“How’s your business going”?

Often the answer is friendly, “good”. But a more thorough questioning may reveal that the owner really doesn’t know what’s going on inside his or her business.

Does the business owner intimately know the answers to these questions?

• How did the business go last week? Not last month, the month before or last year. Last week. Frankly, that information is unlikely to come from a Profit and Loss report. At best that report is two weeks after month end and provides information that is up to 6 weeks old.
• Does the business have a range of simple measures of performance?
• Is the information provided to the owner accurate and up-to-date?
• Have the accounts for last year been done yet? Does the bank have a copy yet? Not sure what to say to the bank?
• Does the business undertake proper budgeting, sensitivity analysis and importantly, cash flow forecasting?
• Are there computer glitches that remain unresolved for long periods of time? Do your accounts people know what they are doing?
• Does the owner really understand the sales, margins and product movements by category, class and region? What works and what doesn’t work?
• Does the owner get presented with a mountain of paper every month?

Clearly, timely and accurate information is critical to running a business. It is said, “What gets measured gets controlled”.