What is on your financial dashboard? What metrics are you monitoring in your business?
Are you using your industries SIC or NAICS codes for comparison? Your banker should be able to supply you annually with the updated metrics for your industry. So you can see where you stack up against your peers.
But what ratio analysis are you using for the management of your business: beyond the Income, Gross Profit, Total Expenses and Net Income (Loss).
I personally like the comparison to the prior year; I feel it helps put the business into a better context. For manufacturers and retailers I like to monitor inventory turnover ratios. Then there is the AP and AR agings.
Granted you can’t do any of this if you run your business out of your checkbook. I know that there are businesses that have gross sales over $1MM that do just that. This makes any kind of strategic planning difficult, mainly because they have only a general idea of which are their best and worst clients and product lines.
For help planning and developing your financial dashboard call for an appointment.