Every day small businesses pile up financial data. And it usually goes unused when it could be a source of explosive growth. This problem has many reasons, but lack of time and knowledge tops the list. Today we will address those two fundamental problems so you can use financial data to grow your business. We’ll go over three ways to use the data you have. And where to get help in using it.

Financial Statement Analysis

Your business financials are some of the most critical data sets. They are loaded with key performance indicators (KPIs) that can reveal missed profit centers and unmask inefficiencies. One of the most important KPIs is revenue. It’s a great starting point and easy to start using. It can get you asking questions about your marketing efforts, the quality of your product or service, and even your staff’s training. The answers to those questions can help you come up with some excellent customer research.

Here’s one scenario. Let’s say your customers constantly give you feedback on how great your product or service is, but revenue doesn’t reflect all that feedback. Some simple research could reveal your existing customers might be willing to pay more for your product. Or it may show they can be easily incentivized to do word-of-mouth marketing.

Comparing gross profit margin to net profit margin is another excellent way to use your financial statement data. This can get you started on the path to finding wasted spending or areas where you can spend more to grow your business. The key is to let a financial professional or industry mentor help you determine what these margins should be so you can figure out if your business needs to make changes.

Another helpful piece of data is accounts receivable turnover. Knowing how long it takes to collect payments can reveal some vital information. For example, slow payment collection may be the root cause of cash flow issues impacting several other areas of your business.

Budgeting and Forecasting

This is closely related to Financial Statement Analysis because you can use much of the information there to try and determine future trends and how to budget for them. But you’ll probably need to analyze market trends in your industry to get a more accurate picture. You’ll also want to enlist the help of a CPA for this. They can create forecasting models that better help you predict financial outcomes, set realistic goals, and help you allocate resources effectively.

Cost Analysis

Reducing costs can be challenging for any business, but it’s especially true in smaller ones. Small business owners wear a lot of hats, and that can make analyzing expenses difficult.

Often getting outside help is a good investment. A good mentor can come in and usually determine cost drivers quickly. And they can help you look for alternatives to save money without reducing quality.

For a deeper dive, a CPA can do a variance analysis and perform activity-based costing to identify inefficiencies and streamline operations. All that means increased net profit at the end of the month.

The Bottom Line

Your small business has a lot going for it, including a mountain of data that can be a fantastic resource. So, get some advice from mentors in your industry on the best way to compile and organize it. Then come up with a plan to analyze it. And don’t be afraid to make part of the plan to get some outside help.