We’ve measured, monitored, and analyzed.

The last piece of the cycle is course correct.

This is the step where you make some decisions based on your analysis.

When you have a bad number, course correct is about fixing it and getting back on track. It’s about figuring out how not to do it again and how to get out of the hole. For a good number, course correct looks like: let’s do more of that. It’s figuring out how you got the good number and how to replicate it over and over again. 

In the analyze step, we found out the root cause. In this step, we’re actually trying to fix the root cause. Here, we fix or amplify things to get back on track to achieving the results we want to achieve.  

Remember: there’s no reason to continue to do something that doesn’t serve your business well or support you any longer. Whether it’s the way you’ve always done things or it’s a vanity thing, how successful can you be if you keep doing it? If it’s not returning anything and not doing anything beneficial for your business it’s probably time to stop, even if you’ve done it for a long time.

Another way you can implement course correction is through trial and error. Sometimes you don’t know the exact solution or the exact answer to why, but you can try different things to see what works. We all know that continuing to do the same thing and expecting a different result is the definition of insanity. So even if you don’t know the path to go down, experiment until you find it. Don’t get sucked into continuing to do things the same way that isn’t actually working. 

After course correct comes coach, the last step of the cycle. That’s the communication aspect of the cycle: understanding the course corrections and informing everybody. This is where you communicate about changes you’re making, and that can be scary to your team. Explain why you’re making the changes, what the benefits are, what they can expect from the change, etc. Everyone wants to be successful, so let people know how this will make them and the business more successful.

The other thing the coaching process does is encourage empowerment in your organization. That’s huge for engagement and creating a winning team. Bottom line, that’s what success looks like. It’s a winning team. The cycle is there to support all of it and to ensure that you have a winning team, which creates a winning business. 

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TurboCharge Your Business is a show for business owners who are tired of just working IN the nuts and bolts of their businesses and ready to work ON the business itself from a big-picture, growth-oriented, strategic perspective.

Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge. 

We talked about measuring and monitoring. The third step in the business financial management cycle is analyzing. Analyze always begins with asking “why?” - sometimes over and over again until you get to the heart of the underlying cause. 

How do we figure out the answer to that why?

In the last segment we talked about monitoring versus a benchmark or trends. When we see that gap, we’re going to calculate variances to those benchmarks (the difference between the two). We look at what it is, what it means, and why it’s there to try to determine the root cause. There’s an unpeeling of an onion a layer at a time to reveal the root cause as we continue to ask why. 

You have data in your business, and the answers are in it. You just have to collect it and start figuring out the answer to the why question. When you analyze, you can go back and grab any data set that may lend itself to an answer. Always, when we do analysis, we want the data to reveal the story behind the numbers for whatever you’re looking at, whether it’s the balance sheet or common ratios or the income statement. By going back and understanding what those different numbers have to tell you about performance, you’re going to get a better picture of what’s going on. 

Remember, the foundation of this is your chart of accounts. If your chart of accounts is set up properly, that’s going to lead to consistent, trusted reports you can use as a basis to analyze. You can get your numbers more easily than having to go back and recast numbers and reformat reports. 

Ask yourself: if you go back two or three years, is that data consistently recorded with how you do it today? You need to look back and make sure your data is comparable. Of course, things change over time and your business, hopefully, is expanding. But you can look back and create some benchmarks that will be helpful to your business so you can analyze and understand what to do next. 

Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge. 

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The next step in the cycle after measuring is monitoring. This is about paying attention to what you’re measuring so you can actually manage it. What good is measuring if you’re not going to pay attention to it? 

When we monitor, what are we comparing those numbers to? What can we do with that data? You can compare it against benchmarks, targets, trends, a budget, a forecast, industry standards, etc. When you make those comparisons, you’ll really see the numbers tell you a story. You can see if the numbers are good or bad, and you can start drawing some important conclusions.You can see where there might be issues to pay attention to. 

Bottom line: what gets measured gets managed, and it gets managed through the monitoring process. Monitoring leads to us paying attention on a regular basis to our data, so we can start to see the story behind the numbers.

Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge. 

TAGS: business finance management,small business financial management,financial management,what is financial management,business management,business finance for business management,what does financial management do,how does financial management work,financial management system,business finance,business management course,financial management software,financial management business,business advice,business plan