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pPlanning and Control are the two most important ingredients to a Successful Business.nbsp; A a href=http://www.businessconsultingabc.com/Writing_An_Effective_Business_Plan.html target=_blankBusiness Plan/a takes most of the guess work out of Business Strategy and Control through solid Financial analysis. Financial Data provides a nbsp;way to gauge where you are in your a href=http://www.businessconsultingabc.com/Strategic_Plan_For_Business_Success.htmlStrategic Plan/a, telling you where changes in your Plan are necessary.nbsp; Because of this, Financial Data Analysis and Management are vitally important to run a successful business./p
pIt is extremely important to have a suitable Accounting System installed throughout your business so data acquisition is easy.nbsp; You cannot manage your Business for Profitability without a good Accounting System.nbsp; My CPA has a bookkeeper who comes out to the business to help install the Accounting System and show us how to work it.nbsp; All of this is done with the guidance of the CPA but at a fraction of the cost.nbsp; A good Bookkeeper is invaluable in helping capture Financial Data. Having an established working Accounting System in place will minimize the fees a CPA charges to analyze your tax indebtedness and prepare your tax returns./p
pAn Accounting System is typically built around the following key Financial Management tools:/p
ul
liProfit and Loss Statement/li
liCash Flow Statement/li
liBalance Sheet/li
liBudget/li
liBreakeven Analysis/li
/ul
pBy having a Financial Management system in place, you can easily identify early warning signs or spot particularly profitable areas.nbsp; Not having a system in place to analyze and organize Financial Data makes it impossible to effectively manage, grow and control a business.nbsp; It makes it impossible to gauge the success (or lack there-of) of your Planning and Strategy.nbsp; Moreover, used incorrectly, inaccurate Financial Data can be disastrous for a companyrsquo;s livelihood./p
pAn Accounting and Financial Management System is only as useful as it is used systematically throughout an entire business.nbsp; It is extremely important to implement the system into the very fabric of the business and be used systematically.nbsp; The Accounting System is a reflection of the health, or lack therefrom, of a business and from which business decisions are made.nbsp; Make sure to set it up right, train your people on it and most importantly, use it!/p
pTwo principal objectives of any business are to be Profitable and have Cash Flow to pay obligations.nbsp; The strongProfit and Loss Statement and Cash Flow Statement/strong figure prominently in this area.nbsp; The Income Statement represents how well a Company is operating, and the Cash Flow Statement shows how well a business is managing its Cash.nbsp; Profit or Loss on one side and Liquidity on the other./p
pThe trick is to find a good balance between Profits and Liquidity, which when not well planned for, can be very difficult to maintain.nbsp; Fast Growth with high profits can drain the liquidity of a business, so being Profitable is no guarantee yoursquo;ll stay in business.nbsp; The role of the existing and projected Cash Flow and Income Statement is to help you identify problems areas so you can effectively plan for them, such as raising more capital, infusing more equity or obtaining finance.nbsp; Moreover these two statements help you identify areas which can be better controlled and managed, forestalling the need of additional capital and funding./p
pstrongThe Breakeven Analysis/strong is based on the Cash Flow and the Profit and Loss Statement.nbsp; The Breakeven Statement and Chart is extremely important because it shows the revenue volume from gross sales that are required to precisely balance the sum of your fixed and varying expenses.nbsp; The Breakeven Analysis can be extremely helpful when:/p
ul
liSetting Product and Service Price Levels/li
liDeciding whether to purchase or lease equipment / building /li
liFiguring out profit projections based on diverse sales levels/li
liDetermining if new employees are required/li
liPlanning ahead for finance / capital required in the future/li
liMaking Strategic Objectives more tangible and achievable/li
liMeasuring your Companyrsquo;s progress toward Profit goals/li
/ul
pstrongThe Balance Sheet/strong records the past effects of company decisions (or lack thereof) and projects the affect of future Plans.nbsp; The Balance Sheet is a record of the companyrsquo;s Liquidity and Ownerrsquo;s Equity.nbsp; These variables are straight off affected by the Income and Cash Flow statements.nbsp; The Balance Sheet is the oftentimes overlooked Financial but it has a lot of utility:/p
ul
liShows the effect of past decisions/li
liKeeps track of anbsp; Company Cash Liquidity Position/li
liRecords the level of Ownerrsquo;s Equity/li
liQuickly shows the condition of the business/li
/ul
pA strongBudget Analysis/strong compares a Companyrsquo;s Actual Performance to Projected Performance on a monthly, quarterly and annual basis.nbsp; The Budget is a great tool to guard against excessive, unmitigated expenses and is closely tied to the Strategic Objectives the company has set.nbsp; Analyzing the Income Statement and Cash Flow Statement projections against Actual Performance is an excellent control tool, which can quickly address problems before they become too severe.nbsp; Little oversights and mistakes in a Companyrsquo;s Projections spread over time can have a disastrous affect.nbsp; The Budget Analysis is your guard against that./p
pWorking together, the strongemProfit and Loss Statement, Cash Flow Statement, Balance Sheet, Breakeven Analysis and Budget Analysis/em/strong provide a complete picture of a companyrsquo;s Current Operations, Liquidity, Past Operations and Future Viability.nbsp; Working through an interactive Accounting System can be a very useful tool in determining future business scenarios and analyzing past mistakes.nbsp; Understanding the financial implications of your Financial Decisions can mean the difference between your companyrsquo;s success and bankruptcy.nbsp; Probably the most important financial is your Cash Flow Statement but understanding all of these financials and how they work together is the key to a companyrsquo;s success.nbsp; Projections are based on assumptions ndash; make sure these are well thought out and as realistic as possible./p
pstrongAbout this Article Writer/strong/p
p Frank Goley is a a href=http://www.businessconsultingabc.com target=_blankbusiness plan consultant/a, business consultant, and business turnaround consultant for ABC Business Consulting, and he has been helping companies to succeed for many years. He is an expert in developing business plans, marketing plans, funding plans, strategic plans, turnaround plans, web marketing strategies,nbsp;and project specific business plans. Frank is also a business coach and a web development, web marketing and web seo consultant. Frank is author of the business plan book, strongemThe Comprehensive Business Plan Workbook ndash; A Step by Step Guide to Effective Business Planning/em/strong, and he has over 50 published articles on business success strategies. He also writes the Business Success Strategies Blog./p