How good information can drive great decisions
In today’s economy, success isn’t accidental. It’s the result decisions made which are based on the best information possible. As a business owner, so much depends on the decisions you make. Your decisions not only affect you, they affect your family, your employees, and even your clients and customers. Needless to say, you need to make good decisions. How can you ensure that you are making the right decisions?
Good decisions start with good information. When it comes to decisions driven by your financial performance, being informed almost always creates a better conclusion. Are you confident that you fully understand the current market and performance dynamics of your business? Do you know how a dip in sales in September will impact cash flow in February?
Setup is essential
Every business is unique and has certain critical financial measurements which must be understood before informed decisions can be made. Yet many small-business owners manage their businesses with minimal information. Instead, day-to-day and strategic decisions are too often based on how much cash is in an operating account.
In order to get the appropriate information at the needed time, your accounting system must be set up correctly. It has to track and report the right information at the right time. Every industry is different. The performance indicators important to a manufacturer may not be as important to a technology firm or 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 is properly setup to provide you with the information that you need to make confident, informed decisions.
Good data in good information out
Once you understand key performance indicators and what they mean for your business, you then need to ensure that the data producing those indicators is accurate and timely. Your system needs to ask for the right information and organize it correctly.
Getting relevant financial information out of your accounting software requires the consistent and accurate input of data – and that depends on your accounting processes. How is information being gathered? Who is responsible for data entry at each step? How is your team being held accountable and what are your fail safes? A well-designed system for data input with reliable ways to monitor success and identify problems will go a long way toward ensuring that the information you are using for critical decisions is accurate and reliable.
Look back, think ahead
Once your accounting system has been properly setup and managed, 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 the effects. Then, when necessary, you have to go one step forward and make changes that will positively alter results moving ahead.
Ready to make more informed decisions?
If reading this commentary has you questioning whether you have enough information to make the best decisions for your organization, I have good news. Ensuring that our business clients are getting the best information and are making well-informed decisions is extremely important to our team. We have extensive experience across many different industries and can help you identify the most critical performance indicators and predictors for your organization. Our business enhancement services team can help you setup your accounts and reports to ensure that your accounting systems are asking for and producing the right information. Our bookkeeping team can help with data entry if necessary, or consult you on the development of your internal accounting processes to ensure that accurate information is being input on a timely basis. And finally, our management team can review your performance results and financial indicators and work together with you to analyze the past and plan for the future.
If you want better information and better decisions, call us today to put our business enhancement team to work for you.