To make sure your business is growing strong, you need to pay attention to key financial metrics.
How well is your business doing? Have you priced your products and services appropriately? Are you spending too much on labor, and not enough on sales and marketing? Should you hire another employee, or continue to outsource some of the work to a contractor? These are the questions that we get time and time again from our clients. Luckily, the answers to these highly important questions are contained within your financial statements.
As managerial accountants, we laser-focus on providing you with information that will help you make key strategic decisions in your business. Sadly, not all bookkeepers and accountants are created equal, and not all of them are equipped to help you make managerial decisions. Many bookkeepers simply input transactions into Quickbooks and spit out a financial statement, leaving you to decipher the might-as-well-be-written-in-ancient-greek results. And many CPAs tend to focus on tax compliance issues, creating high-level financial statements that will please the IRS but leaving very few details for you to actually analyze what’s going on at the ground level of your business. That’s where we come in, sitting squarely in the middle of these two extremes, providing enough details for you to actually manage your business without giving you a splitting headache.
For example, for your business to be healthy, the cost of you providing your product / service should be no more than 50% of your sales. This includes the cost of the labor that goes into providing the product / service. When we put together your bookkeeping records, we actually take your payroll records and split each employee’s pay according to the amount of time they spend in producing the product / service versus doing other things, like managing the business or doing administrative-type duties. The result is a financial statement that gives you a quick, yet powerful, instant analysis of the success of your business…at a glance!
Using this information, you can make tweaks to your business to stay in line with the suggested metrics. If your cost is 60% of your sales, for example, then maybe we need to negotiate a better price for your supplies…or maybe your employees need to be trained better to become more efficient at their job…or maybe you need to increase your prices!
You are the captain of your ship, and if you are off course, there are several paths to take that will correct the navigational course and get you back on the right track towards your destination. As managerial accountants, we will help you analyze your current trajectory and make any corrections needed.
To learn more about the key financial metrics you should be paying attention to, schedule a free consultation with us.