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    Unscramble Your Numbers: Unlock the Secrets to Your Business Cashflow
    Unscramble Your Numbers: Unlock the Secrets to Your Business Cashflow
    Unscramble Your Numbers: Unlock the Secrets to Your Business Cashflow
    Ebook203 pages1 hour

    Unscramble Your Numbers: Unlock the Secrets to Your Business Cashflow

    By Amanda Fisher

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    About this ebook

    Do you understand your business numbers?
    Do you want to grow your business?
    Do you want to take control of your business and stop stressing about your cash flow?
    Then now is the time to read Unscramble Your Numbers and unravel the mysteries of your numbers.

    21st century technology is giving you the tools and providing the numbers instantly from within your accounting system. There has never been a better time to understand the figures, the graphs and numbers that your cloud system is showing you.

    In this book you will learn:
    – why cloud accounting systems are essential
    – what reports you should be reviewing weekly and monthly
    – the difference between a budget and a cash flow forecast
    – the 5 Key Performance Indicators you should be focusing on
    – the importance of setting written financial goals
    – why accountability and advice is imperative to improving your numbers

    The definitive Step by Step Guide to Understanding Business Cash Flow and Financial Reporting for Better Decisions.
    LanguageEnglish
    PublisherBookBaby
    Release dateMar 19, 2018
    ISBN9780987486752
    Unscramble Your Numbers: Unlock the Secrets to Your Business Cashflow

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      Book preview

      Unscramble Your Numbers - Amanda Fisher

      Author

      Introduction

      For too many years business owners have not been given the tools and knowledge to empower them to take control of their business and truly understand their business numbers. Financial statements are considered the domain of accountants and information for reporting to the tax man when in reality they are the backbone of the business with useful information for the business owner.

      I have written this book for business owners to help you Unscramble Your Numbers. I believe that it is imperative for you to understand and be able to interpret the numbers to survive and grow your business.

      Up until recently, the tools that were available for accounting were not designed to truly help you, the business owner. The great news is that we now live in the Age of Technology and cloud accounting systems are providing the solution.

      Cloud accounting systems provide a platform for business owners and entrepreneurs to improve efficiencies and to have real-time information available to assist you in running your business. Over the past five years, there have been massive advances in this area, and the leading cloud accounting systems are disrupting the accounting industry and the way business is done. These changes are permanent and will benefit all businesses in the future. Those who do not embrace these changes may find themselves losing ground to their competitors or losing their business completely.

      The first stage in the conversion to cloud accounting is now underway, with entrepreneurs and tech-savvy business owners already converted. More conservative business owners are now starting to convert to cloud accounting. If you haven’t embraced cloud technology for your accounting yet, now is the time to do so.

      We are seeing an explosion of other systems which can be integrated with cloud accounting systems. These range from applications applying to all businesses, to those which are industry specific.

      Rod Drury, CEO and Founder of cloud accounting system, Xero, identifies the benefits for small business:

      We think there’s this other really big trend where accounting software for small businesses just becomes integrated right across business processes.

      What this means is that every part of the business will be integrated into one system. No more multiple databases, no more worrying about sales that have been missed. What follows is that the information I will be referring to throughout the book will be readily available from the data in your cloud system – all in one place.

      We have also seen a large number of reporting tools emerge integrating with cloud accounting systems to provide:

      •Graphical display dashboards in real-time

      •Reporting packs with graphs and charts

      •Projections based on trends

      •The ability to run multiple scenarios against actual business results

      Statistics report 65% of the general population are visual learners. Thus the graphs and charts appeal to these visual learners easier than a report with a list of numbers – where typically the eyes glaze over with lack of comprehension.

      Most business owners have never had any business training, having started in business with a new idea or the idea they can run their own business better than working for someone else. With no training though, many business owners struggle to understand their trading results or know the difference between profit and loss statements and balance sheets. Many bury their head in the sand, putting off bookkeeping until the last minute. Some business owners do not even look at the figures regularly, often relying on checking their bank balance.

      I recently undertook a business owner survey (which I will refer to throughout the book), identifying areas where business owners do not look at their figures and focus on fundamentals of their business.

