Most owners know what their numbers say, few know what to do with them. In this post, ABS explores what real financial control looks like and why it's the missing link between a surviving business and a thriving one.
Many business owners reach a point of understanding their numbers. Financial statements no longer confuse you. You know what they say, yet you still don’t know exactly what to do with them. Although your numbers are now visible and coherent, the path forward is still blurry. Knowing how to read the map is one thing. Knowing how to navigate is another. As you gain visibility in your finances, the next step is control and determining how and where things go from here. Today, we go from visibility to control of your finances in your business.
Clean books and reports help create awareness. You know how to read your P/L, balance sheet, and monthly reports. They all give you that insight of your business that showcases the hard work you do on the front end. You see how much you get paid, how much your people get paid, and where there’s leaks and overpay elsewhere in the business. The security of knowing exactly where you stand in business is like a warm hug. On the other hand, just knowing what the numbers mean doesn’t mean anything unless you do something with them. If you’re only looking at your numbers you’re observing your business, not leading it. Your business numbers are the ingredients to a successful strategy forward. Control is to take those numbers and convert them into steps that will move you forward. Whether it be away from debt in business and building your line of credit or to allocate more funds towards investments in the business so it can work better without you. A lot of owners think of extra money as their profit. That’s not necessarily true and you’d see that from the numbers your reports show you. Use them wisely to first know what your business is telling you. Then tell your business what’s going to happen next. That’s the power of control.
Interpretation means to understand the meaning of something. In this case, interpreting your business financial reports means understanding exactly what they mean. This allows you the freedom to build systems that cater to the furthered success of your business. Just because your profit might be low doesn’t mean you aren’t making money. And just because you're making money doesn’t mean you're making profit. When you have control, there’s a shift that happens. You move from “What happened?” to “What should we do next?”.
Even asking the right questions helps steer you in the right direction for your business.
Having control of your business is knowing exactly how things are running. If things aren’t going how you planned, it’s obvious, and you can immediately make sound decisions to steer your ship back on course. Understanding your numbers gives you options. Using those numbers gives you control.
Control looks like many things. However, you can often tell when someone has things under control or not. If you want to look like you have control over your business, then you should gain actual control over your business. Control looks like proactive decision-making. When you have control of your business finances, you make decisions before something goes wrong. Instead of being reactive to little things like inventory mishaps, you already made sure to have a little extra from the last shipment. You may even get creative and decide to push other inventory that isn't selling as well to get those off the shelf. When you have control, decisions feel easier, more stable, and your cash flow is more predictable. Some people like surprises. When it comes to running a business, surprises are not appreciated and often not positive. No one likes to see low inventory weeks before the next shipment. Control doesn’t mean mishaps won’t happen. It does ensure that you are ready for them. When there’s a clear connection between your financial data and your strategy for business, there lies control of your business and confidence in your decision-making. That’s what real control looks like.
Most owners never reach the visibility stage, let alone the control stage. This isn’t an anomaly. When you see people shut down a seemingly successful business it is often because they lacked control somewhere. Systems , processes, or people were not in place to move the business forward. Instead, everything was an assumption or estimations were way off and nothing was captured on paper to review the wrongdoings. Lack of control is just the symptom of financials being delayed, inaccurate, or overly complex and unclear. Owners find themselves stuck in this loop because they want to figure it out, or worse, think things will just smooth itself out on its own. That will rarely ever happen if ever. Business owners aren’t often trained on interpreting financial data. Obviously you got into business to do what you do, not read reports and balance sheets. The step that most owners are slow to take, is finding a partner that understands these reports. Knowing what your business is telling you is only half the equation. Action is the second half. Creating proper systems and doing away with the unnecessary ones stalling your business is control.
Reaching that control stage is simple. Once you understand what your financials are telling you is happening in your business, you make the changes that improve your situation. Then you will have the capabilities to do that again and again as your business grows. Whether the economy is positive or negative won’t affect your business too much because you will have a plan for any climate thrown your way. That’s control.
You don’t fully own your business until you understand and control its numbers. Visibility gives you insight into your business. Seeing every aspect that controls and is controlled by your cash flow or lack thereof. Control gives you direction. Reading your map, then orienting yourself to the right direction and taking that first step. Visibility is seeing where to go. Control is getting there safely and on time.
If you’re lacking control in your business and need some help crossing that bridge from visibility to control, then Atlanta Business Services is your preferred partner. We help small and medium businesses take back control of their inner workings by helping them first understand what their business is telling them(visibility). Then helping them create the systems and cut the systems that aren't serving them(control). We help you use the data your business provides to help you feel confident in making sound decisions for further success. If you want to learn more, you can schedule a consultation with us right on our website. We also provide financial reviews and profit leak assessments that tell you just where profit is slipping right through your fingers. If you already have visibility in your business, we help you bridge the gap to control in your business. Own your business by controlling your numbers.
