The real-time accounting model makes it easier to have hands-on management of your financial data. With a few key accounts, you can access data to make real-time marketing decisions that help you achieve your business goals. Not only do you meet your business goals, but you also come closer to living the life you’ve always wanted. 

From these accounts, the data you gather reduces the time spent trying to make sense of your finances. It allows you to become an expert at analyzing your financial reports and reviewing your accounts. That feeling that your business has become a prison disappears as you reduce stress from growing too fast or becoming too deep in debt. Data frees your mind so you can make thoughtful business decisions and realize your objectives.

The Importance of Financial Reports

Small business owners like you tend to have a lot on their plate. You know every day presents a new opportunity. However, fear of missing out on that opportunity because you were too busy looking at your financials makes it difficult and takes time away from your customers, team, or the latest crisis. Using data can actually reduce demands across the board because you’ll create the ideal environment for success. 

Your insights allow you to create the right-sized team, target the ideal customer and sell the most profitable offerings to improve your profit margin. When you learn what key indicators to track, and where to look, you always remain proactive, so you maintain financial health. You make informed marketing decisions that reduce time wasted on seeking any customer or selling any product, and instead remain focused on the right customer and the most profitable offering.  

The Right Formula For Your Company

You want to figure out the best formula for your company to optimize your profit margin. For some businesses, that might mean reducing to five employees, while others might expand to 500. The key is learning how to use your reports to discover the ideal team size that meets the needs of your customers while seeing your profit margin right where it should be. This helps your company feel less like a prison and more like a success story. Here’s the data that will help you get there: 

Understanding Reports

The key to real-time accounting success is becoming more proactive about your finances. Using reports, you can continue to improve your profit-making skills. Reviewing key reports, including profit and loss, balance sheet and cash flow provides valuable insight on where you have an opportunity for growth, or where you need improvement based on monthly/annual comparisons and real-time numbers.

Profit and Loss By Customer

Having customers alone is not enough to succeed. You need to understand how your customers affect your profit and loss so you can target the ideal customer for your offering. A ‘small potatoes’ customer always placing minimum orders takes too much time and effort, so you end up losing money. Meanwhile, a large customer who places larger orders has a more positive effect on your bottom line. By looking at profit and loss by customer, you can determine who costs you money and who makes you money. You define your most profitable customer, so you provide the ideal target for your marketing and sales team. As a result, you find more of the customers you want and eliminate or greatly reduce the customers who cost you money. You can fine-tune your audiences and segments to become more profitable and use your reports to answer important questions:

  • Do I have the capacity right now?
  • What’s it going to cost me to build that capacity?
  • What’s my timing?
  • Do I need to recruit more employees?
  • Does it make sense to expand or contract right now?
  • Will the profit justify the end result?

These insights are invaluable, providing the driver for your marketing plan.

Profit and Loss By Product or Service

When you look at each of your products or services, you learn more about their percent gross profit margin and net income. Again, it’s all about learning where you make money and where you lose it. Profit and loss by product or service shows the value of what you offer so you can determine its worth. As a result, you can spot opportunities to expand, decrease or remove a line, consider price restructuring, and focus on the most profitable offerings to improve profit margins. When you find areas requiring improvement, ask yourself these questions:

  • Do I have the capacity right now to make changes?
  • What’s it going to cost me to build that capacity?
  • What’s my timing?

Now you’re in a position to make informed decisions that allow you to scale your business without overshooting or missing opportunities within your reach.

Becoming the Right-Sized Business With an Accounting Advisor

Unfortunately, there really isn’t a small business accounting model where you can set it up and then forget about it. However, a real-time accounting model provides the tools you need to simplify the process. Your reports allow you to remain proactive when managing your business, so you make informed decisions based on real-time data. When you know what to look for, you remain forward-thinking so you can spot opportunities as they arise. Perhaps more importantly, you also avoid disaster by proactively taking steps to remain financially sound. 

While your reports help provide and improve your profit-making skills, as a small business owner, you sometimes are too closely involved to see the big picture. That’s why it makes good business sense to partner with an accounting advisor who doesn’t just balance your books, but who actually plays an active role in nurturing your success. Accountants for small businesses have the skills to assist beyond sending reports. Instead, they can show you how to make the most of the information your new real-time accounting setup provides. You don’t stand alone but have a trusted advisor who keeps your eyes on the prize, so you remain profitable every step of the way.

Your reports offer real-time numbers offering confidence to make marketing decisions that allow you to become a right-sized business. Although it takes some soul searching and goal setting to determine what you want out of the business for yourself, your loved ones, and your team members the end result is the formula to create your right-sized business. With those goals, and an accounting advisor who can help you interpret the numbers you can finally enter the most rewarding and profitable time of your life.

If you want to make the most of using your data to make the best decisions for your company, contact the Accounting Advisers at Tolbert CPA. Or, consider our 90-day Foundations Program, where we strengthen your business financials and ensure every financial business decision is moving you closer to your goals. Sign up for an initial Foundations Program conversation with us here.

For more resources to get your Financial Foundations working for you, visit our Complete Guide to Strengthening Your Financial Foundation.