Making good business decisions is easier to do when you have excellent information at your fingertips. That’s the value of having excellent reporting at the heart of your startup.
Any cloud accounting software worth its salt will offer you straightforward ways to run your financial reports and track your important metrics. That’s standard in the new digital world. And this level of reporting gives you real, tangible data on which to base your decision-making. But making good business decisions isn’t just about the numbers.
As well as having an effective understanding of your finances, you need a sense of what’s good for the business. How will decisions impact your growth, and what will your future path look like.
Modern cloud accounting software makes it easier to run detailed, up-to-date reporting on your financial position. With the click of a button, you can run numerous in-depth reports and statements. These reports can show your past and future position. Doing this often gives you a wealth of financial information on which to base your decision-making and strategic thinking.
At each stage in your startup’s growth, you’ll have to make important decisions about your next step. So, it’s important to think about the financial implications of any new projects. What’s the amount of cash in the business, and the availability of new funding sources.
Setting up a custom dashboard to monitor the most important metrics and key performance indicators (KPIs) is a good idea. Most accounting apps will let you tailor your dashboard to pick and choose from the most relevant KPIs for your startup.
Set clear and democratic targets for your main KPIs and track them weekly to monitor the business’s financial heartbeat. If cash flow is looking poor, look at freeing up some cash or borrowing money to fill the gap. If sales revenues are dropping, put some renewed vigour into your sales activity. You could also get a new marketing campaign underway to raise awareness of your most profitable products and services.
You may be the sole founder of your startup, or you may be part of a bigger team of co-founders. But the reality is that no one person can make all the decisions in a busy startup. To get the best overview of a challenge or come up with an effective way to grab a potential opportunity, you need to talk to your team – that’s the only way to get an effective consensus.
Talk through the current threats and opportunities and run through as many potential scenarios as possible. What’s the best-case scenario, and how can you achieve it? What’s the worst-case scenario, and how do you plan for it, if things don’t go according to plan?
When working in the business 24/7, it’s hard to see the business objectively. Your judgement on some issues can be overly emotional and clouded by internal or political factors. Working with an experienced accountant, business adviser, or business coach brings a fresh perspective to the business financially, strategically, and emotionally.
Having a trusted external accountant on the team definitely helps you get your numbers straight. But they can also bring their knowledge and experience to bear on your strategic thinking, decision-making, and the business’s impact on your own mental health and well-being.
You can open up to them about your worries, share your aspirations for the business and bounce strategic ideas off them – taking some of the pressure off your shoulders.
To meet your goals and make good business decisions, it’s helpful to monitor and track your progress against these targets. If you refer back to your reporting and KPI metrics, you can easily measure your performance over time – and take action if progress is starting to slip.
Areas to keep an eye on can include your:
Making a few bad decisions along the way is all part of the learning process. But by monitoring your performance and talking to the best advisers, it’s easier to keep the business on track.
If you’re at the early stages of planning out your business idea, please get in touch. We’ll help you set up the best possible management information to help guide you in making good business decisions.