Are you tired of your paycheck being comprised of the financial leftovers from your business? Make the decision today to take action to increase your pay by implementing a formal financial system. Follow these five steps, and you will be on your way to creating a financial feast!

Step 1: The Foundation
Every business owner must wear their financial management hat. No one else cares as much about your pay or the financial success of your business than you. It’s time you accept this fact and make sure you have the foundation required to effectively serve as CFO, chief financial officer, of your business.

I am a proponent of creating a financial team comprised of a bookkeeper and CPA. Let these professionals complete the daily financial tasks and serve as your tax advisor and financial experts. As CFO, your time will be spent analyzing and planning. To be effective in that role, you need to understand the basics of accounting and how to read financial statements. Both are easily learned through courses or books like Counting Noses.

Step 2: Good Data
To effectively analyze and plan, you need information on the financial performance of your business. This requires good data entered into your accounting system so you can get great information from it easily. The common mistake many business owners make is not having enough detail in their accounting system. In the bean counter world, we call this the chart of accounts. It is important to create an account for each type of revenue service you offer in your business. You also want to split your supply costs into accounts for each service offered.

Second, you need your data input to be timely. At a minimum, enter income and expenses on a weekly basis into your accounting system. Your goal should be to have all data for a month input to the accounting system by the fifth day of the following month.

Step 3: Analyze
Your role as CFO requires that you spend time each month analyzing the financial performance of your business. By the tenth of the month, you should have financial statements for the prior month. Another mistake frequently made by business owners is just reviewing the month’s financials, which may not tell you much.

However, if you compare the current month financials to your budget or the same month of the prior year, the picture changes completely. Now you have a benchmark of expectations to compare your financial performance to and see if your actual results were better or lower. Most important is determining why performance was better or lower.

Collecting key performance measures in addition to your financial results is highly recommended. Suggested measures are occupancy for all key services provided, pet nights, and the number of dogs attending daycare, grooming, and training classes. Monitor trends of your key performance measures to flag opportunities for improvement.

Annually it is also helpful to compare your financial performance to industry benchmarks. There is an industry survey report for 2012 available on www.CrystalCanine.com, but more importantly, consider participating in the 2013 survey launching in April. Increased participation will provide better benchmarking data for the pet services industry.

Step 4: Take Action
Key to your role as CFO is financial planning and taking action when actual results fall short of expectations. The quicker you are to identify a negative trend and plan corrective measures, the better your financial results. There are two primary decisions and actions to improving business profits. You either increase income or decrease expenses.

Do you know your revenue stars? These are the services that contribute the most profit to your business. With good data and analysis, you can know which services you offer are most profitable for your business. Focus on growing these services and adjusting low performers to become stars by increasing prices or reducing costs.

Do you have an annual pay increase budget? Since payroll is often the greatest expense in the business, you should have a budget and manage pay increases to it. Do you review all vendor contracts annually for competitive bidding? Implementing these steps to manage expenses will contribute positively to your financial feast.

Step 5: Schedule
There are recurring activities that should be a part of your financial system. Reviewing pricing on all services offered and increasing some rates each year is one example. Adjusting pay rates twice per year for all employees makes managing a budget much easier. Schedule these financial activities for specific months each year.

Most important is scheduling time each month to perform your CFO duties. Make this appointment on your calendar and keep it sacred. Have this meeting with yourself at your favorite remote office so you will not be interrupted (yes, mute your phone too). Reward yourself with your favorite beverage and analyze your financial results. Plan three items to change for the next month, which will improve business profits.

Accepting responsibility for your role as CFO is the first step in creating a financial feast. Create a financial system that provides good data that you can analyze timely. The time invested allows you to be proactive in creating a financial feast, and your pay will no longer be comprised of financial leftovers.

Susan Briggs provides financial management and training resources for the pet industry. She is author of Counting Noses, the only accounting and financial guide customized for the pet industry. Using her masters of accountancy and experience as a CPA, Susan enjoys helping business owners understand their financials and improve profitability. Her Financial Health Check-up Series course is a self-study program that provides step-by-step guides on creating a financial system for your business. Check out these and other financial management tools on her website: www.CrystalCanine.com. As “The Dog Gurus,” Susan and Robin Bennett’s mission is to improve safety in the off-leash dog play industry. Check out our site at www.TheDogGurus.com. Susan’s career in the pet industry began as co-founder of Urban Tails, a large multiservice pet care center in Houston Texas. One of the first cage-free sleepover and dog daycare centers in the country, Urban Tails evolved into a training resource for pet professionals on safe daycare operations. Staff training is a passion for Susan resulting in development of Crystal Canine, a consulting and training resource for the pet industry. In 2008 her first book Off-Leash Dog Play: A Complete Guide to Safety & Fun co-authored with Robin Bennett was published.

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