Article originally published in the Orange County Business Journal.
Shortening the gap between a company’s long-term strategic vision and the current reality is key to achieving any business goal or objective. But while this may seem like common sense, this truth tends to fall by the wayside when it comes to a company’s accounting and finance functions.
For many business leaders, “the numbers” feel like just another necessary hoop to jump through to make ends meet and keep business records up-to-date. Companies with this mindset often believe that accounting is merely about reporting the past, presenting the company’s numbers at tax-time, and keeping a record of the business’s activities, investments, and incurred costs.
Strategic leaders, however, understand that their company’s numbers are not just numbers. Rather, they know that their financial data can be viewed as an asset, and a growth tool that can help them elevate their brand and expedite their company’s expansion. With a future focused approach, accounting can do so much more than simply recap what happened yesterday. Rather, it can help a business truly identify blindspots, areas of improvement, and even growth opportunities, with one central goal: responding strategically, in alignment with the company’s long-term goals.
In a future focused accounting model, financial data isn’t the final word. Rather, it is a conversation starter, encouraging stakeholders to think bigger and reflect on the critical question that is so often forgotten in the accounting space: “What does our data say about what we can do differently in the future?”
One of our clients is a consumer products company. As we do with all of our clients, we worked with them to create a Profitability Roadmap®, in their case to grow the business 20% in 2021. As we got toward the middle of the year, our monthly reporting showed they were not achieving the 20% growth objective, and we wanted to find out why.
When we began analyzing sales and inventory, we discovered that the company had been out of their top-selling SKUs for several months, as their purchasing planning decisions were based on outdated numbers that no longer accurately reflected consumer demand. This past-focused strategy resulted in an estimated $3 million lost in 2021 sales.
Rather than simply report this information to the client, our team helped the company look to the future and determine an effective response. We implemented strategic accounting improvements to meet future demand and developed an inventory planning model to ensure that they would never run out of their top SKUs again.
Looking to the future doesn’t mean leaving the past behind. Rather, it means utilizing the past as fuel along the journey to your business’s intended destination. By crafting a roadmap to profitability through the power of future focused accounting, you will see your company’s growth goals more clearly, and achieve them faster than you ever could have imagined.
At Blueprint CFO, we utilize the power of future focused accounting to help our clients achieve their profitability goals. To learn more, visit www.blueprintcfo.com or contact us at info@blueprintcfo.com!
