Introduction
How do you make critical business decisions…?
Based on your gut instinct? Simply doing what you ‘think’ is best? Or, doing something because every other business in your trade is?
If you are guilty of all or some of these decision making blunders, then beware… you are risking the life of your entire business – your bread and butter!
When you make decisions in such a frivolous manner you are constantly taking gambles, you are out of touch with reality and you are truly bargaining on a hunch, hoping that it pans out.
Many trade business owners are lucky to see a Profit & Loss Statement every 6 months, or even just once a year. The review of other financial data (such as Balance Sheets, Budgets, Break Even, operational targets and Forward Forecasting), seem to stack up as a low priority. Money in the bank is used as an indication of financial position. However, many forget that (thanks to ATO requirements), money in the bank is not always going to be kept.
You must “know your numbers”! This standard line, which echos from the mouths of both Andy and Ange regularly, is an absolute non-negotiable. It is so important to take a vested interest in your true financial data in real time, whilst working with a ‘great’ accountant, to gain certainty, clarity and control.
In this section, we will take you from a position of ‘Naivety’ in terms of financials ‘Knowledge’.