It is Key to identify what the key drivers of your business are – befeore developing your reports
Most people in business spend countless hours reviewing their traditional financial reports to come to a view on where their business has been, rather than where it’s going. They tend to focus on the historical financial results achieved – not enough time analysing the key drivers that have put the business where it is.
Each business unit has different elements driving its business activity. When multiplied by a unit price and activity numbers, those elements create the financial result which appears on a financial report.
Too many business people are financial report watchers instead of key driver watchers. Rather than focusing efforts on the financial result, time should be set aside to analyse the process creating the result. Without measuring inputs, there is no control over their outcome.
Think of your business drivers – they might include:
- new customers
- invoices raised
- chargeable hours
- phone calls or enquiries made
- employment hours
- new LinkedIn connections,
- Etc etc etc
Display the relevant drivers for your business – and other drivers in a format similar to your existing financial reports before showing the actual financial results and you will then see the cause (rather than the effect) in the items which drive your business.
When you next attend a board or management meeting, you’ll be equipped with the material to answer any question raised or have the evidence to support any argument being made to sway an important decision.
When was the last time you introduced a better way of doing what your business needs you to do?
Watchmynumbers® has been developing reporting structures which can help identify trends quickly, allowing you to clearly and easily see the direction of key business drivers, helping you make more effective business decisions while saving you time, money and stress.
If you are just monitoring your financial reports in a black and white report, you are certainly not monitoring your business as effectively as you should be.