WHY TIMELY INFORMATION IS THE MOST IMPORTANT INGREDIENT YOU NEED TO GROW YOUR BUSINESS

Business owners spend a considerable amount of their time making decisions concerning their business. In addition, this vital procedure is sometimes costing them a considerable amount of their life energies like their effort, sleep and worry .

The purpose of this article is to show you how information about your business finances given to you in good time can save you unnecessary worry, time and money, while at he same time it can simplify and make your decision making process easier and faster, thus assisting you to achieve your business goals much easier.

A business is like a living organisation, an open system if you like. It is part of a larger system, the environment within which it operates. Who else is there? The Government with its ever increasing and complicated legislation and red tape imposed on businesses, other businesses it's dealing with, customers, employees, the business owner and his family themselves etc.

That environment is not standstill. Every day, something new happens in that system. New developments occur, either good or bad. Events that are capable of spelling trouble for the business if not properly dealt with, opportunities that have to be taken advantage of.

Those events don't even have to be the result of our own decisions, actions or inactivity. A system is influenced from outside as well from inside. There can be influences within our control and totally beyond our control. For example, a nasty new piece of tax legislation.

If the businessman sits tight and does not react to the changes that affect his business, it might well be storing trouble for the future or sitting on a bomb or inviting for problems. You name it.

Business owners do not want to be diverted or derailed from their objectives by anything that can cause a change in the course of actions they have set in their minds and which lead to expansion, profit increase etc.

Therefore, decisions are required in every step of the way to adapt and effectively deal with those those events.

Events that can be the source or cause of problems need to be solved at an early stage because if they are left unattended or even unnoticed they can become big trouble in the future and even threaten the business. Dealing with them late can be more expensive and more difficult to solve.

Equally, events that may be the source of favourable opportunities must be dealt with as soon as possible to ensure maximum advantage is taken of them. If not, they might be lost for ever to the competition or by the time we take action a lot of income has already been lost.

So, we need to have some system in place that would give us peace of mind. We wouldn't have to worry all the time about something going unnoticed. We wouldn't spend so much time trying to spot something wrong (that might not even exist at the end of the day). And we know very well that time is money. Instead, we would use that valuable time for other things , for example we could spend it with our families or devote it to ourselves on other projects.

I know that as a businessman, you have been doing that for a long time in your own special way... For sure you have been dealing with and solving problems and taking advantage of favourable opportunities, otherwise you wouldn't be in business right now.

But, can you think what difference would make to our lives if we had a system in place that would work like radar or like a smoke detector. As soon as there was some threat in the air or something positive it would pick it up and send a signal to us. Please click here to read more on the importance of having in place an early warning system.

There is a key word here: Information . We need information and knowledge. And we need it NOW, not next year!

And there is a key question also: What sort of information do we exactly need and how do we get hold of it?

Well, you will be glad to know that you are already receiving this information. But, sadly, you are receiving it too late , when it's impossible to use it as a platform to make decisions that concern the future .

It's all included in the financial accounts that your accountant prepares for you every year. As you know, accounts have to be prepared by law for filing with the Inland Revenue or the Companies House or other authorities. Because of its compulsory nature, a lot of business owners regard accounts preparation as a necessary evil and honestly, I can't blame you for that.

As a result, many business owners tend to be put off in the very idea of Accounts and therefore they they don't make the most of the valuable information included therein. It's all in the mind. Let me give you an analogy how the brain works: Remember when you were a child you persuaded yourself that maths is definitely not for you and you never touched it ever since in your life because you had some difficulty understanding something the teacher said once?

Nevertheless, some business owners have realised the importance of having that information fresh, on a timely basis . And that's why they have requested their accountants to prepare it for them. Those business owners see their accountant as their main ally, as a kind of strategic partner with them. As a problem solver and as a financial advisor they have at their fingertips.

