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. 

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

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. 

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

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

Measure is the starting point of effective financial management in your business because, as I’ve shared in other episodes, what gets measured gets managed. Measurement is the fundamental foundation of the entire cycle of business financial management. 

I look at that cycle as a circle, where each part points to another in a closed loop. You continuously do it, and when you implement this continuous process in your business you can continue to uplevel the business. 

So what does measure actually mean? It can take a lot of forms but the bottom line is you want to measure what’s important in your business – and that may not be the same as what’s important to someone else’s business. Your key metrics will be different based on the type of business you have, the industry you’re in, and your unique strategic plan. 

What’s key is putting measurements in place as your benchmarks and putting them in a clear dashboard format that you look at frequently. They need to be where you can see them and communicate about them. How often do you need to have your eye on any particular number? Is it once per shift, per day, per week, per month, per payroll cycle? The correct frequency depends on when you figure out those numbers are going sideways, because as soon as you’re able to determine they’re going sideways, you need to take action. 

These aren’t just measurements for measurements’ sake. These are actionable numbers. Don’t measure just to measure, measure what’s actually important, gather those numbers, and put them on some kind of dashboard. After you’ve determined what’s important to you and the frequency of measuring those numbers, you’re going to need to communicate those to the organization effectively.

Communicating key data - and what’s most important - to your team is critical. You want to let people know that the better you are as a team, the better you are as a company. There’s power in communicating what matters and the success of your company without divulging, of course, any personal numbers you’re not comfortable sharing. Communicate the data that’s important to the performance of your overall company and your teams because when your teams want to impact the business and want to be part of something successful. You can help them by communicating what’s important and updating them on the numbers that matter.

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

Impacting your numbers means that you, as the business owner, have the ability to make decisions to change the trajectory of your financial performance. 

We’ve talked about owning those numbers and understanding those numbers. You have your numbers accessible at all times, and now you have some analytical horsepower inside the business to tell the story behind those numbers. 

From there, it’s about impacting your numbers: actually executing decisions based on the reports you get. When you understand the numbers, you know what numbers are good and bad in your business (which will vary year to year or even month to month). So what do you do with that information? What do you do about a bad number?

I hate to say it, but it really depends on the kind of number it is and what makes it a bad number for you. Depending on the number, when you understand what it’s telling you then you can make some informed and insightful decisions. One of those decisions is understanding where you can impact your number, like dialing up or dialing down a lever.

For example, maybe your spending on advertising or marketing is too high. How can we reduce that? What do we need to dial down? Or maybe you’re missing your sales targets. How do we dial up that number? Is there an offer we can put out? Do we have enough bandwidth to take on a new project? 

What are those levers that you have access to, to be able to impact those numbers? You have the ability to control your company’s destiny via the levers and knowing good numbers from bad numbers. 

TAGS: finances for business owners, financial intelligence, impacting your numbers

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. 

As a business owner, you need to know what “good numbers” and “bad numbers” are in your business. 

What constitutes doing well (and not doing well) in your business?

There are a lot of numbers floating around your business, but how do you discern what’s good and what’s not? How do you know you’re headed in the right or wrong direction? 

Part of owning your numbers is having your financial reports available to you on demand, and that translates right into understanding your numbers. If you have analytical horsepower within your financial function (something we offer at TurboExecs), you have a person who can give you the answers to your “why” questions about your numbers. They can explain why your numbers are so low or so high, why numbers have changed against trends and benchmarks, etc.

As the business owner, you just keep asking those questions. That’s how you drill down and understand what the drivers are for your performance and operations. 

The numbers tell a story about your business. It’s up to you as the business owner to understand that story and change the trajectory of it as needed. You can do that when you’re able to look at the trends and the numbers versus various benchmarks. 

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: finances for business owners, financial intelligence, understanding your numbers

Owning your numbers means that your transactions are entered into your system in real time. It’s not taking a show box and giving it to your outside accountant to update your Quickbooks. 

Why?

Because if you’re not getting anything in real time, you don’t have your basic reports available to you in a timely fashion. There’s no visibility to where you’re performing, because those numbers aren’t timely. You can’t really own your numbers because you can’t see them as frequently as you need to be able to make decisions in your business. 

Remember, the foundational elements of financial intelligence require you to have those big three reports. In order to have those generated from your software, you need to have transactions going in on a daily basis. 

It doesn’t matter whether you have someone do it internally or if you outsource, as long as it’s done in a timely fashion every day to get you the insight you need to take your business forward. Once a week isn’t good enough.

When you own your numbers, your company’s financial status is available to you on demand at any time. You can understand exactly where your business is at any given moment, and have the ability to manage that. 

And remember: garbage in, garbage out. If your transactions are recorded incorrectly, your reports are going to be pretty useless. If that’s something you’re struggling with, call TurboExecs - we help people uplevel their entire accounting function.

Honestly, the bottom line for owning your numbers is about being able to take control of your own destiny. Don’t leave that in somebody else’s hands. Once you give away your power in that way, you’ve given away your ability to impact your numbers. So do yourself a favor within the realm of financial intelligence: take control of your destiny by owning your 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: finances for business owners, financial intelligence, owning your numbers

Financial intelligence is a requirement for business owners and luckily, it’s a skill that can be learned. As a business owner, you need to make sure you’re acquiring these skills to be able to really work in your business and grow your business. 

Financial intelligence consists of understanding these four different areas: 

• Basics of financial measurement, including the big three reports you need to run your business: the income statement, balance sheet, and statement of cash flows 
• Finance and accounting as two disciplines (both art and science!) that must come together and build an understanding of your business
• The analysis of your numbers (including profitability, percentages, and other metrics) so you understand the story they’re telling you 
• The big picture, where you can zoom out, see relationships and patterns, and understand your business in the larger context of the economy, competitive landscape, laws, technology, and changing consumer needs and desires

All four of these shape the environment of financial intelligence and when you understand them, you can make more insightful decisions towards the goals and targets of your strategic plan, leading your company forward successfully. 

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: finances for business owners, financial intelligence