Are you getting the right information at the right time?
In today’s economy, success isn’t accidental. It’s the result of the right people, in the right place, making the best decisions based on the best information possible. As a business owner, so much depends on the decisions you make. Your decisions don’t just affect you, they affect your family, your employees, and even your clients and customers. Needless to say, you need to make good decisions. But how do you go about making decisions? And based on what information?
When it comes to decisions driven by your financial performance, informed decisions are usually good decisions. Are you confident that you understand what’s going on financially with your business? Do you know how a dip in sales in March will impact cash flow in August?
Setup is Essential
Every business is unique and has certain critical financial measurements which must be understood before good decisions can be made. Too many small business owners manage their businesses based upon how much money they have in their checking account. While your current balance may provide some indication of recent success, it does not necessarily reflect future or even present conditions. Account balances can’t predict the need to change pricing or business practices.
The ability to predict future results is essential to effective management. And it’s hard to begin projecting future results when you don’t have a clear picture of the past and present. At any given time, too many business owners have insufficient information on how they performed during the past month, how financial results compared to the prior years, and what changes are occurring that should be providing valuable managerial information.
In order to get the right information at the right time, your accounting system must be set up correctly. It has to be tracking and reporting the right information. Every industry is different, and the performance indicators important to a manufacturer may not be as important to a shop owner. It is critical that you understand the numbers and ratios that are most important to your organization and ensure that your accounting system, whether QuickBooks or another system, is properly setup to provide you with the information you require.
Good Data in Good Information Out
So we know that you need to have your accounts setup correctly in order to ask for the right information and organize it correctly. But even a well-setup accounting system can’t provide timely, relevant information to management if it is not kept up to date.
Getting the right information requires putting the right information in at the right time, and that depends on your accounting processes. How is information being gathered? Who is responsible for information at each step? How is your team being held accountable and what are your fail safes? Having a well-designed system for data input with reliable ways to monitor success and identify problems is critical.
Look Back, Think Ahead
So now your accounting system has been perfectly designed. You know the critical numbers and ratios and you are getting the right information into and out of your system. Your accounting department, whether internal or external, is a well-oiled machine.
The final pieces of the puzzle are analysis and action. It’s not enough to have the right information at the right time. You need to understand it in the context of your decision making. There’s no shortcut to getting this right. You have to be able to see trends, discover causes, and analyze and understand the effects. Then you have to go one step forward when necessary and make decisions that will positively alter results moving ahead.
Want to Make Better Informed Decisions?
If reading this commentary has you questioning whether you have enough information to make the best, there is good news. Ensuring our business clients are getting the best information and are making well-informed decisions is important to our team at Presti & Naegele. We have extensive experience across many different industries and can help you identify the most critical performance indicators and predictors for your organization. Our QuickBooks consulting group can help you setup your accounts and reports to ensure that you are asking for and producing the right information. Our bookkeeping team can handle data entry, or consult you on proper development of your accounting processes to ensure that accurate information is being input on a timely basis. And finally, our accounting staff and partner group can review your performance results and financial indicators and work together with you to plan for the future.
If you want better information to make better decisions, call us today to get started.