Many business owners make this mistake every day…
Imagine you were a passenger in a car.
Then you noticed something very strange.
The dashboard only had one dial on it: The speedometer.
No fuel gauge. No engine temperature. No warning lights. No indication if the engine was about to overheat or the car was running out of fuel.
Would you still feel safe? Or would you be looking for the nearest place to get out?
The truth is, a car can’t be driven safely with just one number on the dashboard.
The speedometer tells you something important. But it doesn’t tell you everything.
Running a business is much the same.
All too often, business owners become fixated on a single number: profit.
It’s understandable. After all, one of the main reasons we’re in business is to make money.
But as I’ve explained over my last couple of emails, profit isn’t even an objective fact. Two competent accountants can legitimately calculate different profit figures from exactly the same business.
And even when the profit figure reflects reality, it still doesn’t tell you everything you need to know. It’s only one part of the picture.
To understand how your business is really performing, you also need to know your cash position.
How much money do you actually have available today?
Unlike profit, that’s an objective fact.
Then there’s cash flow – how much money you’ll have next month, or in three months’ time.
Will you have enough to pay suppliers? Fund growth? Buy new equipment? Repay borrowing?
Profit helps explain how you’ve performed. Cash tells you where you stand today. Cash flow tells you where you’re heading.
Past, present and future.
Together, those three measures give you a far more complete picture of your business.
Look at any one of them in isolation and you’re only seeing part of the dashboard.
That’s why, at Insight Associates, we don’t just produce a profit figure and leave you to interpret it. We make sure you have the full picture – not just one number.
Every month, we provide the full suite of financial reports you need to understand exactly what’s happening in your business. More importantly, we work with you to explain what those numbers mean, answer your questions and help you use them to make better commercial decisions.
Because good financial reporting isn’t just about producing numbers.
It’s about giving business owners like you the clarity and confidence to make better decisions, seize opportunities sooner and steer their businesses in the right direction.
If you’d like to find out what that could look like for your business, simply email garry@insightassociates.co.uk or call us on 01279 647 447 for a no-obligation conversation with myself or one of our specialists.
Warmly,
Garry
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