As a small business owner, you hear this question all the time: How’s business? A very typical response is: Great, but I’m just so busy. Most business owners are just busy being busy, but I wonder: How many of them know how their business is actually doing? I will explain how an outsourced bookkeeping service can help you understand how your business is doing.
Create and communicate a Vision and Mission Statement
You may be wondering why written Vision and Mission statements so important. They shouldn’t be more than a page long each but they help guide 
and challenge us. Since you work so hard any way, these items provide a compass and give feedback on progress and accomplishments.
A company mission is different from its vision: A vision is more audacious and describes what will be pursued and it’s general direction whereas a mission is a more specific goal to be accomplished to guide our on-going actions.
Not only is it important to have a vision and a mission, but it is also important that you review it regularly, and communicate it throughout your organization. Doing so will keep you and your entire team aligned toward accomplishing your goals.
Develop an Exit Plan
How can an exit plan help you know how your business is doing? While defining an exit plan is a more sophisticated exercise, it is an important step in any business. An exit plan provides a much broader financial picture. While a vision and a mission are critical to the business operation, an exit plan provides context to the operational results and ultimate goals of the business. It is important to have an exit plan and review it about once a year.
Create a Long-Term Budget
A vision mission statement and exit plan are important yet one-time efforts. Bookkeeping and financial control are regular and frequent tasks. When someone asks “How’s business?”, your bookkeeping system helps you keep visibility towards your financial goals.
For a small business, you should develop two budgets: one for the next 12 months and another for the next 3 years, or so. The budget projections should remain unchanged throughout the year and should be re-evaluated against actual results at the end of each quarter or at least once per year.
Create a Monthly Forecast & Pivot
A monthly forecast is a crucial business tool. Forecasts change throughout the year as results materialize and new information becomes available. The forecast tends to be more accurate that the original budget. Yet, since the original budget remains unchanged, the difference between the monthly 
forecasts and annual budget provides a opportunity for reflection and learning: What just changed? What do I think will happen next? What is certain and predictable and what is not?
If you have a solid bookkeeping system in place, then you should know your actual results. You should have a firm handle on your sales pipeline and on-going expenses. The recent forecast versus the actual results allows you to spot potential shortcomings quickly and make the necessary adjustments to stay on track. The variation between the original budget and actual results inform you of larger pivots you’ll need to make.
Answering: “How’s My Business?” – Really!
Now you can answer: “How’s business?” and assess your situation better using the following questions.
- Are you on-track with your forecast or can you explain variances?
- Are you on-track with budget versus actual or can you describe shifts?
- Are you confident in your business direction or do you have changes?
- Do on-going actions of your business support your vision and mission?
- Are you still on track to implement your exit plan when the time is right?
Answering these questions will provide the objective data about your business progress and give you greater confidence and control over its performance.
Is your Bookkeeping helping you answer: “How’s Business?”
Focus on what you do best.
Your Biz Manager can help. You can start the process by sending us an e-mail (info@YourBizManager.com) with your contact information, a list of your bookkeeping or business support needs or by texting or calling 424-246-6006.
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About Doris Cristiano & YourBizManager.
As an independent bookkeeper, Doris has been providing flexible business services in Santa Monica and West Los Angeles since 1997. To support Clients’ needs and growth, YourBizManager (www.YourBizManager.com) tailors its services to each unique business situation and works closely with its clients at their business or home office. More About Us
