Track your progress – what to track?

Don’t fall into the trap of preparing budgets and forecasts and then forgetting about them. Here we outline how to track events that will help you grow, and we de-mystify the Balance sheet as it can unlock secrets too.

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Track your progress – what to track?

What are variances?

Many businesses forget that the way you will drive your growth is through understanding the impact of:

  • I said we were going to make X and we made Y (It is a good thing if the actuals are more than the forecast for Revenue accounts and KPIs)
  • I said we were going to spend A and we spent B (It is a bad thing if the actuals are more than the forecast for Revenue accounts and KPIs)

These examples are primarily focussed on Profit & Loss variance analysis

Tracking revenue and expense variances against your plan gives you control. When you start digging into each account, or each operational KPI, the variances start to tell you a story that looking at the pure numbers may not have highlighted. Tracking the numbers on a chart, will give you a fantastic first indication of trends occurring, but having a simple red or green arrow flagging where your business is strong, or needs some attention, helps massively.

The variance itself is as important a KPI as the trend-line.


Sometimes a single variance result can be broken down into many smaller positive and negative variances. If forecasting has been created for departments or projects for instance, the results will be more granular and will highlight the marginal gains you need to make within your organisation, which when combined, will create a positive effect on the business.

If variances are monitored frequently, timely alterations can be made as they are needed, circumventing the need for more drastic adjustments later.

Balance sheet analysis is equally important

A Balance sheet is a snapshot of your business at a point in time, on a specific date. Simply put, it shows what assets your company controls and who owns what. You can run a Balance Sheet report for weekly or even daily analysis in FUTRLI. Restricting your reports to month-end, will sometimes hide the variances, patterns and trends contained within these snapshots. When you combine this with the ability to do the same for forecast/budget data, there are powerful insights to be had, that don’t need to feel like they are scary to find.

Read on for a Balance Sheet 101!…

“"My client's love seeing the different charts and exploring how we can better monitor and track their data. I have never gone to a client meeting with the intention of selling FUTRLI. Instead, I know I have it there to show them once they steer the conversation towards a problem that FUTRLI can help them solve. Being able to instantly provide my clients with a solution to their problem has resulted in a 100% sign up rate so far. It really is the easiest upgrade/additional service to sell. I love it."” - Claire Owen-Jones

Why is it called a Balance Sheet?

The two sides of the balance sheet need to add up to the same amount.

  • Side 1: Assets-Liabilities (this creates a KPI called Net Assets)
  • Side 2: Equity

Net Assets = Equity

Here’s a simple example when buying an office for the business, with a commercial loan and a deposit:

Office value (Asset) £100,000 = Loan of £75,000 (Liability) + Deposit of £25,000 (Owner’s Equity)
This is a very simplified example, but property purchases are something we can all understand.


Balance sheet ipad

What are Assets?

An asset is anything of value that your business controls. It doesn’t matter who owns it, if it’s in the possession of the company, it will be found under the assets section.

For example, you might have bought office space with a commercial mortgage. The value of the office is an asset, despite the fact that the bank really holds the keys! Cash, office equipment (computers, chairs, etc) and inventory are all considered assets.

One really important asset is accounts receivable, (the money your customers owe you). This figure shouldn’t get too large, don’t let yourself get into a position where your AR is larger than the cash in the bank.

Monitoring “Debtor days” to ensure you’re getting paid on time can help bring the AR figure down. Make sure you are sending reminder emails from your accounts package or use one of the great chasing add-ons out there such as Chaser.

What are Liabilities?

Liabilities are the debts your business owes. Some will be short-term, like your Accounts Payable (the money you owe to suppliers).

Again don’t be in the situation, where your Accounts Payable starts to creep into an worrying level. You need to be able to service your debts. If you can’t you, enter into an insolvent state.

Longer term liabilities will be commercial loans and mortgages for instance. Have you got the best interest rate and terms that are available? Keeping on top of these details, will result in more assets for the business – free cash.

What is Equity?

Equity is the part of a small business that the owner or owners actually own.

As illustrated above, think of equity this way: Lots of people who say they own their homes really own just a piece of their homes, and banks or mortgage companies own the rest. The same is true for business owners and their businesses.

Owner’s equity comes from two basic sources:

  1. Money coming from outside investors (Investment Capital) and
  2. Money generated from profits that are kept inside the company (Accumulated Retained Earnings)

Investment Capital:

  • Cash invested by shareholders, or you
  • For larger companies, the public may own the company and invest their cash (IPOs)

Accumulated Retained Earnings:

  • When your business generates profit, you have to decide what to do with it. You may decide to give some of it back to the owners and investors in the form of dividends. Or
  • You might leave these profits in the business so that you can grow it, and, as a result, create more equity for everyone who has a stake in your company. Accumulated retained earnings represent all the profits you’ve poured back into your business.

There’s plenty more to a balance sheet, but shareholder’s distributions and accumulated depreciation we can save for another day. We hope that de-mystifies it a little!

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