How to Connect Financial Data to Business Goals

    As an entrepreneur, you have big goals and dreams for your business.

    Many times, when you focus on achieving these goals your vision turns to sales and marketing, growth, people, new business will be required to get you to that next level.

    While this is all true, the secret to hitting your goals may lie in your financial system.


    Because your financial system puts data to your goals. With data, you are held accountable to take the right steps and maintain momentum.

    Data helps with decision-making, as it provides a lens through which to evaluate options.

    For many businesses, their accounting system is separate from their goals. In this post, we’ll walk through how to use your financial data to achieve your goals.

    Goal #1: Reducing ongoing expenses

    Obviously, nobody enjoys throwing away their money. But the reality is that in practice, things aren’t as simple. Going through a jumble of receipts and trying to reconcile every expense with how they impact every aspect of your business is time-consuming, to say the least.

    To help you reduce unnecessary spending, there are several financial reports that can help. The main one that you need to make sure you are getting periodically is the Budget vs Actual Report.

    Why you should use the Budget vs Actual Report

    Every business, big or small, needs a budget. Budgets are the roadmap of what you can and can’t do. However, they’re an estimate. So it becomes critical for you to know exactly how everything played out in real life. And that’s what the Budget vs Actual report helps with.

    The Budget vs Actual report lets you know if you were over or under budget and by how much.

    These are the 2 key insights you can get from this report to help you reduce your ongoing expenses.

    • It helps you see what activities performed as forecasted from an expense point of view.
    • You can see where the discrepancies happened so you can become better at making your budget.

    Goal #2: Getting more clients/customers with marketing

    Being able to market your business successfully is one of the aspects that can make or break your business. Even if you have the best product or service, if no one buys/hires you, then quite literally nothing happens.

    When a big business needs more growth they often allocate more of their budget to the marketing column. For startups and small businesses, it’s not quite as simple.

    Chances are that you’re working on a tighter budget with reduced wiggle room. And when it comes to marketing, there are dozens of ways you can invest your budget on. The problem is, how do you know how much you can spend on marketing and if it will be enough to get the results you want. To help you answer this question the Cash Flow Statement becomes incredibly useful.

    How you can use the Cash Flow Statement

    A cash flow statement is one of the key financial reports that lets you know the financial health of your business. Oftentimes, small businesses and startups tend to neglect this report since they have a smaller amount of transactions or their accounting, in general, is less complex compared to a large corporation.

    This isn’t to say that the report isn’t useful for smaller businesses. A periodic cash flow statement report will allow you to get the insight to know if you can allocate more of your budget to another area of your business, like marketing. And when it comes to marketing, you will need to spend some amount of cash, whether it’s on paid advertising or by hiring an agency as those are typically monthly expenses. Here are the 3 key insights you can get from your Cash Flow Statement:

    • It gives you a clear image of your business performance.
    • It will help you understand how much actual cash you’ll have in your bank account available to invest in marketing activities.
    • When done over a longer period of time, it lets you know how your bank balance fluctuated throughout the year. This knowledge helps you build projections that will give you the ability to make more detailed business plans.

    Goal #3: Increasing your profitability

    Selling more and/or getting more clients is typically a good goal to have. Increasing your revenue is important, but even more important is how much of that revenue you end up keeping. This is where knowing what your profitability is and having a plan to improve it comes in handy. To come up with a plan you’ll need some data, and here are two financial reports that will give you the insight you need.

    The net profit margin over time

    This report gives you the percentage of the revenue that you get to keep. It's expressed as a percentage, so if you have a 20% net profit margin it means that you are keeping $0.20 per each $1.00 of sales.

    Businesses can run this report over a given timeframe, say quarterly or yearly, to better understand how this margin fluctuates over time. For instance, your net profit margin is at its highest during the second quarter, it would make sense to ramp up your marketing efforts during those months.

    Action Step:The Bookkeeper 360 App makes this reporting easy. With a net profit percentage, you can see the fluctuations month over month and year over year. If you’d like more information on how the app provides this detail, check it out here.

    Revenue by customer report

    For most businesses, not all customers generate an equal amount of revenue. How much revenue each customer generates depends on a variety of factors such as the channel by which they were acquired amongst others.

    These reports help you better understand who are your best customers, so you can strategize to get more of the customers that generate the most revenue for your business.

    Connect it all together

    Your finances are one of the best places to get reliable data with which to make decisions for your business.

    Should all your decisions be made based on your finances?

    No, there are aspects of your business that are hard to see reflected on your spreadsheets. But due to the impact that your finances have on the viability of your business in the long term, it makes sense to keep an eye on them periodically.

    Whichever goals you have for your business at the moment, it will become incredibly valuable for you to make sure you have all the reporting systems and bookkeeping in place that will help you keep track of the progress you are making towards said goals. Because as the old adage says, “you can’t improve what you don’t measure”.