Like many young women, I learned to cook watch­ing my Moth­er.  She was a great south­ern cook, her spe­cial­ty being fried chick­en. By the time I left home, I was pret­ty good too. My love of cook­ing was fos­tered in two ways.  One, I loved to eat.  And two, there was noth­ing bet­ter in my book than shar­ing a meal with fam­i­ly and friends.  What I didn’t always enjoy so much was the prepa­ra­tion, espe­cial­ly if it involved knives.  Chop­ping, slic­ing, dic­ing and minc­ing weren’t my fav things. These were the chores that had to be done to get to the good stuff.

With no oth­er frame of ref­er­ence, I set up my kitchen just like my Mother’s.  Same pots and pans, same kinds of dish­es and serv­ing pieces, same knives.

For years, these tools served me well, or so I thought.  Then I mar­ried my hus­band, Bar­ry, and things got real­ly inter­est­ing in my kitchen.  You see, Bar­ry had been in sales his entire pro­fes­sion­al life.  And a large chunk of that time, he was a rep sell­ing upscale kitchen gad­gets to gourmet shops.

He had a gadget for every­thing.  And knives, boy did he have knives!  I had nev­er seen so many knives.  All shapes and sizes.  As we cooked togeth­er, he was always cor­rect­ing my use of knives. “Why are you using that knife?” or “That isn’t how you use that knife, it goes like this.”  It wasn’t long before I real­ized in the world of knives, I knew very lit­tle.  What was the dif­fer­ence in a chef knife, a par­ing knife and a slic­ing knife?  How could they help me and how do I use them cor­rect­ly?

Thank­ful­ly, Bar­ry was a good teacher.  Hav­ing the right knives and know­ing how to use them prop­er­ly made all the dif­fer­ence.  I no longer dread­ed chop­ping, slic­ing, dic­ing and minc­ing.  I pre­pared meals faster and eas­i­er.  And my meals improved! What a dif­fer­ence the right tools and the knowl­edge to use them makes!

Just like a good set of knives and the knowl­edge to use them, trans­forms cook­ing from a chore to a fun and enjoy­able expe­ri­ence.  A com­pre­hen­sive finan­cial man­age­ment sys­tem, with the knowl­edge to use it, trans­forms a mod­er­ate­ly suc­cess­ful busi­ness into a pros­per­ous one.

In a pros­per­ous busi­ness, not only is the busi­ness ful­fill­ing its inten­tion and meet­ing or exceed­ing its goals, the own­er is ful­fill­ing her or his per­son­al inten­tion and meet­ing their per­son­al goals.  So often the owner’s per­son­al goals get lost in the 60+ hour work weeks of grow­ing and build­ing a thriv­ing busi­ness.

And that is sad, because it’s not nec­es­sary.  It real­ly boils down to two very sim­ple things:

  1. Hav­ing the right tools
  2. Know­ing how to use them

 

What are the right tools?

A finan­cial man­age­ment sys­tem con­sists of three inter­re­lat­ed sys­tems

  1. Mon­i­tor­ing, to keep your fin­ger on the pulse of your busi­ness
  2. Ana­lyz­ing, to dis­cov­er the truth of what is help­ing or chal­leng­ing your progress
  3. Pre­dict­ing, to see around the bend and avoid unnec­es­sary sur­pris­es

 

Mon­i­tor­ing sys­tems include:

  • Month­ly finan­cials
  • Key Finan­cial Indi­ca­tor trends
  • Depart­men­tal and Indi­vid­ual Score­cards
  • Bud­get & Cost man­age­ment

Ana­lyz­ing sys­tems include:

  • Sales and Cus­tomer analy­sis
  • Prod­uct and/or Ser­vice analy­sis
  • Oper­a­tions and Over­head analy­sis

Pre­dict­ing sys­tems include:

  • Key Per­for­mance Indi­ca­tors and trends
  • Sales, mar­gin and net income fore­cast­ing
  • Depart­men­tal and Indi­vid­ual Score­cards

In busi­ness, a finan­cial man­age­ment sys­tem is your most valu­able tool. It is also one of the most mis­un­der­stood and under­uti­lized, for two rea­sons.  First, entre­pre­neurs tend to excel at their craft, rather than finance.  Just like me using my Mother’s knives, I didn’t know what I didn’t know.  I need­ed some­one who was an expert in knives to teach me.

Sec­ond, when an entre­pre­neur deter­mines they are ready for help beyond a set of books, they turn to their CPA or tax advi­sor.  In most cas­es, they can’t help, because it isn’t their exper­tise.  Their job is to reduce your tax­es and com­pile or review your exter­nal finan­cial state­ments, not to build a finan­cial man­age­ment sys­tems and teach you how to use it.

If 2017 is your year to pros­per, start by tak­ing the list above and inven­to­ry what sys­tems you have and what sys­tems are miss­ing.  Next, set aside an hour or two of qui­et time and get out your jour­nal.  Write down what frus­trates you about your finances.  Where do you get sur­prised?  What keeps you up at night?  What deci­sions are you mak­ing blind, with­out good data?  What is your return on your invest­ment in your busi­ness and what would you like it to be?

Now that you have a good idea of the prob­lems you are look­ing to solve and what sys­tems you are miss­ing, do your due dili­gence in find­ing a con­trac­tor that can deliv­er.

At Mack­ey Advi­sors, our inten­tion is to cre­ate a pros­per­ous world, one per­son and one busi­ness at a time.  If we can help you on your pros­per­i­ty jour­ney, please reach out to us at 859–331-7755 or Lisa@MackeyAdvisors.com