Why YOU need a Financial Operating System!
I want to talk about building a better toolbox specifically a better financial toolbox, I call it a Financial Operating System.You have a system for how you do everything in your business, but my experience is that most business owners don't have a financial operating system. They don't have something that looks both the past and the future that starts at the top and goes to the bottom of their business.
It's not a 365, is just a one-way between maybe the accountant and the business owner, and those cases you're losing so much energy in your business, but you have a comprehensive toolbox, one that starts with your annual plan where you build your really big goals with your team. Then goes to taking that plan and putting into your monthly, um, putting into your monthly goals. From there, building scorecards for your team actually letting them engage in building their own scorecards to meet the big picture goals of the business.
And then forecasting, you know, looking forward the chance that we make differences in our business when we know what we're going to do in the future. We can’t change the past, we can only change the future. So, we build forecast, cash forecast, sales forecast then income forecast. We can begin to proactively change our future before it happens.We put these pieces together and we engage our team. We build a robust financial operating system and that becomes the way that the business is done. And we talked about a database being a container, the data becomes a container, it brings our team together, we now have the reports that we need. We actually have the data to make the decisions that we need to make.
Sometimes, the data itself doesn't tell us what to do. It really only alert us to the problem. If we didn't have the financial operating system. We wouldn't know that the problem was there until it became a big one. Wouldn't you rather know that you have a problem when it's just a little one? Those are much easier to fix. Most businesses have some sort of monthly financial statement.
What my experience is that they're not accurate and that's the first thing that has to change. We have to have accurate financial statements and sometimes we think that that's all we need. But a monthly financial statement is just some simply a look back on what happened last month and if you're a business owner, the reason that you're in business is to achieve your goals, your personal goals, and your business goals and the only way to achieve your goals is to look forward to so you have to build a robust financial operating system. An operating system that lets you see your past, project your future, and know when you need to dive deeper and to solve problems that are coming up. Those three things combined, pull together your financial operating system. It sounds complicated. It sounds hard to put together but really it's a series of tools. It's a tool for planning. It's a tool for reporting. It's a tool for forecasting and it's a tool for analysis.
You need a financial operating system so that you can be confident that your business is going where you expect it to and if it's not but you know how to correct it. It's an essential part of every business and most people don't have it. So, don't feel bad if you don't have it. And if you need help, email me at mackey@mackeyadvisors.com or go on our website mackeyadvisors.com. A lot of our financial operating system tools are right there available for you to download.