How to Get a 360-Degree View of Your Company
As a business owner, it's critical to have a comprehensive understanding of your financial position. This means having a clear view of your historical performance, current situation, and the road ahead. Achieving this 360-degree view of your financial information is essential for making informed decisions and ensuring the long-term success of your business.
Looking Back: Analyze Historical Information
Your monthly accounting provides valuable insights into your business's historical performance. Your balance sheet tells you your financial position at a point in time. Your Income Statement (Profit and Loss) helps you identify trends in your business. By analyzing your financial statements, including the income statement, balance sheet, and cash flow statement, you can identify trends, patterns, and areas for improvement.
Many business owners stop at this point which means they are always looking backwards and missing some critical aspects of their business.
Looking at the Present: Business Intelligence Dashboards
Business intelligence (BI) dashboards, such as Microsoft’s PowerBI, provide real-time insights into your business's day-to-day operations. These dashboards aggregate and visualize key performance indicators (KPIs) from various sources, enabling you to monitor your business's performance in real-time. By leveraging BI dashboards, you can monitor your ongoing activity, including:
Track sales performance: Monitor sales by product, region, and customer to identify trends and opportunities.
Manage inventory levels: Keep track of inventory levels to avoid stockouts and optimize your supply chain.
Monitor customer satisfaction: Collect and analyze customer feedback to identify areas for improvement and enhance customer satisfaction.
Identify operational inefficiencies: Analyze operational metrics to identify bottlenecks and inefficiencies in your processes.
Including BI in your business ‘radar’ allows you to adjust immediately rather than waiting until month-end to review monthly results before making a decision.
Looking Ahead: Forecasting, Budgets and Strategic Plans
Forecasting and Budgets
Forecasting allows you to look into the future and anticipate your business's financial performance. Using historical data and industry trends, you can create financial projections that provide insights into your future revenue, expenses, and cash flow. Forecasting helps you:
Plan for growth: Develop realistic growth targets and strategies to achieve them.
Manage cash flow: Forecast your cash flow to ensure that you have sufficient liquidity to meet your obligations and invest in growth opportunities.
Make informed investment decisions: Evaluate potential investments by forecasting their impact on your financial performance.
Prepare for contingencies: Identify potential risks and develop contingency plans to mitigate their impact.
Strategic Planning
A strategic plan provides a roadmap for the future, outlining the company's long-term goals, objectives, and strategies. By aligning historical data, real-time monitoring, and forecasting with strategic plans, businesses can ensure that their decisions and operations are consistent with their overall vision and mission. Strategic plans help businesses identify and prioritize key areas for growth and improvement, allocate resources effectively, and make informed decisions about future investments and partnerships. They also serve as a benchmark against which progress can be measured, allowing businesses to track their performance and make necessary adjustments.
Summary
Business owners can gain a comprehensive 360-degree view of their financial information by combining historical analysis, real-time monitoring, and forecasting. This holistic understanding enables them to make informed decisions, optimize operations, and confidently plan for the future.
About Highpoint CFO
Highpoint CFO is a CFO consulting firm based in Tampa, Florida, that serves clients throughout the US.
Scott Young is the President and Principal Consultant at Highpoint CFO. He is a CPA, Certified Merger & Acquisition Advisor (CM&AA), and Certified Value Growth Advisor (CVGA) with over thirty years of experience in finance and accounting at industry-leading companies.
#smallbusiness #consulting #CFO
How We Can Help
Highpoint CFO provides CFO consulting services. Contact us to learn how we can help you with forecasting, cash flow and working capital management, by-product profitability reporting, and data analysis using business intelligence tools such as Power BI.
