While you may have hired an accountant to manage your numbers for you, it is vital that you as the owner of the sign business understand and monitor the money in and out on your business. You are the most motivated person when it comes to seeing your sign making business succeed, and just because you aren’t a trained accountant doesn’t mean you can’t track the numbers for your business along with a trained professional.
Quarterly meetings with your accountant serve to keep you up to date, but they don’t spell out financial success for your business. Sometimes decisions need to be made quickly and if you are unaware of the state of your business you will not be able to make such decisions as effectively. All business owners should be aware of basic financial proceedings of the business, one of these being a snapshot of the company.
A company snapshot is a simple way to get an overview of your business’ numbers. It is easy to put together; you should be involved in the process to become familiar with the numbers and what they mean, but you may appoint a staff member to put together a weekly snapshot. Depending on the amount of business you do, you may find it necessary to do reports more or less frequently.
The following example of a basic company snapshot is taken from an article by Bob Reiss on Entrepreneur.com. Note – you can add or remove categories to tailor the model to your business.
Current assets: ______________________
Cash, reg: ______________________
Liquid assets: ______________________
Inventory (if a product company): ______________________
Current liabilities: ______________________
Accrued commissions: ______________________
Accrued royalties: ______________________
Fixed monthly expenses: ______________________
Loans outstanding: ______________________
Monthly sales to date: ______________________
Yearly sales to date: ______________________
Future orders to ship: ______________________
Open purchase orders: ______________________
The goal in producing this chart is coming up with a set of number that you can understand and that you will be able to use to make solid financial decisions.
Another helpful source of company dashboard/spreadsheets is Kraig Kramer’s CEO Tools website. The email newsletter is free, and there is a free PDF preview download. We have used some of his tools at SignWarehouse and found them really beneficial in planning for the future.
Helpful information you can extract from the company snapshot includes whether or not you have enough cash on hand to pay bills, if your inventory is under or overstocked, and if your sales are matching your expectations. Make sure and analyze all the information diligently and respond accordingly. If you are struggling to make bill payments, see where you can cut fixed expenses, or if you have too much inventory, do a detailed report on inventory and come up with a way to quickly move overstocked items.
Keeping up to date with your numbers can help you avoid a disaster by spotting it before it happens. Other numbers you should have on hand are regularly updated cash flow statements, a cost analysis of your products and a break-even analysis. Ask your accountant for help in getting these numbers together, and learn how to do it yourself. It takes a little extra effort, but not much, and the results are most definitely to your benefit.