The popular “Business Model Canvas” framework has been used by millions of startups and established businesses to describe, design, challenge and pivot their business models. There are now countless websites, apps and other free resources available that helps one think of the essential building blocks of their business. I don’t think I’ve come across a more effective, one-page framework that can be so flexible and yet powerful in helping business owners better understand their businesses.
I will leave it to you to do a quick online search on this topic and very quickly you will have access to several one-page templates that you can easily adapt for your business. One such website that has been really helpful for my business and my clients is called Canvanizer, where you can use “Post-it notes” to fill in each building block. It is worth checking out by clicking on the link above.
For the purpose of this article, I want to share with you an insight that we uncovered while working with one of my clients. At our meeting, we were discussing various financial management tools that many businesses use to more effectively manage and improve their business. We then turned to the Business Model Canvas and started talking through some of the blocks for their business.
At first I wondered how we made the leap from talking about what is in their financial management toolkit, to discussing their specific business model canvas blocks. Were we simply distracted and taken off course a bit with the work we were doing? Looking back, if this was a distraction, I am glad we made it. I then inserted a “Financial Mgmt” block to the Canvas … as I like to take a useful model and tweak it to make it even better. Please continue reading and see whether you agree or not.
“The ‘Financial Management’ block provides the key tools needed to measure the effectiveness of all of the other components of your business model. If you have a robust financial management toolkit, you will know when you need to spend more time on the other blocks to build a truly lasting and sustainable enterprise.”
Contents of a Robust Financial Management Toolkit
Essentially, as businesses grow over time, new processes are required to manage the growth. Also, key financial tools become essential for businesses to continue operating profitably. No longer can you simply look at your bank account to determine whether you have a successful business, or wait for your accountant at year-end to tell you. Unfortunately, we have found that investing time and resources in a good financial management toolkit is often postponed by many business owners, until it is absolutely required. Initially, they simply resource the minimum requirements – i.e. traditional bookkeeping responsibilities. This is a very natural evolution of a business and that is ok. Here is a quick list for your reference of the key tools I suggest for all of my clients – large, small and including start-ups:
Essential tools for your toolkit
- Timely financial reporting (monthly & quarterly)
- Annual budgeting / forecasting
- Cash management practices
- Analysis of:
- Performance & results
- Establishment of key performance indicators (KPI) – financial & non-financial
- Product and Customer profitability
- Trends and key ratios (ones that bankers / investors like to look at)
- Comparisons to industry benchmarks / best practices for your industry
- Conversion of the analysis into ‘Actionable insights’ about your business / business model
I will end this article with a quick assessment you can use to peak inside your own financial management toolkit. I would love to hear your results of this assessment, so please contact me!
So, what might be missing in your financial toolkit? Please reach out to us anytime to share your findings and learn more about how we can help you close any gaps … let’s get started today!