In reviewing our current business numbers as part time CFO for Canadian small business, we're pleased to see that there seems to be a bit of an uptick in activity by small businesses looking to get their numbers caught up. This is as a result of the introduction of easy to use, available by anyone at any time anywhere software tools for collecting and recording key business numbers. We're crossing our fingers that this trend continues, and here's why.
As easy-to-use tools are now readily available at reasonable costs, there is no longer an excuse for not having your small business numbers up to date. Not only is there no excuse, as professional advisors, we are also not able to come up with any reasons why you could argue (like "it's too costly", or "we don't gain any intelligence doing this") that there's no need to either.
On the flip side however, we can think of many reasons why you should.
Here are 5 such reasons, after which we need to go no further:
It goes without saying that collecting and recording your business' key numbers when, or as close to when, they occur adds materially to their accuracy, both in amount and in categorization.
In small business, things change rapidly, making it imperative that business decisions get made on the most accurate up to date and current information possible.
Running your small business on dated information can lead to inaccurate assumptions and conclusions. The more real-time your numbers are, the less likely you'll wake up to unpleasant surprises from your tax accountant, the bank, your customers, or anyone else that you interact with and rely on in your business.
We all know that, even if it is just for income tax preparation and compliance purposes, we have to account fr our numbers eventually. It's a fact that, catching them up after a few months or more have gone by is always more expensive to do, both in real dollars, and in our time which could otherwise be focusing on increasing our results.
The most important reason however, which, all by itself, is enough to outweigh any reason or excuse not to keep your numbers current, is that current data about your business is much more informative.
Current provides invaluable information about your business' financial health, prosperity, trends, prospects, and challenges. From this, informed decisions can be made knowing that they are done in concert with accurate and relevant data, generated at the best cost, knowing that there are no surprises lurking in the shadows.
Once all your numbers are current, a detailed financial and business review is the next likely step, followed quickly by setting key measures to follow and report against, forecasts, budgets, and disciplines to follow to ensure that your numbers are kept current and giving you the invaluable information from which to run, and grow your business.