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How are you managing your business's finances?

Please see this article https://www.micromentor.org/blog/financials-are-your-co-pilot by mentor Hanna Obersteller.

How are you managing your business's finances? What approaches have you found most effective? What lessons have you learned? Please let us know here!

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6 answers

Looking at all the details I think my business needs help to organize its finances.

Report Joao's answer

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Joao, I can only encourage you to be curious about your financial performance. To find the right approach for your business:

  1. Make sure you fulfill the minimum requirements to be tax-compliant.
  2. Ask yourself - what else do I want (and need) to know about my business?
  3. Develop from what you already have: What information and records do you have available today? How can you develop your tracking to give you the information you need? What financial skills can you leverage - on your own, in your team or from an external provider?

Feel free to send me a message if you have a specific question!

Report Hanna's answer

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Hanna,

Your article is an excellent treatise on the accounting and related aspects of managing a small business.

To your question, most of my small business clients who are successful in achieving the objectives to which your article aspires, develop their financial control accounting structure as part of their Long Range Plan (LRP ). That plan is focused on pricing while they are establishing their marketing plan. The approach serves not only their financial accounting but also their operations planning and control.

A Long Range Plan (LRP) integrates the technical, marketing and operations aspects with an accounting structure you discuss which resides in a separate data base, an annual forecast by month for planned expenses juxtaposed to planned sales and revenue. This allows them to determine pricing and competitiveness in their forecast.

As the year proceeds my successful clients utilize many of the techniques you have offered to assess their cash flow, revenue and expenses in a software tool selected based on its suitability for their type of plan.

The results obtained from each accounting month closing are then transferred into copy of the marketing plan LRP and the accounting closing results are compared to the plan in order to resolve issues such as:

***Are we or are we not getting the sales we planned?

*** Are our sales and direct costs occurring in the time frame we forecasted them?

***Are our expenses over or under plan and what actions musts we take to control our overhead and make the plan a reality going forward to achieve our profit objectives?

The above process and systems integration combines your astute guidance with a long range view of the market and the company's planned role in it. That allows operations problem solving utilizing the best available information.

I enjoyed reading your article and recommend it highly.

Report Kenneth's answer

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Thank you very much for your explanation.

Report Joao's answer

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Hanna,

Thank you for the excellent outline! Very comprehensive and elucidating!

I am not a specialist on finance and as an entrepreneur, I have always outsourced this task. Checking my balance sheet is one thing. I have found the greatest support a financial consultant can give me is interpretation of my ideas and vision into numbers. I know beforehand what I want to achieve and how much risk and passion I intend to put into it. But expressing it in numbers helps me determine which segment of my business is more successful than the other, prioritise goals or create different scenarios of action. Numbers make also planning easier to share with a team.

Report Eleftheria's answer

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Ken - great comments! Integrating (Long Range) Planning processes and accounting of actuals definitely is benchmark! Thank you for sharing these very thoughtful practices and the questions that can be answered - great additional insights!

Eleftheria - I love your reflections on your decision to outsource your financial activities and how you see Financials as a translation of your entrepreneurial activities - that can provide you new perspectives.

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