NID51 Business Analytics for Small Business

Just like an iceberg only shows 1/8th of its mass above water, your accounts have many more things they can tell you if you go looking.

But many analysis tools assume a fair degree of experience and management and accounting training.  That's not common with small business owners.

So 12Faces has developed several tools that can give useful insights to your accounts but are easy to use and understand.

For example, we have tools for;
1. working out how much to increase your prices to counteract the costs of inflation in wages and inputs to your business - a Gross Margin Ratio analysis

2. building a 'model' of the economics of your business that then lets you plug in a proposed change to e.g. prices, revenue or wages to see  the impact on bottom line profit.  Then you can play with "what if " scenarios in your model to find what works best.  We call this ChangeBoard because it measures the impact of change

3. conventional accounts are a mass of numbers and it is hard to make a great deal of sense of them.  Our TrendBoard shows your changes over time in your accounts as graphs.  Then you only have to work on the principal "up sloping trends are good and down sloping are bad" to quickly find any trends that might impact on your business.

Don't wait for your annual tax accounts to see how you turned out for the year.  Take control of your future profits with the 12Faces Business Analytics tool kit.


Transcript of Business Analytics Nugget podcast

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More information on Business Analytics for Small Business

Transcript

0:00

The many business owners working on the accounts. Is feud with some trepidation. All those numbers are doing mysterious things and their stories only become clear. Some months after the end of the financial year. When your tax accountant reports in. But your accountants, your accounts can be your friend and can to do a lot more about your business health. And just your tax picture. We have several simple tools to give you more insight, which we call our business analytics. Let's touch on three. Just one simple calculation. Called a gross margin ratio can tell you when to put up your prices. It cuts through the clutter of changes in cost and revenues, moving in different directions. Basically your gross margin ratio goes down. So it is your profit. And this problem operates in stealth mode. Inflation means your cost and wages slowly creep up. It happens slowly and it goes largely unnoticed. Then you check your profit and you see a serious impact. Joe Gross margin ratio is worth checking quarterly. So you're not shocked to find your profit has imploded. When you get your tax report each year. Other similar and equally simple ratios can tell you when your staff are becoming less productive. And when the businesses becoming less efficient. At generating profits. Second resource is change board. Just a few numbers already available in your accounts. Can I ask a such questions as the impact of a percentage change. In price on your profit. The impact on cashflow from changes in your accounts, payable and accounts receivable. And the profit change that you can expect from a change in your revenue. We call this tool change board because it measures the impact of change. It uses your real accounting data. For these predictions. So it is up to date as your accounts are. This process is called modeling because you have a model of your business. Well, you can make changes and you can see what impact those changes have on your actual business. Use it to play. What if scenarios quickly and easily? The third tool is called trend board. Revenue and expenses are constantly changing any business. Input costs like parts and labor go up and price your income. Ebbs and flows. It's very hard to hold all this in your mind. It's much easier to visualize when trends are displayed on a graph. Then it simply becomes a matter of up is good. And down as bad. I better fix it or trouble is living. With the trend board tool you put in five to 10 numbers from your accounts. And your critical grafts are displayed instantly for you to look at. We encourage you to do this quarterly. So you check. Any changes that are happening behind the scenes? You can check out a sample set of the graphs despite on our website. Any business that is, I have no idea what truly useful insights. I sit in your accounts, just waiting to help. You're a tax accountant. As soon as you once a year. So it's too late. By the time you get the bad news from. Put yourself on simply quarterly. A simple quarterly routine. To get early on. Of impending profit swaps. These 12 phases tools are designed to highlight issues and easy to read and understandable formats. Ideally suited to small businesses. And as silly as it to work hard, but go backwards because you've not heard the messages, your accounts. Happy to tell you if I knew you would listen. Convert your accounts from an annual donation to the tax office to becoming a trusted advisor. Our business analytics collection is a collection of resources to help make this easy. Find them under the business analytics menu on our 12 faces. I taught business. Website. Always remember. That advice is general in nature because we don't know the specifics of your business. Always seek specialist advice. For specific issues. If this was useful, subscribe to the channel where you got this clip and please like this clip. So we get some brownie points. You can always read more by searching on the 12th faces. Doc business website. Thank you for your time.