The number of hours per day spent solving problems has the biggest impact on the time of good business managers. Regardless of how well you have planned there are always going to be problems that occur at the worst possible time. Knowing what you should be monitoring so you can spot problems is real challenge for most business managers. You cannot grow a good business without managers who are great problem solvers.
Good financial controls are critical to the successful management of any business. Financial controls act like trip wires that alert managers to imminent or immediate problems. As most financial controls are accounting based, it’s a good idea to make sure you have a good small business accounting software package to give you the reports that support managing financial controls. It is essential that the small business accounting software you deploy in the business can give you reports to compare actual versus budgeted activity such sales, expenses and cash flow. Design your reports by selecting a small group of key numbers and operating ratios you need to manage and then as you become more comfortable with this approach add more complexity.
You must closely monitor the margins on what you sell and any deviation from what you set out to achieve regardless how minor should be immediately investigated and understood. Overlooking any decrease in volumes or margins if you sell products or services in large numbers can quickly lead to disaster, so it’s vital that a key financial control is in place to give you immediate warning of any deviations. Never take your eye of the fixed expenses of the business in the early part of the year and make sure they follow the budget. Monitor the collection of payments and pay special attention to the average number days it takes for you to receive the money, this is easily done using the debtors reports to be found in most small business accounting software.
Experience is the way to learn and over time you will learn which financial controls should be highlighted in your accounting reports, just make sure you have the right small business accounting software that can generate these.