Is your financial data irrelevant?08th November 2017
This is the last time I’m going to mention it, I promise, but I’m still buzzing from the get-together we had last week, to celebrate our 25th anniversary.
Looking round the room, it was such a pleasure – and a bit odd! – to see so many people who have been part of our journey all in one room. I was proud that we had been part of their journeys, too.
Over the course of the evening, after lots of laughs and a bit of nostalgia, we took the opportunity to launch a project which we have been working on for many months.
I’m talking about our new website – Please go check it out here!
The truth is that the launch got me thinking.
I wasn’t joking when I said we’ve been working on it for many months.
As the company’s CEO, I can’t claim to have done much of the legwork myself. Our wonderful staff deserve all the credit. But I took the big decisions about how to develop the project.
And that would never have happened without a really good flow of information at all times, helping me understand where we stand, and allowing me to make sensible choices about where to go next.
Early on, for example I needed a list of great web designers, to help me pick the right company to work with.
Later on I needed site maps to understand the proposed structure of the website, and design options to review. Once we’d agreed on the details, I needed regular reports about the progress of the site, so I could make sure everything was on track and tweak the direction if necessary.
It sounds so simple but without the right information at the right time, the project would have sunk.
Your company finances are just like that.
As company owner, it is your responsibility to take strategic decisions about how to develop your company.
To do that, you need regular information about your financial situation, so you have a clear view of how profitable you really are, how much money you expect to have in the bank over the next few months, and where your company’s financial strengths and weaknesses are.
These come in form of regular management accounts and cash flow reports.
But there’s more to it than that.
As your company grows, the type of information you need will change as well. Just like a list of web designers would have been irrelevant to me last week (when I needed a list of all the pages that had been completed), you need to make sure that you’re not getting information that would have been great five years ago – but is irrelevant today.
Take, for example, the company that sent their CEO a weekly list of sales, itemised by client.
Sounds useful, right?
Unfortunately, they hadn’t updated the list of clients in several years. The biggest number was ‘Other’ at the bottom. Many other clients had zeroes against their names, because they were actually former clients. The list was useless.
Similarly, I’ve seen CEOs get reports on KPIs and products which are no longer central to their business model – without getting information they do need - just because someone set up the report a few years back, and it never got updated.
So make sure you regularly review the type of financial information you’re given. Just because a piece of data was useful three years ago doesn’t mean it’s right for you now.
And if you’re not sure how useful the information you’re getting is, let’s talk about how we can help. Sometimes it takes someone coming in from the outside to question the way you do things, and make sure it really is serving your needs.
PS. Don’t forget to check out our new website!
PPS. We actually launched something else at our get-together – an amazing resource which I’m going to share with you next week. Watch out for that announcement… This is something I’m particularly excited about!