Whether you want to grow your business or you are happy with the current revenue of your business, most likely you will like the idea of having some degree of control and certainty about your business finances. After all, your business is there to serve you; you shouldn’t be a slave to it. So, how do you regain that much needed control?
There are three essential tools all businesses must have:
- An annual Business Plan.
- An annual forecast.
- Ongoing reporting and accountability.
The annual Business Plan
Your Business Plan shouldn’t be a lengthy document living in a dusty drawer. It should be on one page and displayed somewhere highly visible so you can review it regularly.
Best developed using an independent facilitator, your Business Plan should articulate exactly what you want from your business; the hours you want to work, the holidays you want to take, and the income you need.
You’ll identify Key Performance Indicators (KPIs) to monitor, vulnerabilities to manage, and opportunities to act upon. You’ll set no more than four key goals for the year, breaking these down into quarterly goals with clear actions to complete in order to achieve them.
The annual forecast
Your forecast will record how cash must flow throughout the year to give you what you want from your business. Too often business owners only create a forecast because the bank has requested one.
The forecast will highlight your business’s weaknesses, when cash flow problems might arise, and how you need to manage your business financially to achieve the goals in your Business Plan. Don’t wait for your bank to request a forecast; it’s an essential tool to ensure the success of your business every year.
Ongoing reporting and accountability
The value lies in the implementation of your Business Plan and annual forecast. Regularly reviewing your progress against your targets is crucial. Ongoing reporting allows you to track actual results against your forecast to ensure progress towards your goals.
The best way to ensure you don’t fail to implement the plan is to be held accountable by someone independent. Every business owner needs a finance professional who can not only assist and guide you in preparation of annual Business Plan and forecast but also coach you and support you with their implementation. A great finance professional will work with you to get a result better than you could achieve on your own. They’ll uncover the root causes of problems in your business and empower you to do better. Most importantly, they’ll hold you accountable to getting the important stuff done.
There are no magic bullets to business success. All businesses need these three tools.
Get in touch with us to discuss how we can work together to help you gain clarity and control of your business fiances.
“Dreams x Goals x Plans x Actions = Your success” - Brad Sugars