As a result, many owners and managers simply don’t read them.
In this post, I’ll share three tips to help you review your numbers so that you can master your financial results.
In my experience, I’ve found that owners and managers don’t read the company financials for one of three reasons:
- The reports are too long and complicated (presentation problem)
- The information is out of date (stale numbers problem) OR…
- Owners/managers don’t understand what they are looking at (training and financial literacy problem)
These issues are common and understandable. Financial statements can be confusing and complicated, present old information and be difficult to read and interpret.
However, these problems don’t have to plague your beer business.
To overcome these barriers to reading the financial reports, and to help you master your financials, I’ve put together these three tips:
- Make Pretty Financials Reports
- Keep the Numbers Fresh: Create a Daily Financial Report
- Pay Yourself to Learn the Financials
#1 Make Pretty Financial Statements
Financial statements don’t need to be long and complicated, but most of them are. And most of them are ugly.
The first tip to master your financial statements is to create simple financial statements.
Simple financial statements are pretty to look at. Best of all, simple financial statements are pretty useful, because you’ll actually use them.
Scrap your old financial statements and create something pretty.
To give you inspiration, here are simple templates you can use.
#2 Keep the Numbers Fresh
Old beer is bad and so are old numbers.
No one likes to get financial statements that are out of date as soon as they are printed. Yet, it happens all the time.
The purpose of financial reports is to show how the company is performing so that you can take corrective action if needed. It’s hard to take action on information that is weeks old.
The second tip to master your financial statements is to create a daily financial scorecard.
The daily scorecard ensures that you are getting real-time, real fresh numbers. The scorecard is also simple, easy to read, and provides only the most important information needed to make important decisions.
Want to create your own Daily Financial Scorecard? Check out this guide to get you started.
#3 Pay Yourself to Learn the Financials
The primary reason why owners and managers don’t read their financial statements is that they don’t understand them.
There’s no shame here. The financials can be hard to look at (let alone to understand).
As we covered in tips #1 and #2, the first steps are to create simple, pretty financials and to look at the numbers on a daily basis. This will make the numbers more approachable and ensure the information is timely and up to date.
The third tip to master your financial statements is to pay yourself to learn the financials.
To learn a new skill, you usually have to pay someone to teach you. However, if you create simple financials and look at them every day, you will find ways to save money, improve gross profit, or increase cash flows in your business.
If you follow these steps, you will literally pay yourself to learn about your financial statements.
Wrap Up + Action Items
Beer wholesaler financials can be confusing to read.
As a first step, start by making them less confusing.
Follow the tips above and create financial reports that are simple, easy to read, and contain timely information.
Lastly, take a look at the video below which has ideas to help you read your financial reports.