As George* related his story, his disappointment was palpable. He was out of time and out of options. It was too late to have done things differently. The best he could do now was clean up a nasty surprise. You see, George got a tax bill that made his stomach sink. He had recently made some substantial purchases and now he felt sick. As we explored the situation, the real cause of the disappointment became clear. Although the tax bill was indeed a nasty surprise, it was in reality just a symptom that something was very seriously wrong. If you’re like most small businesses, that something that was wrong in George’s business could be causing disappointments in your business too.
Avoid nasty surprises
Remember that sinking feeling that you experienced when you uncovered the nasty surprise in your business? Perhaps for you it was an unexpected tax bill, or a bank overdraft, or your sales were down, or maybe for you it was something else. That sinking feeling can be a thing of the past in your business with the right reporting systems in place. The right systems won’t prevent something bad from occurring, but they can ensure that you are prepared. The funny thing about preparation is that if you’re not prepared, you’re likely to wish you had been, and if you are prepared, you’ll frequently find that things go so much better.
Let’s see how the right reporting systems can help you avoid the nasty surprises associated with the common situations outlined above. Regular monthly monitoring of your Profit & Loss Statement can help you avoid the shock of an unexpected tax bill. Weekly monitoring of your Accounts Receivable (AR) and Accounts Payables as well as your bank balance will ensure that you’re not surprised by a bank overdraft. That sinking feeling from flat or negative sales figures comes from a place of powerlessness. By monitoring on a weekly basis, where your sales and your leads are coming from, you’ll be aware of changes in the marketplace as soon as you are impacted by them. You can’t change the things that are beyond your control, but with the right reporting systems in place, you won’t get those nasty surprises and then be stuck playing catch-up.
Have you ever kicked yourself (figuratively of course) for a decision that in hind-sight looks rather stupid? Fortunately much of the disappointment that we experience can be avoided by making more informed decisions. In other words, had we known more information at the time we were making a decision, we would have chosen to do things differently. Again, having the right reporting systems in place can help you avoid kicking yourself over poor decisions.
Let’s notice how having the right reporting in place can help you avoid the disappointment of poor choices. Reviewing your monthly and year-to-date Profit and Loss Statements allows you to anticipate your tax bill. It also gives you the opportunity to consult your accountant or financial planning partner to ensure that you’re employing the best tax strategies. Timely review of this report can easily save you thousands. If you’re faithfully reviewing your receivables, payables, and bank balance, your purchasing decisions will be informed by that knowledge – allowing you to make choices that will keep you from overdrawing your account. Weekly monitoring of where your sales and leads are coming from allows you to not only know what’s taking place in the marketplace, it also gives you the opportunity to quickly respond to changes. In other words, your choices of marketing, advertising, and new product/service development are all informed by timely information.
Having the right reporting systems in place in your business is all about positioning your business so that you’re prepared for what’s ahead and your decision making is informed by timely information. The uncomfortable reality is that we engineer most of our own disappointments through our own unrealistic expectations. Unrealistic expectations are simply expectations that are not based on facts. Putting the right reporting systems into place in your business will enable you to be much more prepared for what is taking place in your business now and into the foreseeable future.
*The name has been changed to protect privacy.