Is dirty data suffocating your business?
Whether you are a small business or a multi-million dollar business, your accounting data is the place where you find the pearls of wisdom that improve your decision making and propel you toward your goals.
Unfortunately though, business owners everywhere avoid their numbers and so stunt the growth of their business and their dreams.
So what should you do? Here’s an insight into how you can simplify your numbers and really understand what they mean…
The DIY Dilemma:
Do It Yourself accounting is a double-edged sword. On the one hand it makes it easy for a business to record data but on the other it doesn’t provide the necessary guidance. Some business owners are often left bewildered and feeling stupid.
Instead of four elegantly simple pages of information that lay out the story of their business they are faced with screens full of possibilities – or are they just gobbledegook.
Without foundational principles and guidance, business owners are swamped with information that doesn’t feel right and they rapidly lose faith in their own abilities.
Worse still, they send that data to the accountants who charge big bucks for someone else to sort it out. In this case they still remain deprived of the ability to make the best decisions about their business.
Instead business owners need to empower themselves by getting to know their numbers, and it’s easier than many would have you believe.
Know Your Numbers
Step 1- Print basic reports
Print your four basic reports, (yes, I said print – we want to touch, feel and scribble on them).
These report names may vary depending on your software, but relate to the following:
- Report 1 – Profit & Loss Statement Year to Date
- Report 2 – Balance Sheet as at today
- Report 3 – Aged Debtors (customers)
- Report 4 – Aged Creditors (suppliers)
Step 2 – Analyse the info
With these reports in front of you, ask yourself these questions;
- Does report 1 make sense as the story of your business incoming sales and outgoing expenses? Do the words on it reflect the way you do business and the costs of doing business in your words?
- Does report 2 reflect your business Assets & Liabilities? Is it complete, does it look right?
- Does report 3 actually reflect what your customers owe you? (Perhaps there are stray odds and sods that need cleaning up?)
- Does report 4 actually reflect what you owe your suppliers?
Now if the answer to any of these questions is NO, then it’s time to speak to the people responsible for data entry and start tidying up the loose ends.
If you answered YES then congratulations – the basics are covered and you’re ready to check for pearls of wisdom within your numbers.
Want help to make Better Business Decisions
With over 30 years experience spent deep in the trenches of tax accounting and small business, Liz Jarvis is far from your average chartered accountant.
As the founder of Better Business Decisions, she is a passionate advocate for small and medium business, who educates and empowers operators to understand the story their business numbers tell.