How many of you remember life before smart phones…or even before the simple mobile phone? How ever did we manage to survive or even get in touch with someone urgently?
I think that’s the point. Technology has brought about an urgency that demands an instant response. Is this a good thing for business?
When the phone keeps buzzing and the emails keep pinging, it seems that we just can’t keep up with all the tasks that demand our attention. And with that, the modern business owner is thrust into a world of short-term issues and simply surviving becomes the goal for the day.
So, what is the solution? Well, there’s an app for that – it’s called getting back to the basics. It can be downloaded from any common-sense network and the best part is that it’s free.
You see, the world around us might be changing rapidly, but the fundamentals (ie the basic principles) of business haven’t.
What are these basics of business? Below are a few recommendations:
- Let’s start with the plan. Every journey needs a map, every project needs a plan, every business needs a budget. This helps you to see where you’re heading financially. The budget should always be at least three years, because business is not a short-term venture.
- Next, let’s look at the check-in. Every year your accountant produces a set of financial statements to show you how you went last year. But, what are you comparing it to? If simply to the prior year, then you’ve missed the first fundamental…that being the plan. If comparing to the plan (ie the budget), then you are empowered to make changes, because you set the budget in the first place based on your knowledge of how your business is run.
- Don’t forget that cash is king. Don’t tie up your working capital (ie cash needed to pay the next couple of months’ bills and wages) into long term assets (eg vehicles, equipment). Use your budget to manage your cash and know what your peak debt is (ie lowest cash balance or highest overdraft balance).
- Keep an eye on the numbers. Once a year is not enough. This is where technology comes into play. Cloud accounting software provides you with the opportunity to create a set of financial reports that makes sense to you, whilst making sure the numbers are correct. How? Because your accountant can log in at any time to check them over for you, so don’t be afraid to ask them for help.
In the hustle and bustle of life, don’t forget the basics of business. Take time to plan, check in, and review. The next time your device starts demanding your attention, remind it that you’re in control and can turn it off.
If you have any questions about the basics of business, please do not hesitate to contact your local RSM office.