small business gurus - the blog of Cat & Keith Matson

by Cat Matson

Can you imagine watching a footy game without knowing the score?  Watching the play might be interesting for a while, but if you didn’t know the score, how pointless would that be?

How do you keep score in business?  How do keep track of improvements in tactics and game-plans, how do you know if your performance has improved one year to the next?

As we rapidly approach the end of the financial year, many business owners look to their financial statements (mainly their Profit & Loss* and Balance sheet) as their main scoreboard, and will either celebrate victory or commiserate their losses based on those ‘final results’.  But those bottom-line figures only tell us a small part of the story.

In football, the final score tells us who won the game.  But it’s the other stats that paint a far more informative picture – tackles, tries, conversions, errors, effective possessions and so on tells us how the teams actually performed... which gives the coaches valuable information on which to make corrections, adjust the game plan and inform decisions for the next game.

The financials in your business should do the same thing.  Unfortunately, most business owners track their financials only for compliance purposes – sure, the ATO is happy... but how do you know how you really performed?

Stats like average spend per client/customer, profit margin, customer acquisition, sales conversions, client retention and trend information all paint a far more informative picture of your business than just the bottom line.... especially in the current context when the economy has changed (comparing bottom-line figures from this year to last is meaningless, as the external environment has changed – you’re comparing apples with lemons).

Use the end of the financial year to forensically investigate the performance of your business.... and structure your 2009/2010 accounts to give you the score on a regular basis.  Your accountant should be able to help.  If they can't... we can (read about our accounting services here).

How do you keep score?  What business stats are important to you? Share your thoughts in via 'comments' below.

 

* (I’ve always thought it’s funny that we call it a profit AND loss – it’s should be a profit OR loss.)

 

Cat

Igniting your business performance

Alito - business mentors and accountants

by Cat Matson

There's an old adage, "the plumber's taps always drip".... and it's often true for other small businesses as well.

In the 'old days' you could hide your 'dripping taps'... but now, when brand integrity and consistency can be tested by a potential customer with just a few clicks, they're harder to hide. 

My good friend, Tim Reid, (aka The Ideas Guy) has just written a post that highlights how costly this mistake can be....

What do your potential clients 'discover' about you after a few clicks?  Does the story unfold in a way that supports your message?