This week, we discuss what you and your management team can do to take full ownership of the financial performance of your business.
Hopefully, you have monthly financial reviews where you sit down with your management team and pore over your various financial statements. The goal is to understand where the business is performing well, where the challenges are, and, hopefully, to gain some sort of understanding of what the financial performance is likely to be over the months and quarters to come. Now, if you aren’t already doing this, implementing it is going to be a game-changer for those meetings.
My tip for you is to ensure that you have proper P&L (profit and loss) and balance sheet accountability. You need to identify all of the key lines in your P&L and the key lines in your balance sheet, and allocate owners to those lines. Those people are likely to be the function heads or the management team around the table. You need to be clear on who owns stock costs, sales, direct wages, overheads, and who owns some of the most important lines within overheads.
It is critical that when those numbers are off track, the owners understand that they are off track. They should be able to provide proper explanations as to why they are off track and able to raise the warning flag if they don’t know what to do. Then, you and the team can sit down and come up with a plan of action. It is really simple but extremely powerful.
So, who owns your numbers? What are the most important numbers for your company? What are you going to do at your next finance review meeting?
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