Accountants are by far, due to their experience and training, the best placed people to provide you with accurate, understandable and timely information to allow you have control over your business. And let me tell you one more thing: those entrepreneurs that have realised that, definitely have an advantage over their competition.

But even them, although they are receiving timely accounts, they have difficulty in using that information for their purposes. That's because Accounts is a set of numbers and narrative. They are prepared in a technical language (accounting terminology) and therefore difficult to understand by the layman who doesn't have a basic foundation of accounting. It's amazing the bulk, the volume of useful information that can be derived from the financial statements. If only the information was demystified and de-coded to you in a plain, no-jargon language... If you would like to know more how you can have that information in an understandable language, click here.

Coming back to the subject of the necessity of timely information, as you are well aware of, financial information changes constantly, every day, every minute. It doesn't stay still in a fast moving world of opportunity. And it's like a race against the clock. And for that reason, the more "fresh" data about your finances you have the easier and faster to make business decisions .

Let me put it in a different way:

You have been investing so much time, effort and money in that business and you want to make it a success. That business represents your whole life dream! It makes absolute sense to do everything you can to make sure the ship is safely steered towards the harbour and that there are no nasty and unpleasant surprises in the way, doesn't it? If you knew that by having the RIGHT information when you needed it you would be able to turn your dream into reality, wouldn't you try your best to get it?

But you need to help your accountant, for if you are not willing to cooperate, nothing will be done. Get those damn records to him on time, as soon as the month is over. And make sure that you give him ALL the records.

For if no cooperation exists on the matter, he won't be able to finalise his work, he won't be able to come up with the accounts in time. And in final analysis, you won't get that useful information in good time to assist you with monitoring the progress of your business and make decisions to solve problems ate an early stage when it's easier to do so or take advantage of favourable trends.

If you get obsolete and outdated information, it's no good for financial planning purposes. Ok, I agree that it may serve to provide you with historic information, which you could use to make predictions about the future and base your decisions on those interpretations.

But even that won't be possible if a whole year has passed after the financial year to which the accounts refer because in the meantime a lot has happened and the future is always so uncertain. And that will render those accounts misleading and they may even lead you into making wrong decisions if you use them as a base. We have to face it: They will only be good for the taxman.

You also need to pay your accountant for the service. Don't forget that he is a business owner himself trying to make a living for his family. And it is only because of survival instinct that he will turn his attention to those paying clients. Wouldn't you have done the same?

But, what about the cost of getting this service?

Unfortunately, most accountants do not provide this kind of service by default. They only provide compliance services, bean counting and form filling. But, if you pay an accountant, ASK for this service and he should be able to offer it for a reasonable additional cost.

If your accountant already does your bookkeeping, say on a quarterly basis for the VAT, it shouldn't be too difficult to provide you with management accounts and convert that information into a suitable format for you to understand without needing an accounting qualification.  

And on top, he should be able to make recommendations (if you ask him) about what it could be done to solve any problems at an early stage or how to best deal with favourable opportunities spotted in your business timely accounts.

Being an accountant myself, I don't like interfering with my clients' businesses, telling them what to do or not to do unless they ask for my advice and input. A business owner is the boss and is the person who runs the show. You don't tell the boss what to do with his business!

I like to be in the background making myself visible and available if and when needed. There is only one situation where I regard it as my duty to step forward: That's only when the business' existence is threatened, when the business is in danger going down.

So, make sure you are getting your financial statements before the end of the following month.

Getting accounts prepared after the event is a lost cause. You cannot exercise any degree of control nor do any planning over your finances. It's too late.

Please feel free to use all the information that you will find on the web site.

If you have questions, please feel free to contact me personally at any time. You can call, e-mail, fax or write to me and I will be happy to answer any and all of your questions.

Good luck in your business ventures!

Demetris Savva BA FCCA
Constantine Savva Accountants Ltd
Chartered Certified Accountants
155A West Green Road
London N15 5EA
Telephone: 020 88094468
Fax: 0845 0500905

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