Being a start-up business owner in my spare time, I know that many of us start-up and small business owners aren’t masters at creating and interpreting business reports. However, insight from these reports can help us manage our businesses better, so it’s important that we can at least read them and make some wise deductions, like:
1. What to sell more or less of
At the end of the day business is about making a profit to keep the business afloat and grow it. Sometimes, staying afloat means making tough business decisions like discontinuing a product that you’re personally attached to.
Reports that reveal your top and bottom ten products/services, or your top and bottom ten customers, give you an indication of which products/services are the best performing and which ones you need to take off the shelves.
2. Whether or not you need additional funding
Many start up and small business owners are compelled to create financial reports when they are required by the bank, revenue services and potential funders or investors. That’s a reactive approach.
Proactive business owners regularly update their finances and are always aware of their business’s financial standing. So, using reports like cash flow statements, they can see way ahead of time when they’ll need a cash injection and can make plans to ensure that they secure it at favorable terms. Proactive financial planning is critical for any business to succeed.
3. How and when you can expand your business
When your business has been profitable for a significant period of time, it’s time to consider the next step. It’s pretty simple to see profitability for a given period using a Profit and Loss Statement, also known as an Income Statement. What matters is what you do with that information. There are various ways that you can expand your business, it all depends on your business goals.
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*Intelligence Reporting is currently only available to Accounting customers in South Africa, Australia and Malaysia.
