I’ll have mine Shaken… not stirred.
Most small business owners will agree it’s really hard to make a decision without all the important information. Just like James Bond, the bookkeeperaccountant in any small business is the key to finding the right intelligence. Proper business intelligence is often the difference between survival and business failure or a thriving, healthy business.The truth is… the bookkeeper/accountant is one of the most important players in any successful business.Mr. Bostrom says, “A professional bookkeeper and professional tax preparer can be very beneficial to you as a business operator or department manager in helping you retrieve and analyze information.”There are a number of software applications available to help business owners analyze their important information each month, but it doesn’t have to be a difficult and expensive process. In his book, In the Black, Allen Bostrom suggests a number of items that any small business owner should be considering on a monthly basis.
- What are our sales totals?
- How much cash is available?
- What are accounts receivable and how old are they?
- What are the monthly payable numbers?
- What products are selling?
- Where does the profit come from?
- Is our inventory current or obsolete?
- What are the major expenses for the business? How much are they?
- What are overhead expenses?
- How does business compare to last year at this time? Last Month? Last Quarter?
- What are the most important numbers you would like to see on a daily, weekly or monthly basis?
- What is working well in the business? What needs to be improved?
- How is our customer service working?
I’m sure you’ll agree, as we look at this list, the bookkeeper/accountant is critical to the success of any business. You may also see that there may be some information that is unique or of special consideration to your business, so don’t feel like this list is all inclusive, it’s just a place to start.
How do I watch all these things on a monthly basis?
There are a number of tools available to track the important, even critical numbers that any business owner will want to have at his/her fingertips. Let’s take just a few minutes and talk about “Score-Carding”.Score-Carding is a term used to describe the process of evaluating important information to get a feeling for how the business is doing now and how it will be doing in the near future. Allen calls these numbers “the key leading indicators of the business.” If they are in synch, then the rest of the numbers that follow during the month should be okay.
What should I do to start Score-Carding in my business?
On page 72 of his book, In the Black, Allen has created a sample Score-Card. This is only an example of some of the information taken from the company’s accounting system that would be valuable to a business owner or manager, but I’ve reproduced it here so we can better see how valuable this tool could be.
| Description | Target | Week 1 | Week 2 | Week 3 | Week 4 |
|---|---|---|---|---|---|
| Marketing Leads Generation |
10 |
4 |
2 |
1 |
2 |
| Sales Closed |
8 |
2 |
2 |
1 |
2 |
| Production Completed |
20 |
8 |
2 |
6 |
4 |
| Customer Returns |
0 |
0 |
0 |
1 |
0 |
| Cash on Hand |
10M |
4M |
8M |
8M |
8M |
By studying the table above, you can see how one entry relates to another. Leads Generation and Sales have a corresponding relationship to each other. By keeping track of the “key leading indicators” of any small business, the business owner or department head is in a position to make decisions based on solid business intelligence rather than by the seat of his/her pantsMr. Bostrom recommends regular monitoring. Every time a decision is made, it’s essential to evaluate the impact of that decision on the Income Statement and Balance Sheet. Mr. Bond, the bookkeeper/accountant, just became one of the most important people in any small business.For a more detailed description of how score carding can effect the bottom line, Allen Bostrom’s book, In the Black, is a perfect place to start.
Universal Accounting has the answers to the tough questions.
There has never been a better time to begin a career as a Professional Bookkeeper or Tax Preparer than right now. With literally millions of small businesses all over the country who need the skills and knowledge of a professional bookkeeper/accountant, you may not be able to rescue the free world, but you will be able to have a wonderful impact on your clients businesses and your own career. A new career in accounting is only a click or two away.Show me more. I’m interested in a business opportunity in Accounting and Tax Preparation.
