The first (and most important) thing small business owners should focus on
Your business financials are important… but I argue they should be the last things you focus on.
I encourage all small businesses to take the Balanced Scorecard approach, focusing on the 4 pillars of every business: your People, your Processes, your Customers, and your Financials.
This sounds controversial coming from an accountant… but business owners should first focus on the other 3 pillars of business: your People, your Processes, and your Customers. These three pillars drive the final pillar – your Financials.
The reason you should develop your financial strategy last is because the success of your financial strategy depends on your ability to fully understanding your business, your industry, your competitors and your target market. Without a clear understanding of these, your financial strategy will be a guesstimate.
You need to first develop an overall strategic plan – armed with this, you’ll be able to build an accurate financial strategy based on industry benchmarks and KPIs.
A key part of your financial strategy is a budget / cash flow planner, so you can manage incomings and outgoings to ensure your cash flow each month will be adequate to meet your needs.
Once you develop your financial strategy, you then need to monitor your performance regularly to ensure you’re on track. Set KPIs (Key Performance Indicators) so you can quickly see how you’re tracking against critical measures, and take action where necessary. The best way to do this is tapping into the benefits of cloud-based accounting software to build a business dashboard so you can see at a glance how you’re tracking to your KPIs – no matter where you are in the world.
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