Synopsis
The quality of your profits enables more consistent healthy cash to flow through your operations. Business owners who use a business intelligence system to connect the data into business information for superior decision-making have significantly higher profits and predictable cash flow than those who don’t.
Business reporting is how you connect the money-making dots across your business for higher profits and cash reserves.
Timely and accurate business reporting is the start of a business intelligence system that will provide you with the following benefits:
- Linkage of sales, operational activities, and trends with your most recent financial performance.
- Heightened ability to anticipate changes in business conditions before they “bite” you without warning.
- Better-informed decision-making leads to continuously improving profits and cash flow.
If you choose not to convert your business data into information, you have chosen to surrender control over your business. Those who fail to act on the results of their business financial reports choose to operate their business blindly via the “hope” method, “hoping” their daily operation activities produce profits, not losses. The problem is “hope” is not a method you can count on to deliver planned higher profits and predictable cash flow.
You can’t connect the money-making dots in your business if you don’t know where they are supposed to connect.
Consider the difficulty a business owner trying to connect the following data dots in their business because they don’t have in place a business intelligence system:
Trying to connect the above dots for better decision-making is impossible if you treat them as random points of information. Put a pattern into the mix through a business intelligence system such as the goal to make more money, and you get something like the following:
The data from your revenue production efforts entered into your accounting software positions you with financial summary reports on the results of operations for any period you have captured that data. Use your business financial statements to show you, at any specific point in time, how your business has used the funds entrusted to it by its owners’ (stockholders) and lenders, and its current financial position, through the following three primary financial statements:
- The P&L (also called income) statement shows how the net income of your business is determined over a stated period.
- The Balance sheet shows your assets, liabilities, and net worth on a stated date.
- The Cash flow statement shows the sources of cash utilized by your business activities during a stated period.
By understanding the parts of your financials, you can perform meaningful business reporting and analytics. Those who do this consistently experience the difference between being a business lost in the Survival Stage versus one that is Stuck, Stable, Stretching, or Significant, as shown below:
BusinessCPR™ Step 3 is all about harnessing the power of business analytics to your management decisions.
Never lose sight of the fact that the quality of your profits enables more consistent healthy cash to flow through your operations. Profits are the day-to-day driver of your business, not just a number on your monthly P&L Statement or an annual number you and your tax accountant discuss when they tell you how much money you owe in taxes.
Step 1 of BusinessCPR™ (B-CPR) Management System comes down to sustaining your healthy business by ensuring cash inflows are always greater than cash outflows. Your business can survive, for a while, without profit, but it will never survive without cash. Cash is like air, profit is like water, and your vision is the nourishment that sustains your business.
As a result, every business must succeed in two critical areas; everything else is a means to this end:
- Generating Cash to Survive;
- Producing Profits to Make Money, so you earn a return on your
Your financial statements are your scorecard tracking whether you are making or losing money:
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- Your Balance Sheet is your company’s health thermometer.
- Your P&L Statement tells you how you got that way and what you can do about it.
- Your Statement of Cash Flows shows the sources of cash utilized by your business activities.
The critical success factors required for avoiding the negative consequences of losing money include:
- Knowing where you are in your profit plan, to know your next move with confidence;
- Awareness of the “surprises” that can cost you unplanned expenses and drain your business of cash;
- Having goals, objectives, and metrics to gauge how well you are performing;
- Knowing what specific actions will cost you in carrying out your business operations;
- Use your financial statements consistently to shed light on the quality of your results.
You earn profits by continuously pushing yourself to manage your business’s assets more effectively as you control your expenses through sales, operations, finance, and admin functions. B-CPR Step 3 helps you confirm whether these activities are being carried out effectively and as planned or not.
Would you like help connecting the dots in your business with your transaction data?
Implement a business intelligence system to access the information you already have to solve your business problems. Those who do this hold onto more cash flowing through their business than those who don’t 100% of the time. Click here to talk with a certified BusinessCPR™ Business Scientist to learn how to start doing this today.
Get help connecting the dots across your business using your transaction data
Knowing where to go for the information you already have to solve your business problems is how you hold onto more cash flowing through your business. Click the link below to talk with a certified BusinessCPR™ Business Scientist to learn how to start doing this today.
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