One year, we had a new client who wanted us to work out in a lot more detail which parts of his business were profitable over the past 12 months, and which weren’t.
It was a wonderful idea, because you need to understand where the profit lies in your business in order to grow faster. In fact, that’s a key part of the financial analysis we perform for our clients every month.
There was just one problem…
For this particular client, the information didn’t exist. He sold a number of different products in different variations, but his previous accountants lumped them all together in a small number of categories. It was impossible to tell exactly which variants were most profitable or promising.
Going forward, collecting that detailed information became a critical part of our work. It allowed the owner to really understand the guts of his business, and make considered decisions about which variants were worth focusing on, and which he should drop or change.
So here’s a plea to you.
As we approach Christmas, you’re probably firming up your plans for 2023.
Maybe you’re creating ambitious goals. Perhaps you’ve put together a new marketing plan, or you’ve set aside a few days to develop a full strategy for the year ahead.
But if you really want to grow in 2023, there’s something else you should not only add to your list but prioritise ahead of all those other things.
Spend some time working out what financial information you need to grow faster.
Could you use more detail about how various parts of your business are performing? Do you understand which products / services / clients / offices / people are most profitable for you? What numbers would immediately tell you if you’re doing well – or if your business is in danger of failing? Make a list of those numbers. Then start tracking them, so that a few months down the line, you’ll have a much deeper understanding of how your business is performing.
And if you’re already tracking lots of numbers, go back and check they’re the right ones. There’s no point monitoring information that is not useful.
For example, if you make widgets in four different colours but colour doesn’t affect your sales at all, don’t waste time tracking that. You might be better off monitoring the sales of different widget shapes instead; or perhaps sales of widgets in particular locations?
That granular detail will lead to your biggest business leaps forward. You’ll be able to see far faster all your opportunities for growth.
But you need to start collecting it now. You can’t decide to analyse the performance of your widgets in May 2023, if you’ve never collected that data. It’s just too hard, and often impossible.
Not sure what information you should be tracking?
Then, every month we’ll look at the data to ensure it’s really useful to you. Where necessary we’ll make changes, adding items to the list and dropping others. We only want to track data that helps you make decisions.
Finally, we help you analyse the findings. You don’t have to do this alone! We’ll determine together where the biggest opportunities lie – based on real numbers rather than gut instinct – and advise you on how you might improve your business as a result.
If you’re ambitious to grow your business from £1 million or £2 million turnover to £5 million, £10 million or more, this will make the process faster and smoother.
It’s the way grown-up, well-run businesses manage their finances. And if you’d like to operate that way too, get in touch today. Simply hit ‘reply’ to this blog or call us on 01279 647 447 to arrange a no-obligation chat with me about your business and how we can help you.
Warmly,
Garry Mumford
