Business owners who implement this monthly review experience less overwhelmedness, more peace of mind, faster systemization, increased profit and more positive cash flow. We have videos, blogs, live calls and online courses about each of these things. If you need help implementing any of the following, please reach out to us! Here’s how to create yours:
1. Create your financial plan (budget) for the year
You must complete a 12 month plan including your goals for revenue, expenses and profit. You use this as your goal post each month, when you review your income statements.
2. Decide on KPIs for all team members
Once you have good job descriptions for everyone, and a financial plan for the business, you need to create key performance indicators for your team. You will have found your most effective KPIs when your team’s achieving them adds up to you achieving your financial plan (and your strategic objectives).
3. Devise procedures to generate the monthly numbers you need for your financial statements and your team’s KPIs
Your bookkeeper or office manager can provide your monthly profit and loss/income statements. Ensure all accounts are reconciled before you pull these reports. To make sure your books are always accurate, use only business accounts and cards for business expenses, and give ALL receipts and statements to your bookkeeper/office manager as soon as possible. It’s best to review your financial statements as soon as possible after the month ends. The sooner you see the numbers, the sooner you can implement positive actions to improve them.
4. Review the numbers monthly
Compare your income statement/profit and loss to your budget/projection for that month. If you did not achieve your goal, ask “why?” If you DID achieve your goal (yay you!) ask “why?” We want to create and enforce procedures that ensure the bad actions stop, and the positive actions keep happening. Review your team’s KPI goals and what numbers they actually achieved last month. Praise anyone who hit their KPIs and coach anyone who didn’t.
5. Create an action plan to correct/improve the numbers going forward
This is the step where we build or reinforce a procedure, and get commitments from team members to help us ensure that whatever caused the bad numbers, does not happen again. This can look like coaching, creating agreements, creating or improving procedures, looking at one or more particular team members, reviewing the effectiveness of software, or really any of several other things. You have to find the areas for opportunity for improvement, by asking “why” each month.
Although this may sound simple, it is THE MOST POWERFUL HABIT you can implement each month as a business owner. In essence, what you are doing is:
1. Discovering what works, and doing more of it
2. Discovering what does NOT work, and doing less or none of it
If you feel you need some help to make your company more successful and more enjoyable, contact TMH Business Coaching & Consulting today for a confidential, free, no-obligation consultation to propel you forward. Also, please feel free to add yourself to our weekly coaching tips email!