What you need to control the business?

Business control fits into two interdependent parts:
- Monitoring the state at different points in time;
- Monitoring results for different time periods.

The state of a business can be defined as the value of a business.
The results are different. It is customary to single out two consecutive business results:
1. Economic result - is determined by profit;
2. Cash result - determined by the total cash flow.

It turns out three main points of control with which to begin :
- The state (value) of the business;
- Profit;
- Cash flow.
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At the same time, Profit for the period should always be equal to the change of state from the beginning to the end of this period.

Where to get this information? Everything is very simple. These are three financial statements:
- Balance (statement of financial position);
- Report on income and expenses (profit report);
- Cash flow statement.

The conclusion is very simple: to control a business, you must have three financial reports!

Most managers and owners do not realize the significance of these reports, extolling the possibilities of budgeting, which also limit planning to cash flow only.

In the literature, business management according to financial reports of past periods is compared with driving through a rear-view mirror. Then budgeting business management can be compared to driving a car with a drawn map. In these comparisons it can be understood that it is best to look more often under your feet, i.e. not just to have reliable financial reports, but to have them on a daily basis.

Conclusion: in order to control the business, it is necessary to have daily financial reports in the form of a triad: balance sheet, IDT, and ODS.
Then you can do and budgeting, but again, not only cash flows, but in the format of a tri-budget: budget balance, budget SDT, budget ODDS.