Virtual CFO Top Tips
Virtual CFO Top Five Tips
Our Virtual CFO team develops customized strategies for each business specific situation to assist them become more profitable and reach their lifestyle goals. Every individual business is different and needs to be reviewed on its own merit and then a strategy put in place to optimize the business.
Notwithstanding the above, in the process of delivering Virtual CFO services for our clients, we have developed the Five strategies here that can be applied to any business, at any stage. These strategies represent actions business owners can take straight away to become more profitable and reach their next important goal.
These concepts won’t beat getting tailored financial advice, but they will get you thinking about the right things to optimise your business.
1. Know your Cashflow
Cashflow is King as they say, so make sure that you have an accurate cashflow forecast so that you can see the future and where any issues might arise before you get there.
2. Build or Update your Business Plan
To understand the first Top Tip you really need your cashflow to be part of your overall Business Plan to be able see the net effective of your business activities and how your decisions can influence your overall business. Your business plan maps out your businesses future and helps you make the most of your opportunities and reduces your risks. Keeping it up to date is critical to understanding where you are at and where you are heading…
3. Structure your Chart of Accounts to effectively manage your resources
Monitor your staff utilisation, EBITDA (earnings before interest, taxes, depreciation, and amortization) and or stock turnover. Ensure your Chart of Accounts shows you what areas of gross profit of items and services are the highest and net you the most profit. Once you know the data you can better control where your efforts will net you the biggest benefit.
4. Get your KPIs in order
Good KPIs help you and your team make sure you are on track to reach the business goals. A KPI – or Key Performance Indicator – is a benchmark you set regarding metrics relating to finances, clients, processes, inventory, and employees. You can record and measure activity such as sales totals, sales per service, average sale per customer, numbers of new, lapsed and retained customers, number of complaints, proposals won or lost, employee turnover and many, many more categories. Your KPIs should be specific to your business’ products or services so this is where seeking professional advice can come in handy as an expert can advise you on KPIs you may not have considered.
5. Build a Dashboard and Analyse your data
Get your financial team to build you a dashboard so you can see your information in real time and then you can make informed decisions. Each month when you do billing, analyse your dashboard and make sure your KPI, budget, resources and cashflow information is correct. Look for relationships and trends within your numbers and determine strategies to change your business. Make changes if KPIs for growth are not being met.
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