You are in business not only to get by.
Your mission as a small business owner shoots for long-term sustainable profitability and business growth. And you will fail in a highly competitive business landscape if all you do is pile your financial reports without trying to understand what it all means to grow your business.
Don’t get it wrong.
There is a wealth of information in your historical records that helps you look forward and beyond to shape the future of your small business into a robustly growing enterprise. Forward-thinking entrepreneurs look at financial data as a gold mine for growth opportunities.
Achieving your business milestones that lead to your fundamental goal to gain profitable success requires business intelligence that will improve your decision-making skill. And to remain competitive, you must be able to do that in real-time.
Big data and analytics are ranked top corporate priority by over half of corporate leaders surveyed by the CGMA. The new age of business economics introduces you to unrelenting competition: fast, innovative, and dynamic. You must be able to perform financial analysis and convert it into a meaningful, actionable data that drives improved business performance. The sooner you learn to keep up with the shift towards data-driven business revolution, the better chances you gain competitive advantage.
But where do you begin?
The first step is for you to understand that bookkeeping and finance are two important disciplines in business that you must begin to learn.
Here's a quick lecture on the key differences between bookkeeping and finance in business that you should know before we break down how you can combine data that can help you gather smart insights. Then, you can make sound business decisions and boost your profit to grow your small business.
Bookkeeping is the systematic and comprehensive recording of financial transactions pertaining to a business, and it also refers to the process of summarizing, analyzing and reporting these transactions to oversight agencies and tax collection entities. -Investopedia
Bookkeeping looks back at all your business transactions and other financial data.
Bookkeeping normally forms the basis for tax assessment required by federal and state laws.
Bookkeeping reports all business financial transactions including all your revenues and expenses.
Bookkeeping is about all the internal data or the financial information for your business.
Bookkeeping is prepared by cycle such as monthly, quarterly, or yearly.
Finance describes the management, creation and study of money, banking, credit, investments, assets and liabilities that make up financial systems, as well as the study of those financial instruments. -Investopedia
Finance looks forward, which includes business planning, budgeting, and forecasting.
Finance is more about planning and budgeting to properly manage money for your business.
Finance makes use of certain model scenarios and calculation analysis.
Finance combines both internal and external data producing a financial report that compares against industry average or a benchmark data to make a better sense of how your business is doing.
Finance is prepared by management cycle depending on how management or business owners would like to monitor their financial data.
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Learning the key differences between bookkeeping and finance was the preliminary step. Now, we take you to the real question: how can combined bookkeeping and finance data help you develop your small business strategic plan for sustainable growth?
The simple answer is to find meaning in your numbers.
But don’t make a mistake: simple doesn’t mean easy.
Understanding your key financial drivers is not always a breeze for everyone. If it were elementary math to interpret financial data and perform financial forecasting, there should be 100% success rates among small businesses. The sad story is that less than 50% of small business startups succeed in their first four years of operation.
Understand that there are multiple reasons to fail in your business venture. But there is one consistent driving force to failure: lack of good business intelligence.
If you are serious about business success, get a little professional help from trusted finacial advisors. Better yet, hire a part-time CFO who can analyze your business revenue and expenses trends and help you design an integrated profitable program for small business. You will need a CFO’s special skill sets in strategic business insights - the key to increasing your small business value. But you may not need a CFO’s full-time service; so take the best value option you can get.
To architect small business long-term profitable success is about shaping your business strategy. Combined roles of bookkeeping and finance delivers intelligent, actionable insights you will need to make smart business decisions. But that may not be enough.
You must be able to keep up with the changing entrepreneurial landscape.
Gain smart business insights and collect it in real-time to make effective decisions at a quick pace while opportunity is hot to break through success. A successful business model is always ready to adapt and adjust to any climate.
Growing a small business is about improving profitability. But it is more than just increasing revenue. It's about strengthening your most profitable revenue sources.
When you learn to read your financial statements, go to the section where you can find your collections that earns you the highest profit. Identifying your key performance drivers becomes relatively easy as you begin to get comfortable reading and understanding the numbers in your financial report.
At some point, you must be willing to take the ambiguity challenge. Yes, take risks and fail. But calculate your failure within acceptable parameters. Let's remember that the greatest success in business did not start out with certainty.
Success is about finding solutions. And there's never a sure fire. So, be prepared.
While it's a little too vague a prescription for business success, the earlier you accept risks, the better you can be prepared for the adverse outcomes.
“Know how to aggregate outcomes so it can be converted into an insightful report,” James Miln, Senior Finance Director, Global Operations Finance, Yahoo!.
Here is a final question for you: Are you prepared to make data-driven business decisions?
We help you plan, forecast and analyze your financial data
so you can get on top of your finances today to grow your
small business big tomorrow.
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