Have you ever heard the saying that work expands to fill the time allotted for its completion? (For the word nerds out there, it’s called Parkinson’s Law). So, when you fail to consciously allocate time to a task, guess what? It’s never going to happen!
Analysing numbers and discovering what’s working for your business, is often one of these tasks that gets put on the backburner. But understanding what’s happening financially in your business doesn’t need to be a yawn fest. Nor should you feel like you’re wasting precious time that could be spent on servicing your clients. Regular review of your numbers enables you to make changes before things get out of hand (such as increase in costs or low sales), or to make the most of new trends.
So how can we make sure that we do the right thing by our business and review our financial position regularly?
We all know date nights are important for our relationships with our significant others, so I’m rallying for a date night for your numbers! Scott Pape (Barefoot Investor) suggests exactly this – a regular, consistent check in one night a month to review where you’re at. Glass of red wine is optional 😊
I love Gretchen Robin’s (Better than Before) strategy of pairing. It’s all about doing something different, or enjoyable whilst you’re reviewing the figures. Think brunch at a local café or a picnic in the garden. It doesn’t have to be fancy, just different. This helps to rewire your brain into thinking that the task is something fun and important to be doing.
You may be the DIY queen, but sometimes we need to realise it’s ok to ask for help. By outsourcing to a bookkeeper or accountant, you give yourself permission to hand it over to an expert. Ask for regular reports or meet with them on a regular basis. Thus, you are consciously creating the space to make a time to review your numbers.
So that’s all about the making time part. Which, in our busy lives is probably the hardest part. Once you’ve made time in your calendar for your special date with your numbers, you need to know HOW to review them. What are the steps you need to take and what are you looking for?
If you read my previous blog , you’ve already got this part covered. A budget puts your goals into numbers and shows you where you’re heading.
Get up to date
Yes, you really do need to attack that growing pile of receipts, bank statements and invoices that is stacking up in your bottom drawer. Enter them straight into your accounting system or spreadsheet ready for the next step!
What are the differences between your budget and actual results? Highlight significant disparities so that you can dive deeper into the underlying reasons.
Shine a flashlight into the eyes of the differences so that they tell you ‘why’. Is it an increase in supplier costs? Could it be increased wastage, changes in sales volumes, different mix of products (some of which are more or less profitable than others) or the impact of marketing or sales campaign?
Be brave and make the changes necessary to get you back on track. This may mean reviewing suppliers if the costs have increased suddenly or making the most of new trends in sales (so you don’t run out of the popular products or have less popular products sitting on the shelves). Become an action pants warrior by writing a list of what needs to be done, and by when.
Reviewing your numbers is essential to the success of your business. If you don’t know where you’ve been or where you’re trying to get to, you will find yourself getting nowhere, and fast! Set aside time consistently by finding out what works best for you.
If this still feels like a daunting task, then book in for my Profit and Loss Review. All you need to do is provide me with your most recent Profit and Loss Statement, your medium-term goals and any questions you want answered. For $250 I will show you exactly where the opportunities lie in your numbers to build the business of your dreams. Contact me here for your review.