Hi
Today I'd like to get you thinking about your numbers.
Because the start of a new week is actually a good time to sit back with a nice cup of tea...or coffee...and give some quality thinking time to the numbers that really matter in your
business.
You see there are three levels, tiers if you like, of numbers that matter:
1. Your key performance indicators: these are things like your number of leads, conversions and new customers, your costs per click, Facebook reach, average sales value, debtor days, cash flow and so on. They will be very specific to your business. They are the numbers you think about most and drIve your marketing strategy. Importantly many, if not most, will not be extracted from
your accounting system and will need a bespoke system to calculate them. This system will need to be simple and at the same time accurate because you'll need these numbers daily.
2. Your accounting systems dashboard numbers: these are the numbers produced by your - preferably cloud based - accounting system and are the more traditional numbers like sales, gross profit, overheads, cash summary and debtors. They summarise and confirm your daily figures and give you a (slightly) bigger
picture but they tend to lack the detail and timeliness you need for making key decisions. With a good cloud based system you should be reviewing these figures weekly and discussing them monthly with your accountant. As bookkeeping become more automated, most good accountants will offer you a monthly fees plan, that includes a discussion about your performance and improvements you can make, at no extra cost.
3. Year end figures: these are the least useful and of no use for decision
making. They are prepared after the year end largely for compliance (company and tax) purposes. They concentrate on overheads (in case HMRC can disallow them for tax purposes!) rather than performance and efficiency. As cloud based systems develop most good accountants will offer these services as an add-on to their value-added services as the software takes care of the compliance. If your accountant is only doing year end compliance and not offering you any business advice you may be losing
out.
The numbers that matter are in levels 1 and 2. Get out a pen and paper and write down the 10 numbers that, if you knew them on a daily basis, would help you make decisions that would improve your sales, profits, cash flow (and help you sleep better). Now compare - how many of those do you get easily every day? The others are the ones you need to work out how to get. If you need any help give me a call.
To your success
Noel Guilford
Noel Guilford is the principal of Guilford Accounting a small business accountancy practice
specialising in advising owner-managed businesses on current accounting, finance, and tax matters. You can reach him via email at noel@guilfordaccounting.co.uk or by phone at 
01244 660866. He is the author of the best selling book 'Figure it out - an entrepreneurs guide to understanding your business numbers' which you can obtain by visiting http://guilfordaccounting.co.uk/figureit out. His forthcoming book 'Know your business numbers' will be published December.