By: Ruth King
Traditionally at this time of year I write about planning – and how simple it can be. No one envisioned what happened to the world this year. The Grinch really got us. However, those businesses with solid financial statements got the PPP loans more quickly and most pivoted to do what they could do to survive and thrive.
So that the Grinch doesn’t get you in 2021, there probably won’t be Christmas, Hannukah, or Quanza next year if you don’t plan and don’t track. And, if you don’t plan and don’t track, you can’t complain about what happens to your business!
Or, if you are “good” and do your planning the Elf on the Shelf will know it and reward you.
Here’s three ways to have a great holiday season – this year and next:
1. Get your monthly financial statements in a timely manner.
If you are not getting your financial statements within 15 to at most 20 days after the month has ended you are doing yourself a disservice. It makes absolutely no sense to get January’s information in March. By this time any minor issues which you would have seen may have become major crises.
2. Format your financials in a manner that helps you operate your business rather than makes it easy for your accountant to do your taxes.
Many accountants put revenues, expenses, assets, and liabilities in a format which makes it easy to do taxes but impossible for you to check your business operations easily. For example, an accountant combined many overhead accounts of one of my clients simply to make it easier for him to track…his reasoning: the client didn’t need that many accounts. My response: Who’s paying who?
You need the information so that you can make good decisions on labor productivity, gross margins, and overhead issues. If your accountant can’t or won’t put the information you give him in a format that helps you operate your business, one of your goals for 2021 should be to find another accountant.
3. Get accurate financial statements.
This means that you’ve taken an accurate inventory at the end of the year, you have all of your payables and receivables current in the months that they were incurred, and accurate job costing for all departments. Remember that garbage in equals garbage out.
Great financial statements help you spot minor issues before they become major crises. And, you can plan and make great business decisions when you have timely, accurate financial statements.
I wish you a happy holiday season and a prosperous 2021.
Ruth King is known globally as the “Profitability Master,” and is a a thought leader in entrepreneurship and business. Her books have been recognized as among the greatest in numerous industries. Learn more about all her business activities here.