If you’re an entrepreneur, the show Shark Tank should sound familiar. We all know, that one of the top reasons for a shark to completely drop out and not invest is when the entrepreneur does not know their numbers. It is embarrassing presenting how amazing your business and products are, but not confidently explaining the numbers to get the investments you need. One of the first mistakes entrepreneurs make - though important, is going to their accountants that create those financial statements. The numbers on those statements and reports do not help entrepreneurs actively manage and make their business decisions with ease. Don’t be the entrepreneur that gets an “I’m out” from all the sharks right off the bat.
Don’t Use Accounting to Actively Run Your Business
Though coming from a bookkeeping company, we can’t stress enough how important it is to have a professional to advise and guide you in your business. However, it is just not enough to feel completely assured that you’re making the right decisions based on historical records. With that in mind, the following points are why we advise you to not use accounting to actively run your business.
Accounting is the Rearview Mirror
In other words, accounting is everything that happened already. The reports and statements are nothing but facts. The P&L, Cash Flow, and Balance are all accounts that happened already in the past. They are business recordings, transactions, summaries, and analyses that have been documented. In order to make real-time decisions, the answer can't be found in those reports. Businesses need something that can be used today - in the present.
Measuring What Matters is a Managerial Must
A good manager is like a good coach. They know exactly what to measure and know what to focus on in order to maximize productivity. They understand and see all the things so team members can succeed to get to their goals. Objectives and key results (OKRs), key performance indicators (KPIs), etc, are the key metrics to target in business. Those OKR and KPI numbers are not found on the accounting statements. Therefore you can’t actively make those difficult business decisions.
In the 2008 Beijing Olympics, Great Britain’s Cycling team dominated and took home seven gold medals. Before this, there was no trace of success for the British Cycling team. The one person that changed it all was Sir Dave Brailsford, who formerly served as the performance director of British Cycling and is currently general manager of UCI WorldTeam Ineos Grenadiers. James Clear, the author of Atomic Habits, continues that we should not dismiss the small changes, because those are things that help us accomplish big things.
The One Thing
A book by Gary Keller. He sums up The One Thing by asking “what is the one thing that I can do, that if done, everything else becomes easier and necessary?” Experience has taught us that simpler solutions are best for solving complex problems. "Simplicity scales, complexity fails" is what Steve Jobs liked to say. Business is about focus, scaling it down to one thing that makes it easier. That one thing can change differently between roles. Whether that’s making more sales calls, drafting up more blogs, or cutting expenses - these are the activities and tasks that can't be found in those financial statements.
What Should You Use to Actively Run Business?
If you drive a car or any vehicle, you know it all comes with a car dashboard. A car’s dashboard is similar to a dashboard with metrics in the sense that it monitors performance. Though a car dashboard can’t get all the information, in situations it can act as a huge warning sign. When you see the car engine light on it’s a warning that something needs to get inspected or something serious may possibly occur. Dashboards by itself is just metrics and data, without someone analyzing them and telling you why, just know that whenever there is something wrong or off with the numbers, the focus should be turned to now, forget everything else.
Being able to understand and know how to actively run your business confidently, is an amazing feeling. Knowing the numbers behind your business is essential because it can help you make informed decisions that have the potential to make a big impact on your business, your growth, and your bottom line. Be in the know and use dashboards today. Contact us for more information on setting up a dashboard for your business today.