Do you think you know your business well enough to dispense with the need to prepare regular management accounts?
Can you really say you have control over your business if you don’t have up to date figures to hand?
Still not convinced management accounts should be a primary tool for your business planning?
Here’s 10 reasons why they should be:
- External factors can directly and indirectly affect your business, causing serious distortions to your expected results. Having up to date figures available will help you recognise these ‘blips’ early on. You can then adjust your activities accordingly.
- When dealing with your bank, management accounts are invaluable. Especially relevant if you are looking for finance to grow your business.
- From time to time, you may wish to attract people into your business. Management accounts and budget forecasts will help you analyse how soon before they make a contribution to your business, thereby justifying your investment in them.
- You may decide to sell all or part of your business. Providing potential buyers with up to date information about your business makes negotiations easier to control.
- Is your business subject to seasonal variations? With management accounts you can see how patterns arise, enabling you to take action to iron out the variances. This could be by changing the level of output at certain times, or planning sales promotions for seasonal products.
- Examine different areas of your business in isolation. Compare different activities and their contribution to the bottom line.
- When times are hard (which many experienced in the recent recession), tough decisions sometimes need to be made. Management accounts enable you to analyse your figures objectively to see where costs can be reduced and what contribution each area of your business makes. We frequently find that Directors are surprised at results produced by management accounts, when true costs are allocated against specific sales areas.
- Are you outgrowing your premises? Is your growth being hindered by your current premises? Undoubtedly any potential new landlord will want to see your track record over the past few years. Your ability to afford a larger rent will be clearly demonstrated by management accounts and budget forecasts.
- Having management accounts available at Board Meetings can significantly reduce the time spent debating which areas of the business are more or less profitable and help you to focus on productive strategic planning for the business.
- They can be as detailed as you wish, the format is totally flexible. Tailored to provide you with information in a way that is most helpful to you in running your business. Providing critical information to aid your decision making – based on facts rather than ‘back-of-the-envelope’ estimates.
Want more data at your fingertips?
There are two ways we can assist:
- Produce management accounts on a regular basis for you, or
- Provide you with a template especially designed for you, leaving you to produce them yourself to obtain the required information.
Need our help?
Please contact us to find out more – 01483 416232.