As I meet various business leaders and business owners, I am still amazed at the lack of proper financial analysis that such businesses undergo to evaluate and track their business performance.

I am not speaking about just the issuing of timely monthly or quarterly management accounts. I am referring to what you are doing with all the data that your accounts department/function has their hands on, the data in any management or information systems being used and the data that is actually presented in the monthly or quarterly management accounts.

Normally when I meet business leaders or owners I tend to meet the following types from a financial information perspective:-

(i) Those that are solely and exclusively focused on Turnover and nothing else, with little concern on whether certain turnover chasing is worth the while or is actually pushing the business into having it burdened with further costs and risks.

(ii) Those that are focused on Gross Profit. They know their Turnover and their Cost of Sales and are interested in that only.

(iii) Those that are interested at cutting costs, especially any type of overhead, without evaluating the effect on turnover and the bottom line when they pursue false economies.

At EMCS, we have developed a simple, yet effective modelling system, which allows owners of family businesses and SMEs, to get a 360 holistic view of their business from a financial perspective. It is a model that allows businesses, to get simple excel based dashboards, that gives them turnover performance, gross profit margin performance and contribution performance, viewed in a simple trend analysis basis. The information can be drilled down to every single product or brand level but also presented to have a single holistic view.

Using this tool and past financial accounts, we can establish the variable component of overhead costs. This helps business owners and leaders to truly understand which products or services really leave a sustainable contribution towards their fixed overheads. Moreover it would allow business leaders understand the level of contribution needed to cover their fixed costs and in turn what are the real savings that can be gained over their fixed costs.

Using the data you have to analyse your business better and having it presented to have all the data you need at the tip of your fingers, is in our view a very valuable service. We know that managing your business operations is already very time consuming and the least you need is going through a myriad of reports or numbers to make head and tails of the financial performance of your business. We are here to help and deliver value.

Should you be interested to know more about our financial analysis service, just drop me an email on silvan.mifsud@emcs.com.mt. Normally our experience has shown that financial analysis is a good start to identify what issues are effecting your business. This normally leads to a full or more extensive business audit with strategic and structuring advice to achieve a better performance of your business.