      The survey showed that 58% of respondents check their bank balances daily, but only one in four have their bookkeeping done daily, and just 17% check their accounts receivable reports daily. This shows business owners are concerned about their cashflow, but may not understand the key drivers that impact it.

      The challenge in running a business by checking the cash in the bank account, is far too simplistic and ignores many other key numbers which would provide a more complete picture. Despite being pre-occupied with the bank balance, the survey results show these business owners haven’t even taken basic steps to ensure bookkeeping is done daily, and checking accounts receivable reports to see who owes how much money and for how long.

      The survey also requested descriptions of the way they use their financial reports which ranged from:

      Generally only used for tax reporting. We rarely look at the financial reports.

      To: Making sure I have money in the bank and clients paying properly.

      To: As a tool for gauging business success.

      A key study¹ shows the key objectives for most business owners are to use the figures to make better business decisions. This was closely followed by growth in revenue and increased competitor advantage. Throughout the book, I will explain in plain English what the reports are and how to understand them. Not only that, but how to interpret the figures. There are reports which you need to monitor, review and interpret in addition to Key Performance Indicators (KPI’s) which are important for growing a thriving business.

      What is also important to understand is the various reports and KPI’s need reading with each other and not in isolation. Sometimes, figures which appear to be great, hide a darker truth which only comes to light when a different report is reviewed.

      Business is tough, and for many, much harder than they anticipated when they first started out. Too many business owners get caught up in the day-to-day working in their business and don’t take the time to spend working on it and review past performance to make changes for future improvement.

      I will introduce you to two businesses as case studies which will be used throughout the book to provide explanation of the figures. The first business is Cakes, Cakes, Cakes, which bakes and sells cakes to consumers. The second business is Expert Business Consultants, which provides consulting services to larger companies. Both businesses have turnover of $1M.

      Cakes, Cakes, Cakes has a number of serious challenges and the owner Maria has minimal understanding of the figures. On the other hand Expert Business Consultants has a profitable business which appears to be doing well. Dave has some accounting background and understands figures generally.

      There will also be examples throughout the book to help clarify information provided. These examples will be used where the case studies are not appropriate.

      Owning a business can be a lonely place. It may not be appropriate to share your concerns, stresses, frustrations and financial issues with staff members and family. In order to overcome this and to learn to understand and interpret the figures, I recommend regular accountability meetings. These are vital in ensuring you stay focused on your goals and have an arms-length person to talk to and bounce ideas off.

      During the course of preparation for writing this book, I reviewed a number of reporting tools and interviewed their founders.

      The interviews I had with the founders of the reporting tools, (CrunchBoards, Fathom, Spotlight Reporting and Panalytix), each provided interesting insights into their views on management reporting and KPI’s, and how they should be used in business. They also cover the involvement of the accountant as the adviser to assist business owners understand and interpret the figures and function as business advisors.

      To hear the full recordings or read the transcripts go to the resources page here

      (www.amandafisher.com.au/unscramble-number-resources/)

      Amy Harris created CrunchBoards when she was unable to find a reporting tool that could provide her with the level of information she needed to make smart business decisions in a business she and her partner owned.

      We thought we’d made a really smart decision by moving to the cloud … and we thought that was going to make life a lot easier when it actually came to running the business on the ground. Actually, the day-to-day and planning for the future was still a chore. We would spend all of our time in spreadsheets. When I say all of our time, as a business owner, that usually means late at night or on the weekends. So trying to fix formula errors and exporting information out of Xero and then having to constantly go back and update your actual numbers and try and see how you were performing against target was really, really difficult for us. It’s actually a pain, it’s not something you enjoy as the business owner.

      David Watson, CEO of Fathom Reporting said in relation to reports:

      It had to be a visualisation. If you can show them a picture, that communicates so much more effectively to someone who’s non-financially literate (often a business owner). They can immediately say, I understand for the first time what’s happening in my business here because you’ve shown me a visual; a picture, rather than a spreadsheet of numbers.

      Figure 1 - An example of the type of visuals used by Fathom Reporting

      Amy Harris from Crunchboards

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