How do premier league football teams – like my beloved Southampton – improve?
After every fixture, the coaches and players watch replays of the match. They evaluate everything from the team’s technical skills to the tactics they used, how they behaved on pitch and how they functioned physically.
They also have detailed statistics for every player, which complete the picture. These are used to plan where to focus in their next coaching sessions and how to play their next matches. It’s their roadmap to success.
Now imagine that instead of this process, the coaches were simply told, “You came 15th in the league last year – good luck doing better next season!” It wouldn’t be much use, would it?
But that’s exactly how many business owners run their companies.
You see, to make good financial decisions for your future, you need to understand your financial situation in depth. It’s difficult to decide whether to invest in new equipment or to continue producing a particular product if you’re not sure exactly how profitable you are, or how much money you’re going to have in the bank in 2 months’ time.
However, when you have a clear view of your company’s financial strengths and weaknesses, you can make well-informed decisions about where to improve, where to invest and what to drop.
The problem is, most companies really only get one big set of financial “stats”, and that’s the end-of-year accounts. Although these show how much profit and loss you made over the past 12 months, as well as your balance sheet and a cashflow statement, it is just a very broad overview of how you did last year. Consequently, most of the information is badly out of date the moment it lands on your desk. It’s exactly like being told where you ended up in the football table after 38 matches.
Worst of all, because these accounts aren’t written for you – they’re a statutory requirement – they can be quite difficult for business owners to understand. If you just give your end-of-year accounts a quick glance and then move on to the next, you’re not alone! They’re really not useful for planning ahead and improving your business. The information is too old, too general and in the wrong format.
Now, imagine you had the equivalent of those post-match reports.
A detailed analysis of how your business performed financially every single month, which you received in a really timely manner. And imagine that the stats were not only really detailed but tailored specifically for you.
So, if you were worried about the profitability of a particular service line, you’d get information about that.
Or if you needed to reduce your company’s debt, you were told what that looked like.
That would really help you figure out how to develop your business, right?
And it would probably be an enormous relief to be able to keep your finger on your company’s financial pulse like that, instead of trying to make important financial decisions while flying blind.
The good news is, these reports exist. They’re called “Management Accounts”.
They’re standard in larger companies with established finance departments (the premier league, if you will).
But we also help our clients produce them, so they have the same competitive advantage.
Your management accounts are completely personalised. We track the Key Performance Indicators which matter to you and can adjust what we’re tracking as your company evolves. They’re also in a format that suits you. So, if you’re more of a visual learner (for example), we can include more graphs and pie charts.
We want you to be able to absorb this information and then use it to grow faster. Like this client.
That’s also why we never just hit ‘send’ and leave you to grapple with the stats by yourself. Every month, we help you interpret your management accounts, and discuss the implications for your business.
Just like the post-match analysis, your management accounts are your roadmap to success.
If that’s a result you’d like for your business, call us today on 01730 719 250 or complete the contact form here.
Let’s move your financial management up a league!