Financial insight: an essential to grow your business
Your numbers tell a story.
It’s a story about the past, and about right now, and about what could happen in the future.
If your only in-depth look at your financial results is once a year when reporting taxes, it may be time to outsource financial reporting to an expert and so you can use those numbers to build a growth plan.
Ask about three main things.
Profit & Loss report
A profit & loss report does what it says: it tells you profit – or your loss – for a given period.
Profit is one of the most important numbers in your business, and the most honest indication of how your business is performing.
Make sure you know if you are making money, or losing money, and which efforts on your part are bringing the best returns.
Cash Flow report
When you have to make payments (to vendors, to employees) does not always match the dates in which you receive payments (from clients).
That’s why you need this additional report, and why a cash flow report won’t always look the same as a profit & loss report.
A profit & loss is based on commitments that exist, the cash flow report is based on the current reality.
Make sure you know how much money you have at any given moment.
“It is difficult to make predictions, especially about the future”. (Niels Bohr, Citation, maybe, here).
But that doesn’t mean you shouldn’t try.
Financial projections look at current and past patterns, and make a projection of what your financial situation will be over a future period. Ask your specialist for a couple different scenarios too, so you can plan for new hires, increased marketing budget, increased production, year-end bonuses, and more.
Make sure you know what might happen in the future.
There is much more to discuss with your financial expert, but these areas will give you a firm starting point. Find a CPA or outsourced financial consultant who will do this for you, and take the time to work with you on a regular basis. Ask me for names of service providers.