Do financial reports scare the crap out of you?
I’ve heard this many times from clients! And personally I love letting them know, that with a little consideration they don’t have to use them (often).
This isn’t an excuse to never look at your biz figures. (I am definitely not saying that!) Because truly, cash and finances in your business is like oxygen for your body. It keeps everything moving, flowing and functioning.
So today I was just dropping in to let you in on one of the simple philosophies I follow with clients.
Simply put: Measure Only What Matters
SO WHAT MATTERS IN YOUR BUSINESS?
(financial and non-financial- everyone’s is different)
🌿 do you want to pay all expenses, taxes and have some left over for a raining day
🌿 that you’re working the hours that are good for your well being
🌿 track metrics that reflect the values of your company
🌿 that you can choose the future projects you wish to work on
🌿 how about running a business that also donates to your choice of charity
🌿 that you are spending only where you can see investment or efficiencies
🌿 would you like to offer more personal leave for employees
🌿 allow for the quality and workmanship that is best for you and the environment
The list could go on… so, what matters to you?
I know, I wrote above that these are financial and non-financial points that matter in business!
But if you sit back and reflect on these, or your own, if you wrote them down. You will see they all have a financial impact. From employee policies, to workmanship, from philanthropy to taxes and peace of mind. We can’t avoid it. And we shouldn’t want to.
Your financial metrics can tell the story of what matters to you and in your business. And when you understand the value of these metrics you can make more informed business decisions. Your priorities become crystal clear.
Standardised financial reports display what matters to the tax office, potential external investors and some business owners. But they don’t show the whole picture.
Customised reports or simple tracking of what matters in your business doesn’t have to take a lot of time. Most business owners already know what matters to them.
Here are my simple steps to Measure Only What Matters.
#1 Write down your ‘What Matters’ list
#2 Work out the underlying dollar figure to provide that item, value or quality in your business
Example 1: Improved leave policies for employees, may cost 4 weeks of wages per employee, but now your wish to extend that to 6 weeks. With 50% more leave provided, the business will incur 50% more costs.
Example 2: Improving the quality of ingredients in a bakery to organic flour and free-range eggs may increase the costs by 40%. The business may need to adjust prices over time.
Example 3: A service provider may be looking to reduce their face to face consultations to increase the quality of their work, decrease exhaustion and generally increase their quality of life. A decrease of 25% of available appointments will require changes to be made in the businesses finances.
#3 Create a one page document that contains your ‘what matters’ list and the numerical value providing it represents. This is the base line you are aiming for each month or year when tracking.
#4 Track your business numbers that relate to your ‘What Matters’ list. Every month sit down and see how they add up to the annual figure.
And see how your decision-making starts to lean towards moving step by little step closer to those numbers.
I’d love to know what matters in your business?