As easy as 1, 2, 3…
Well maybe not quite, but you should have your important figures at your fingertips and as ready to slip off your tongue as 1, 2, 3. The world of business can be a difficult place in these times, so arming yourself with data will give you a head start. We know that knowledge equals power, but it is the quality of the knowledge that is important. How much use is there in knowing last year’s profit margin? Not much, when you trying to make a decision based on events unfolding before your eyes. But knowing the current profit margin on your blue widgets, will help you to make a proactive decision based on the falling pound value impacting on the price of raw materials being imported from China.
One of the problems of the modern world is information overload. Cloud based accounting systems can provide you with reams of information; the trick is in knowing which pieces of information are relevant. Working with a management accountant can help to prevent information overload. All businesses are different, and the figures that are pertinent to that business will vary. If I import raw materials from China, the value of the pound will directly affect my costs, and I can act according, maybe choosing when to pay based on currency fluctuations. If, however I buy my goods for resale from the UK, I will not be directly affected by the currency fluctuations. Your management accountant will be able to help you sort out which pieces of information from your cloud accounting system will be most relevant to you and your business.
The process of on-going monitoring of your KPIs will ensure that you are following your business closely. By watching your marketplace diligently and observing the effects of any changes in the larger environment on your own business you are banking up knowledge to carry yourself forwards. Great companies succeed because they analyse, anticipate and act. To do this you must understand what has happened, what is likely to happen next, and what you need to do about it.
Before we had modern-day navigation systems, sailors used to navigate by the stars. This was tricky and unreliable. Often it got them near to where they wanted to be, but not actually in the right place. Sometimes they got completely lost. Sometimes they had no choice but to wait to find out where they were if there was extensive cloud cover or a huge storm. Nowadays sailors use GPS systems which can tell you where you are in the middle of the ocean during a force 10 gale, and where you should be headed.
Trying to plan where you are going using only the figures from your financial accountant is a little like navigating using only the stars. You may get near to where you were aiming for, but it will be difficult, risky and stressful. Planning your business strategy with your management accountant is like navigating using a modern GPS. You can track where you are, where you are going, and you will be able to see whether there are any storms on the horizon. Therefore, the chances of you getting to your destination are much higher, and the stress along the way is reduced.
It is not that the information alone will save your company, but the fact that you can be proactive rather than reactive. Marketplaces will always be hit by unexpected storms and surges and they will affect you and your business. Understanding your figures, however, will give you a greater realisation of the effect of those surges which can go quite some way to mitigating potential disaster.
Remember that we are armed with our knowledge and working with a management accountant will ensure that you are armed with the correct knowledge. Don’t leave your destination to chance, but make sure that you know where you are heading and have a plan about how you get there. Don’t float around the ocean waiting for the clouds to part and for the stars to come out. Be decisive and get your financial GPS today!
Let TLA Business Services be your financial GPS! Call us now on 01905 21411 to arrange your meeting.