Your Financial System Provides Your Business Scoreboard
It’s no secret. Most business owners don’t like the numbers. For some it’s confusing and for some it’s something they don’t have time for. For others, they would simply prefer to not dig up some of the potentially painful truths their numbers could reveal.
At Kahuna Accounting we have seen hundreds of entrepreneurs have their eyes opened to the power of understanding their numbers. It’s a clarifying and empowering experience.
Simply put, knowing the numbers makes you a better entrepreneur.
What we’ve realized is that the most important ingredient in having healthy numbers, comes down to the mindset of the business owner. Until you change your approach to the numbers, you’ll always be struggling and falling behind.
If you are looking to get more from your business and grow to another level – it really comes down to the numbers game. Ready to start approaching the numbers differently? Here are the three components of a successful entrepreneur’s financial mindset.
Step 1: Prioritize your Financials
For entrepreneurs the mentality behind finances is most of the battle. Entrepreneurs view their financial reports and information as a necessary evil to work through to make sure their business is “OK.”
This mindset carries over to tax season where the goal is not to move the business forward, or understand areas for improvement, but to simply survive and put it behind you.
This is a flawed approach. In a conversation with a business owner recently, she told me she was just finding out in September of 2016 while finishing up taxes after an extension that her revenues were down 40% in 2015!
Think about that for a second. You are finding out 9 months after the year has ended how you did in 2015. Even worse, 2016 is almost over and the results are probably similar.
When financial information is prioritized, you should have the financial information on hand, on demand you can make decisions and adjustments in real time. When you wait until tax time to pull everything together – it’s too late to do anything but see how it came together.
Step 2: Look Forward not Backward
Although this example is a bit extreme, the majority of entrepreneurs suffer from a similar problem. The only financial information they have is looking backward – not forward.
If you are always behind getting financial reports, and digging through your bank statements at tax time to get everything together, how are you staying on top of the day-to-day insight of the business?
Even at the end of the year, it’s too late.
Think of your financials as a scoreboard. When you are in a sport – you need to know the score, so you can adjust your strategy accordingly.
A business is the same way, and you need to have a scoreboard so you can be one step ahead of the competition.
Step 3: Make More Informed Decisions
Your financial system should inform how you run the business, so that tax time is not a big deal and your financial information ready to go from the beginning.
When you prioritize your financials and are able to look forward, this information will convert into insight and you’ll make better decisions as a business leader.
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