5 KEY PRINCIPLES TO BOOST FINANCIAL PERFORMANCE
The key principles to boost financial performance of a business seem like hidden mysteries to many business owners. These are often overlooked or get tipped into too-hard or too-busy baskets. However, these are the cornerstone for financial success and something that big businesses fully embrace.
Here are 5 key principles that small businesses can apply to enhance financial performance.
1. Change your mindset
- Think long term and the big picture.
- Set strategic and specific business goals.
- Set financial management strategies to measure and drive success.
2. Set business goals, strategies and plans.
- Develop and use a business plan to guide you through each stage of starting and managing your business.
- Review and update your plans periodically.
- Seek guidance and advice from the right people to support your business journey.
3. Set financial targets and timelines.
- Set financial targets that link to the business goals.
- Set annual budgets and update assumptions at least every quarter as new information comes to light.
- Clearly define achievable timelines for targets.
4. Measure, report and monitor
- Establish and evaluate 5-7 KPIs for your business to manage and track their progress against budgets.
- If you are missing revenue and expense targets, investigate reasons why and take corrective actions.
- Understand performance, drivers, trends, risks and opportunities and continually refine the budget assumptions.
5. Make informed decisions based on financial data
- Use financial information, trends and insights to grow sales, reduce costs, increase efficiencies, improve product/service offerings, assess investments, etc.