Knowing your numbers inside and out can help you navigate challenges and seize opportunities with confidence.

Know Your Key Performance Indicators (KPIs)🔗

There’s no shortage of numbers to keep track of in a business—turnover, cost of sales, profit, overheads, and more. However, not every number matters equally for your specific goals. What truly matters is identifying the KPIs that align with your objectives and keeping a close eye on them.

For example, while revenue is a key metric, understanding how that revenue is generated can be even more valuable. Is it coming from a certain type of product? Or is it tied to a particular customer segment? These insights can guide your decisions and help you stay focused on your goals.

Leverage Technology to Simplify Financial Tracking🔗

You don’t need to be an accounting wizard to stay on top of your numbers. Accounting software can be an affordable and efficient way to monitor your finances. Modern software allows you to quickly scan receipts, link to your bank account, and get a live view of your cash flow. It can also help you track amounts owed by clients and what you owe to suppliers.

What’s more, this software enables you to generate monthly management reports at the click of a button, giving you quick access to valuable data. Having this real-time information helps you make informed decisions about what’s working, what’s not, and where to focus your efforts.

Investors love management information, too. If you can provide quick answers and show you’re on top of your numbers, it builds confidence in your ability to manage the business and their investment.

Understand That Cash Flow is King🔗

It’s not just about how much you’ve invoiced—it’s about when you actually receive that money and when you need to pay your suppliers. Every business has its own cash cycle, and understanding this cycle is crucial. Profit isn’t the same as cash flow, and it’s essential to have a clear picture of when money will come in and when you need to pay out.

A cash flow forecast doesn’t need to be complicated. Start with your opening bank balance, add up expected income for the period, subtract your outgoings, and see what your closing balance looks like. This gives you a useful snapshot of your cash position and helps you plan ahead. The period could be anything, a day, a week, a month.

If you offer clients payment terms, software can also send automatic reminders when payments are due, saving you time chasing outstanding invoices.

Use Data to Plan Ahead🔗

Monthly management reports provide valuable insights into your business’s performance, but they also help you look forward. By using this data to forecast future cash flow and plan for upcoming challenges, you can make smarter decisions about hiring, budgeting, and expansion. Proactively planning your finances will give you peace of mind and help you avoid surprises down the line.

For example, understanding seasonal fluctuations in revenue can help you plan for slower periods. With the right information, you can also determine when to hire, how much to pay staff, and even when to seek additional funding.

Conclusion🔗

You don’t need to be an accountant to manage your business finances, but having a clear understanding of your numbers is key to making the right decisions. Above all, remember that cash flow is critical. If you’re running into cash flow issues, it’s best to address them sooner rather than later.

If managing your finances feels overwhelming, consider seeking professional support. You might not need a full-time CFO, but fractional support—like having an experienced finance professional for one day a month—can make a world of difference in keeping your business on track.

By staying informed and proactive about your finances, you’ll be in a much stronger position to grow your business and take advantage of new opportunities.