‘A business is like an automobile: It has to be driven in order to get results.’ – B C Forbes
Taking this even further, in order for the automobile to be driven for performance you also need to know what gear shifts to make and when.
All too often, I see businesses making tougher decisions than they want to, mostly because cashflow is suddenly and ‘unexplainedly’ tight, even though the business is showing a profit and sales are strong.
All too often, you hear horrible stories about bookkeepers defrauding businesses – recently, one stealing more than $300,000 from a local business in Western Australia, and last year, a worker stealing almost $1m from a popular Hastings Street restaurant over a number of years. Could you imagine how you would feel if this happened to you?
It’s so easy to get bogged down in the ‘doing’ and daily running of the business that the bigger picture is often forgotten.
The start of a new financial year is a perfect opportunity to review how your business performed last year and put in place a budget and cashflow forecast to set you up for success in the coming financial year – another step for your business becoming more sophisticated.
If you think reading financial reports is low down on your list of priorities in your business (after all, it’s only a report on what has already happened, right?), then think again. Financial reports are one of the most important tools that can help you make some really exciting decisions in your business. But if not done accurately (or not read properly… or at all!), it can lead to some pretty frightening consequences.