The five golden rules of financial Management

The five golden rules of financial management
Wednesday, 2 May 2012 | By Marc Peskett
http://www.startupsmart.com.au/blogs/marc-peskett/the-five-golden-rules-of-financial-management.html
Here are my five golden rules of financial management every business owner should know:
1. You can’t be successful without strong financial management.
According to Dunn & Bradstreet, more than 80% of small business failures in Australia are the result of bad financial management – poor cash flow, debtors out of control, lack of focus on profit margins, and overtrading beyond your business’s ability to meet commitments.
All of these issues can be overcome simply by implementing the right financial management systems and processes.
2. You can’t manage what you don’t measure
While I’m a believer that gut instinct is sometimes valuable, having your results in black and white is hard to argue with. Deciding what to measure is the most important first step in this process. 
You can measure just about anything, so get focused on what matters to you most. What’s your biggest challenge right now? What keeps you up at night?
3. It’s about cause and effect - make sure you measure and monitor causes as well as effects
Measuring the outcome or end result is not enough. There’s no use looking at your sales figures and profit and loss statement at the end of the year, wishing you could have made more money.
These results are lag indicators that show you the effect of what happened during the year. They are already history.
Monitoring your lead indicators enables you to see what’s happening closer to real time, allowing you to see patterns, trends and make predictions about the results you’re going to get.
4. It’s all relative - compare, compare, compare
All of this is about achieving better results, building a better business and realising a better financial result. It’s the natural state of a business to grow.
It’s also natural for a business owner to want their wealth to grow. To do this you need a comparison or reference point from where you were versus where you are now and more importantly where you want to get to.

5. Keep it simple
This probably sums up why a lot of business owners don’t have the right financial management approach to suit their business. At some point it sounded or became too hard, complicated and over-engineered.
The key is don’t get caught out and confused on the fly when a problem arises and you’re struggling to understand what went wrong.
Posted by: Yamileth Arauz R.