How to measure your performance

In the early stages of a business, the entrepreneurs that start them have their finger on the pulse. They know how much money is in the bank, when their customers will pay, what the crunch points are and the capabilities of their team.
 

They know the sales pipeline and have a strong view on what business they will win. They’re probably investing in the business by taking an unreasonably low salary and can manage the cash flow through personal funds.
 

As the business grows, it becomes harder to keep track. The pressure points on cash flow increase and yet sales are rising. Everyone is busy and the owner feels good in spite of working all hours of the day.
 

So, what’s really going on? The answer lies in the numbers and, more specifically, the right numbers at the right time.
 

So, what’s stopping you accessing this information? Does your accountant produce monthly management information? Is it timely? Has anyone actually explained to you what it means? Does it measure what you really need to know such as profitability by job, staff productivity or customer satisfaction?
 

The financials don’t give you all the answers but they’re a good place to start. So:

• Make sure your transactions are up to date and reconciled. If you’ve outsourced this, and the bookkeeping is done monthly, why not do it weekly?

• Make the necessary accounting adjustments to produce meaningful accounts every month and have them as soon after the month end as possible.

• Use a cloud based accounting package so that you can see the information in real time from wherever you are;

• Sit down with your accountant and forecast your cash flow, on a monthly basis if necessary. The only thing worse than running out of money is not knowing you’re going to run out!