Business Visibility and why looking at the numbers is so important.

A couple of years ago I was visiting a client in their office and noticed that they had a crystal ball on their bookshelf – the type you imagine a fortune teller using behind her velvet curtains alongside her tarot cards.

When I queried what that was all about, the client said he gets it out every six months when his accountant comes to visit. Every meeting with his accountant, he said, involves an exchange where he gets asked what the future financials of the business are going to look like, followed by his shrugs, guesses and pulling of figures out of the air. The crystal ball was a joke present for him, but we see variations of this all the time.

It’s incredibly common for business owners to operate without a clear picture of what their overall business health will look like in the coming months.

Business owners are either too busy to do regular, accurate forecasting, or they don’t want to know because it’s all too hard. They operate with a wait and see approach, hoping that it will all balance out by month end. Most of the time, however, it’s just a case of not having the right tools to forecast easily.

This is where business visibility is so important – being able to look at your organisation from any angle and understand how it’s performing. It’s the ability to easily see everything that is happening in your business – where you’re making or losing money, where you’re using resources, and what your return on investment is for every project or department.

Visibility is the transparency to see how day-to-day activities affect the bottom line, how spending decisions affect profitability, and how resourcing allocations impact your cash flow.

Every decision you make in your business has an impact on your profit and loss.

Many business owners don’t really know how to use their figures. They can look at the bottom line each month and see whether there’s still money in the bank. But they couldn’t tell you what the revenue or profitability will be in six months’ time.

In order to be able to do this type of forecasting, you need to be tracking your leads and opportunities, along with the time and materials that go into converting those into “won” deals. This will give you got much better transparency around your sales process and the clients you’re going after.

You also need to be managing workloads by looking at opportunities in the pipeline and work in progress, so you can add resources where and when you need them. All of this will enable you to review and manage your cash flow far out into the future so that you can forecast and budget better.

Looking at the figures can actually reduce stress.

All of this visibility over the figures, and the business as a whole, can alleviate the common stressors of running a business. The easier it is to understand the fluctuations of your cash flow, the better position you’re in to do something about them well in advance. And an owner who has their business under control creates a more positive culture, and gets better productivity from their team.

One of the most common comments we get with ROLL software is that we give people peace of mind. They always know where their business is at and what they need to focus on. We’ve had business owners who used to dread looking at the numbers, now start to enjoy looking at their financial projections because Roll presents the information in an easy to digest format and they can see the immediate effects of their daily actions. They can see exactly how one opportunity or project could play out over the next six months.

And when anyone asks how healthy the business is going to look in six months, you can answer – without the crystal ball.

 

Roll was built for services based businesses including consultancies, web developers and creative agencies. For more information about Roll or to see how Roll works first hand, click here.