17 Nov 4 Practical Ways Your Business Data can Grow Your Company
As a business owner, you have large amounts of business data available, but making sense of it can be overwhelming. However, the insights you can glean from your business data will enable you to make sound financial decisions.
Grow sales, increase profitability and manage your creditors well through analysing your financial information. Regardless of what accounting software package you use, whether it’s Excel or the latest business intelligence tool, you can make sense of your financial information and set your business up for success.
Business Data Analysis Practical Tip 1: Monitor cash flow
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Your business data reveals how much stock you buy, which product lines are moving, which debtors owe you money and what you owe your creditors — all key factors in determining cash flow. Without this basic financial information, you’ll be in the dark as to how liquid your cash flow is. Knowing when money is coming in and when money is going out will help you determine if you’re heading for financial trouble, and enable you to take corrective steps in time.
Tackling your bank statements will help you drill down into your financial information and understand your cash flow. Use your accounting software or even Excel to analyse your bank statements for the past six months and allocate all your transactions into two categories: cash in and cash out. You’ll find this extremely helpful in understanding your monthly cash flow and better yet, you’ll be able to forecast.
Business Data Analysis Practical Tip 2: Manage resources
When running a company, it’s all about budget, budget, budget. One of the most vital steps to take regarding your financial information is creating an accurate budget that accounts for profits, income, expenses and cash flow. How you allocate resources will go a long way in determining the success of your company. When you’re able to see at a glance what your financial expectations are, you’re in a more informed position to decide which projects to take on.
Compare your actual results against your budget. You’ll be able to clarify your profit and allocate how that money should be spent or reinvested into the business. Use your accounting software to track trends in your budget over the past year. This business data will prove invaluable in assessing whether your budget is accurate or not.
Business Data Analysis Practical Tip 3: Track sales
Your financial information can give you insight into the growth of your sales, or areas where you need to focus on problem-solving. Without a steady growth in sales, your business can’t succeed and thrive. Don’t dive into selling without defining your sales goals upfront. This will help to track sales trends, enabling you to focus on what’s driving the success of those sales.
Through tracking your sales business data year on year, you’ll soon see trends and be able to assess where you can explore opportunities for better sales, or where you need to change tactics.
Business Data Analysis Practical Tip 4: Manage debtors
Don’t try to juggle debtors and creditors at month end. Through drilling down into your financial data, you’ll be able to understand what your credit terms should be, so as to establish a credit policy. While you’ll encounter a few incidents of bad debt, you can avoid having insufficient funds to pay your creditors. Set up accurate, up-to-date invoicing, timeous settlement of debt, and establish your terms of credit. Plan ahead and make provision for bad debt in order to avoid a setback in cash flow.