Make good business decisions
Christoff Oosthuysen reviews “The Essential Finance Handbook for Business Owners – Seven steps to manage your business’s financial performance” by Precious Mvulane, published by GAD Consulting (2014).
You would not say that this book was written by an accountant — that is if you expect a document about business finance to show you how past transactions are recorded so that you stay compliant with the tax man.
No, this book is more of a guide that helps you to use financial information in making better decisions and managing your risks. In the first few lines of the book Mvulane already mentions the words “decision” and “risk” several times, setting the stage for a thorough discussion on how you should go about in making sure you use financial information as a tool to make success easier.
And this is the message throughout — financial systems and reports are there to help you make better decisions… to be pro-active in your decision-making so that you are not caught out for not meeting what is required by the law.
The approach advocated by Mvulane is presented as a simple seven step cycle:
Step 1: Set clear financial goals for what you want to achieve in your business.
Step 2: Select the best business structure for you.
Step 3: Make sure you cover your legal obligations for governance, employment and tax.
Step 4: Get on top of the financial elements of your business.
Step 5: Understand what competencies are needed for the key role players in finance.
Step 6: Set up a financial system and the needed controls appropriate to the risks in your business.
Step 7: Know how to measure and evaluate your business performance.
When you have analysed and evaluated your performance, it is time to revisit your goals again, which leads you through the cycle again… In this way, says Mvulane, you’re implementing an approach that is bound to lead to good business success.
The real practical approach in offering action lists for each of the steps in the chapters of the book, makes reading the book more than just a learning experience. It is more like a guide that helps you in setting up what is needed to integrate financial management into your ongoing business processes.
Take, for instance, how the writer breaks financial goals down into easily measurable and well understood measures such as total sales, money in the bank, number of active prospects, number of new clients, amount of capital raised or number of assets bought.
Her advice is: “Make your reporting simple, and break it down to manageable chunks and periods.
You may be tempted to skip through some parts of the book such as your options when it comes to the legal formation you operate as, but even if you are run well-established business, there are some real gems you may miss.
This is a great book for anyone in South Africa who has found a viable business model and is ready to start, or in the midst of creating a business.
Original article from Small Business Connect