Management accounts are typically associated with benefit benefits, but they benefit business owners too. Clear Vision’s Client Account Manager Ben Hyde explains how.
As a business owner, it’s easy for your own needs to be sacrificed as you focus on your business.
After all, you are responsible for ensuring your business continues to thrive to serve those who depend on it. It continues to shout loudly and make demands of you, so you keep working, nose to the grindstone.
As a result, your headspace is dominated by your business, you work the hours your business dictates you work and your own needs get overlooked.
We see the effects of this scenario on many of the business owners we meet. Ongoing stress. An inability to ‘switch off’ from business matters to enjoy their personal time. A loss of enthusiasm for running their business. Even a sense of resentment towards it.
The symptoms can vary, but all of these owners share feelings with us along the lines of “I can’t keep doing this. Something needs to change”.
A key recommendation we make to them, and one which I would extend to you if you identify with the above scenario, is to produce regular management accounts.
When you produce management accounts you not only highlight opportunities to keep your business strong but also to reduce the pressure on you and protect your wellbeing.
Management accounts help you understand what’s going on in your business
Management accounts tell you how your business is performing.
They are tailored to highlight the products or services that are making you money, the results your business is generating and how market changes are affecting your business.
As you can sense, they provide a lot of information for you to work with.
Imagine how it feels to have ongoing visibility of where you can cut costs, maximise profit and boost the performance of your team.
Plus, it feels good to know you are working ON your business, its performance and improvement, rather than simply continuing to work as you are, without any clarity.
Management accounts flag up issues in advance
It’s an old adage, but in business knowledge really is power.
In the event you can see a new competitor is beginning to hit your income, your profit margins starting to get squeezed or a cash shortage is on the horizon, you have chance to plan and take action to resolve the issue.
Planning in this way ensures you adopt a proactive approach to running your business. You operate on the ‘front foot’ and avoid the stress of continually putting out fires which are already blazing.
Management accounts guide and improve your business strategy
The pressure of making decisions for your business and being clear on the results of those decisions can cause significant anxiety for you as the owner.
Management accounts arm you with knowledge. For example, the level of return on an investment in a new recruit or advertising campaign.
As a result, you know how well the changes you have made have paid off. You have increased clarity on what works and what doesn’t work for your business. And you are able to make decisions with increasing confidence and conviction.
Management accounts introduce a culture of business discipline and team accountability
A management report shows you clearly where you have spent more or less on individual items than predicted in your financial forecast.
With this information, you can discuss where forecast items have been met and define actions to rectify the situation when they have not.
This process develops a level of business discipline as your team members are held accountable for the actions they take and the business resources they use.
With this culture in place, you have the freedom to spend time away from your business doing other things that you enjoy.
Management accounts reduce tax-related stress
Issues with the payment of tax can restrict business growth and scupper your chances of achieving your personal goals.
Following the production of regular management accounts, your accountant can more accurately forecast your future personal and corporate tax liabilities.
So you know what size your tax bills will be, both personally and for your business, and can plan in advance for their payment. No more worrying about an unexpectedly big tax demand landing on your desk.
This sense of control and satisfaction is increased by the knowledge that your accountant has been able to explore opportunities to reduce the amount of tax you, and your business, attract.
Management accounts are typically associated with business benefits. However as you can see from the above, they also play an important role in reducing the pressure on you as the owner.
They help you avoid the stress of ‘working blind’, providing you with the visibility and clarity you need to make better, informed business decisions, deflect potential issues and develop a disciplined team.
For the business owners we work with, management accounts are an indispensable part of maintaining their own health and wellbeing, as well as keeping their businesses strong.
To discuss how you can produce a tailored management accounts pack for your business, call 01249 712074 or email firstname.lastname@example.org. One of our friendly team members will be delighted to chat through recommendations for you to consider.