Related posts on financial aspects of a small business operation
4. Business Control Gauges - Monthly Management Report
In a previous post, I outlined how the financial tracking and reporting in the early years of my practice were managed by my secretary/bookkeeper upon the advice of my accountant. I spent most of my time directly serving my clients spending little time looking after the affairs of my business. I worked very hard, long hours for a marginal income. I labored this way for 20 years until I met a business mentor who enlightened me on a new way of managing my business one that would mean combining my expertise as an architect with business fundamentals to become a successful practice.
Advised by my mentor, we made a number of changes to how my business was managed. Of the changes, the key one was how I viewed my financials and my role in the financial aspects of managing the business. With the help of my bookkeeper and accountant, I set up the financial reporting in a manner that was meaningful to me based on my way of thinking, all within the principles of good business practice. After setting up reports that suited my way of understanding, my mentor showed me how to use current and historical financial information to make management decisions about the company. These changes resulted in substantial changes in my business:
- I spent less hours at work
- I spent more of my time managing other rather than producing myself
- I felt more confident with my decisions
- The company made more profit with the same revenue
- My team members were consistently kept busy producing
- I could see further into the future of the business as far as finances were . concerned
- Our revenue grew month-over-month and year-over year
Once I had the financial reporting a format that I favored I expanded the management report to include other critical categories of the business. The items listed here are monthly summaries that were produced for me through and included in the Monthly Management Report. Once these reports were systematized they took little time compared to the valuable up-to-date information they provided to the team.
- modified financial statements – income statement and balance sheet
- production report – timesheet summary for the month and the progress in . . . percentage of each project
- marketing report – summary of marketing activities undertaken and results
- business development report – leads generated and lead conversions
- income forecast – 6 month projected forecast of income
- along with intangible: (with an intangible rating scale)
staff education and activities
On the 7th of each month the management report was completed and presented in a meeting. Successes of the previous month were celebrated. Any issues requiring special attention were addressed. And, in each category targets were set for the following month.
This report is presented in the context of the annual budget and action plan.
The management report illustrates all key aspects of the state of the business to the owner. Also, it reflects to the team member, progress and how their efforts play a critical role in the success of the company.