When looking back moves you forward!
In the first vlog I did (catch it here), I showed you how to start your own record keeping and bookkeeping process. In the second vlog (here) I spoke about looking at your cash and how to keep track of money coming in and going out of your business.
Today, I am going to talk about reviewing and how you can learn from your numbers.
As you and your business get into a regular routine of recordkeeping, the more time you make to review your records, the more likely you are to seeing patterns.
Patterns are what makes your business work! When are your busy times, when are your lean times? Knowing this information allows you to plan for your future.
When you start seeing patterns, you can use this information to make better decisions in your business. Which leads to better control, which will lead to more profit.
What patterns are you looking for? As each business is different, so will each pattern be different, however, they can all be found in the same places. Once you find them, these patterns can be used on a daily, weekly, monthly, basis, to give you more control of your business.
Business changes fast, it’s important to carve out a few minutes each day to check a few key numbers. The exact types of numbers vary based on your company size, industry you are operating in and whether you are a product or service-based business. However, each business needs to track cash balance! Take out your app on your phone and check each item that went out and came in.
By now, you will already have your hour set aside per week to update your bookkeeping and make sure all your customer invoices have gone out. Adding to this, a weekly financial review, will help you understand your business exponentially.
Take our your cash flow template: look at cash collected and expenses paid during the week, along with other important movements of cash such as transfers to other accounts.
This cash flow template will help you keep a pulse on your company’s ability to pay bills in cash and accomplish your goals. Can you see any ‘holes coming up’?
For services – How are your billable hours? number of projects completed, number of projects in progress or overdue, who owes you money and who you owe money.
For products – How many units were shipped? How is this compared to last week? number of orders in progress or overdue, who owes you money and who you owe money.
Every month, you can go a bit wider in your review, look at your total sales versus total expenses. Ask yourself questions like – any new customers? Any new expenses? What has changed, what has stayed the same?
Look at your overall goals for the year, how are you measuring up to these.
In general, financial numbers over shorter time periods provide a bit of insight into how things are going, while information assessed over a longer time tend to be more useful for strategic decision-making.
Remember, there is no judgement, what we are looking for here is to build your understanding of your business.
I’d love if you shared this article with your business friends or anyone you think may be interested.