Monitoring your financial performance therefore creates more certainty and confidence in making both short and long term decisions. This in turn leads to a healthier business and faster growth rate. It also allows you to outperform and outmanoeuvre competitors who fail in this regard.
WHAT SHOULD BE MONITORED
A lot of business owners make key decisions based on gut feelings. This is an incredibly risky way to run a business. Monitoring financial performance, on the other hand, provides key insights that help you answer questions about your business like:
- What are the most and least profitable areas of the business?
- Is the business gaining or losing financial strength?
- Am I performing in line with my objectives and business plan?
- What price point maximizes profits?
- How much cash will the business generate over the next 12 months?
- How did we perform this month compared to last month?
MANAGING UNCERTAINTY AND RISK IN BUSINESS
MONITORING FINANCIAL PERFORMANCE
By capturing data and monitoring their performance, you have a consistent and effective platform for making decisions.
A good set of management accounts needs a few core sections for it to be a useful and practical tool for better decision making.
ANALYSIS OF OVERHEADS
Check the overhead expenses, like rent, salaries, marketing expenses etc. Are they under control, or are they bringing down the overall profitability of the company
WHY ONGOING MONITORING IS ESSENTIAL FOR YOUR BUSINESS
- Ongoing monitoring creates more certainty and confidence in making both short and long term decisions.
- Ongoing monitoring is an economical way to identify risks or minimize potential risks which could affect your reputation and integrity.
- Ongoing monitoring will help you make better business decisions and improve your business’s performance over the long term.
- Ongoing monitoring allows you to outperform and outmaneuver competitors.
- Ongoing monitoring enables management to continually review business processes for adherence to and deviations from their intended levels of performance and effectiveness.