help my company succeed?\u201d For example, do you have a cash flow forecast? Many business owners don\u2019t take the time to do this. They\u2019re just running historical reports. And on top of that, they don\u2019t know how to analyze, and then apply the information they\u2019re receiving.<\/p>\n It\u2019s like driving your car down the road while looking in the rear-view mirror.<\/p>\n Think of all those entries made on a monthly basis by your bookkeeper and your accounting staff. Sure, you\u2019re using those numbers for basic things like filing your tax returns, and it\u2019s important to make sure that you pay the government the right amount of money. Not a dollar more, and not a dollar less.<\/p>\n But if all you\u2019re doing is collecting financial information to report to the government, you\u2019re not serious about your company\u2019s financial success. Or, if you\u2019re only looking at a few numbers on your income statement, you\u2019re not able to take advantage of all the data that\u2019s available to you.<\/p>\n So, once you have given that information to your accountant, what else can you do with it? You should be using the information in those reports to make decisions about how you can run your company better. More efficiently. More profitably.<\/p>\n If you were serious about the financial success of your company, you\u2019d be doing just that, because everything that happens in your business flows down to your financial statements.<\/p>\n It\u2019s not only important to see if your company is making money overall. It\u2019s critical to understand what you\u2019re making money on, what you\u2019re spending money on, and what return you\u2019re getting from that spend \u2014 ROI. It really doesn\u2019t matter if you\u2019re providing services or selling products. You should know which of those products\/services are successful \u2014 financially \u2014 by routinely asking and answering questions like these:<\/p>\n If you\u2019re serious about making money, then understanding the details about your business\u2019 finances is THE KEY to your success.<\/p>\n Looking at the numbers can tell you what changes you need to make in how your business is operating. If you need to change your pricing. If your internal controls are protecting your company, if workflows and staff time as efficient and effective as possible.<\/p>\n Understanding the numbers gives you a baseline so you can make changes to drive higher profitability.<\/p>\n Not all of this is readily available on the Income Statement. These questions make it obvious: you have to see the numbers behind the numbers to make decisions for your future. Many of those questions can only be answered by subsidiary reports.<\/p>\n And either you can take the time to do this sort of deep analysis yourself, then plan the action steps you\u2019re going to take, or, you can bring in a professional to lead the effort and work side by side with you to get it done \u2014 someone with many years of experience analyzing the numbers to improve your bottom line.<\/p>\nUsing reports to improve future financial performance<\/h2>\n
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