Practice Routines for Learning Proper Financial Management

Revenue and operational planning are about the thinking needed to formulate the experiments that predict how specific improvements in sales revenue and/or reductions in operational costs are to be achieved. How are these experiments to be run? An experiment is worthless in the absence of the measurements that characterize predictions and compare them to the realities as these unfold. These are the sales revenue and operational expenditure numbers. Accounting is the name given to this measuring system. Financial management is the term employed to characterize its use. But forget about these for the moment.

The accounting profession has introduced all the complexities to meet the needs of large businesses. This obscures its basic simplicity when applied to small businesses. Most important for any small business is to become fluent in using this system to properly assess how well the experiments in revenue generation and/or cost reduction are playing out. This means comparing actual outcomes to predicted outcomes as the experiment unfolds. Each succeeding comparison asks the important question – should the experiment continue or is there a need to do some rethinking and come up with a new experiment.

This module provides the opportunity to learn and then practice through the use of case studies, how to employ a spread sheet accounting system to create budgets and then record the subsequent revenue and expenditure numbers that characterize reality and allow a comparison with budget predictions.

This system automatically produces the financial statements needed to satisfy bankers and the IRS. However, while accountants can deal with these financial details, only the business owner can regularly create the experiments that are key to keeping the business on track toward an ever more competitive operation. Fluency with spreadsheet accounting is the foundation needed to support this experimental approach to business development.

Online group learning allows for discussion of any problems that arise, as well as reviewing and critiquing experimental predictions as they are developed. This will give everyone a sounding board increasing the confidence that all group members fully understand how spread sheet accounting works and that their measurement plans will properly assess the outcome of their proposed experiments.