The Road You Choose is So Important
Your financial information creates a picture of your business at any point in time.
The more up to date that picture, the better able you are to fix any potential problems before they become too serious.
With so many businesses it’s like viewing light from a distant star – the event took place so long ago that it’s impossible to do anything about it now.
Not only does your Profit and Loss, Balance Sheet and Cash Flow need to be up to date – but you also need to be able to forecast various scenarios of where you might be in the next 12 months.
Especially in terms of profitability and cash flow.
With the current Furlough scheme coming to an end – it will be crucial to try and calculate what the likely impact the new Job Support Scheme will have on employment costs, margins, net profit and cash flow.
Business owners will also have taken advantage of government loan schemes, payment holidays from finance companies, HMRC Time to Pay scheme, VAT Payment Deferral and similar schemes on a personal level.
These all need to be drawn together to give a clear picture of where you will be over the next 12 months – both on a business and a personal level – so that you can manage and control all your finances.
Rule 1: Know Your Financials
If you have up to date figures for your business – you can manage your cash flow, monitor your margins, control your overheads and track your profit or loss – and be in a better position to control your business.
You can also create a picture of where you want to be by setting a forecast – which is just another way of setting targets.
With established targets you can monitor your results and take corrective actions if your results are not what you expected.
Rule 2: Use Your Financials
It’s all very well having a ‘bunch’ of numbers, but you need to understand them, use them, and take corrective action when necessary to get back on track.
So instead of looking backward at the light from some distant star that is long dead – you need to have up to date and accurate information so that you can see what’s happening now, adapting to events that you can control, and looking to the future – where you want to be.
I’ve been helping business owners in recent months to produce both actual and forecast financials, and to understand and use their numbers to navigate a safer road through the uncertainties of the next 12 months.
I can do the same for you.
If you want to talk about your ‘numbers’ then contact me to see if I can help.