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About the Author
Mark Gilbert is the founder and CEO of MBS Accounting Technology & Advisory. A serial entrepreneur, Mark created the first independent bookkeeping firm in 2000 when he recognized that advances in technology allowed a new paradigm of outsourced bookkeeping. MBS quickly became the largest independent bookkeeping firm not part of a CPA firm in New York City. Connect with Mark on LinkedIn.

How Understanding the Story Behind Your Numbers Can Grow Your Business

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Your expense reports, profit and loss statements, and other financial documents are all telling a story that can help your business thrive. Are you paying attention to it? Or are you letting game-changing insights slip by unnoticed?


I’m a serial entrepreneur, with decades of experience working in and owning businesses before I founded my independent bookkeeping firm twenty years ago. I’ve seen a lot of changes over the years, and I believe that now is one of the most exciting times to be a business owner or entrepreneur.


Why? Because technology is allowing small and medium businesses to take advantage of intelligence in their financial data in a way that was previously only available to big companies.


Even a few years ago, there were only a few accounting software options, and most were too complicated and expensive to be much help for small and medium businesses. Today, however, multiple software-as-a-service (SaaS) options are making it easier and more affordable than ever for business owners to manage their own finances or outsource them to an accounting professional.


But most of all, these tools are putting real-time financial insights into the palm of your hand – literally the case with many apps available for your phone.


Nearly every company has implemented accounting technology. But if you learn to read the story behind the numbers – or work with an accounting professional who can – you’ll be poised to unlock the unseen value hidden in your data.


Using cash flow to make smart business decisions


Entrepreneurs and business owners are generally great at what they do, and many have done an amazing job growing their businesses – but I’ve found that few understand all the nuances of financial reporting.


For example, at a glance, you might think their profit and loss statement looks great, but your bank account is perpetually empty. A solid cash flow analysis can help reveal the story behind the profit and loss statement, enabling you to project and understand the nuances of your day-to-day finances.


Understanding this story will help you stop scrambling to make payroll, know when you can make an investment in new product or equipment, and feel more confident taking on strategic debt to grow your business.


Setting key performance indicators (KPIs) that move the needle


Are you measuring your business success by the right numbers? Or are you making guesses based on your gut feeling?


A careful analysis of your finances will help you set the right KPIs, so you can more easily make decisions that grow your business instead of hamper it. You’ll understand where your profit is, where your time should be spent, and what part of your business you need to develop.


For example, a printing company may look at a $50 business card order as chump change compared to a $10,000 trade show brochure order, but if you are making $40 on the business card order and doing hundreds of orders a week, versus the thousand dollars you make on that $10,000 order that comes in twice a year, the choice is clear. Instead of setting a KPI around making sales calls to trade shows, you can point your sales team to where the money is.


Understanding your market in real time to drive growth


It is far too easy – and common – for entrepreneurs to develop ideas in a vacuum. They make decisions about which products to build or services to offer based on personal preference, rather than on the market.


When you look at the numbers, it becomes crystal clear what it is your customers are looking for. A restaurant owner who wants to focus on a certain type of dish may be quite surprised to find that their biggest profit center is something quite different. Digging deep into the numbers will allow them to set up internal marketing to promote these higher profit items.


From bill paying and invoicing solutions to apps that track your expenses and mileage, you can now get information about the financial health of your business in real time. This means you can make smarter decisions on the fly, whether that’s knowing you have the cashflow to approve a big purchase or putting last year’s merchandise on sale when you spot an approaching fashion trend that could make your current inventory outdated.


Understanding your financial story makes you more competitive than ever


This is an exciting time to be a business owner, because financial tools and advantages that were previously only available to larger companies are now in your hands. And, best of all, you have access to bookkeeping software solutions and expert accounting professionals without making the massive investments big companies have done in hiring and software infrastructure.


Understanding the story behind your numbers is going to be a key differentiator to help your business be agile and stay profitable. Don’t underestimate the value of having a truly smart team on your side: your CPA to help you with tax advising, and your accounting professional who does the bookkeeping to help you tease out what’s going on in your day-to-day numbers.


Learn more about the finance trends affecting your business: Watch for These Two Business Trends Driving Change in Spend