Updated: Jul 24, 2021
No business is perfect and that's a fact. It may not be making enough money or it's wasting too much of it. It could have something to do with your management team or your competitors. You can choose to continue your operations "as-is" and have a 'so-so' operations or read the following tips on identifying your weaknesses. Because the first step to problem solving is admitting there's a problem.
Yes, we know. Going through 'pain-points' and admitting out loud that some aspects are less than perfect hurts. We get it. However, it's a necessary evil in order to improve and become better. So, what are some ways to ensure your hand is on the pulse when running a smooth operation?
STEP 1: KEEP YOUR BOOKS IN ORDER
Even if you're a math whiz, that does not qualify you to do your accounting on your own. Unless you've gone to school for that, our recommendation is to leave this to the experts. It is time-consuming and requires a professional. You may have a bookkeeper for that which might be enough for now as your business may not have too many (complex) transactions but once you start growing, your financials should be taken care of by an accountant or CPA. And don't skip months. Keep your books in order on a monthly basis.
STEP 2: ANALYSIS AND REVIEW
Once you've received your monthly statements, go through the analysis and the KPIs (key-performance-indicators). These KPIs could be real eye-openers. For example: profit margin, revenue per client, liquidity ratio, net cash flow, etc. In fact, you should be reviewing KPIs in other areas as well, such as marketing, client conversion, HR and much more. KPIs strength is transforming numbers into a metrics that means something and can be improved.
STEP 3: RECOMMENDATIONS AND IMPLEMENTATION
Now that step 2 is over, you should have some ideas as to what's not quite working. Review this with your accountant or CPA and discuss with your operations manager. Understand what the issues are, what some of the recommendations for improvement could be and how to implement these moving forward.
STEP 4: REPEAT
Steps 1-3 should be repeated and monitored on a monthly basis. Do not lose track and hold everyone accountable, yourself included.
It's normal to have uncontrolled circumstances that could result in bad results however this should not be happening every single month. Keeping a close eye on business and reviewing performance are key to ensuring its success and improved performance.
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