Are you relying on four month-old financial information like most small businesses?
Despite findings suggesting that those with accurate financial information grow on average twice as fast than those with data three quarters-old, small businesses throughout the UK are not doing enough to stay up to speed.
From my experience, running a business is a pretty bumpy ride so it makes sense to base decisions on the best possible information you can lay your hands on. If it’s four months old, which is what small businesses are looking to on average, then it’s going to be a pretty scary process.
Great businesses are built on great decisions, so make sure you know where you stand before diving into the deep end. Our research has shown that mental arithmetic and rough calculations are being used as a guiding light more often than genuine current financial information.
In excess of half of the owner/managers we interviewed take on big decisions such as recruitment or investing after scribbling out a few sums in a note pad and only with a few bank statements to do so with.
Furthermore, with business owners looking to keep costs to a minimum early on, the majority are using self-taught financial skills to prepare company accounts. While it is fair to say the leader of a company is best informed to make big decisions, a lack of a comprehensive picture is leading to a degree of financial uncertainty for today’s trailblazing entrepreneurs.
Business owners are making do with what they can get their hands on, and doing a fantastic job with it too. But an incomplete picture naturally creates uncertainty and means business owners are spending more time than they should have to trying to interpret their data.
As a bit of fun, we created a Business Finance Personality test. It asks questions such as how you work with your accountant, the ways in which you keep on top of your business finances and how you approach making investments in your business. At the end youll get a summary such as a carpe diem? type entrepreneur, or a glass half full kind of person. Like I said, it’s a bit of fun but should provide a little insight into how you go about making decisions which could have a big impact on your bottom line.
Bivek Sharma has been a partner with KPMG for over ten years, specialising in accounting, tax and software. He started the Small Business Accounting division over two years ago with a goal to transform accounting services for small businesses. The team works with a huge variety of industry sectors and companies including coffee shops, technology companies, manufacturers, pubs, restaurants and retailers.