How Your Accounting Process Fits with EOS
The Entrepreneurial Operating System (EOS) is a framework for running a business. It uses strategic vision, systems/processes, and ultimately data to keep track of progress. The framework focuses on people and guides them toward a successful business with the help of simple tools and principles.
EOS organizes the challenges you face every day by making them more manageable. With the help of this operating system, you can solve issues before they become problems, get the right people in the right seats, make meetings more productive, and build a culture of accountability.
Many companies have started using this framework, however, they are not fully enjoying its benefits because they are still relying on an unorganized accounting system. It’s essential these are working together because good accounting, and even better – an accounting team that uses EOS – will help you get more out of your EOS.
Let’s take a look at how good accounting can help drive the success of your EOS and overall, your business.
Alignment with Strategic Vision
One of the primary functions of EOS is to clarify the vision of your business. It’s meant to get everyone on your team on the same page. Your accountant is not exempt. They should understand the direction you want your business to go so they can focus their work on achieving your goals.
Every move you make can strongly impact whether or not you grow into your one, three, and even five-year vision. This is why it is important to align your strategic vision with the work your accountant is doing.
For example, when your accountant operates under your EOS, they can frame your financial projections to connect to your vision. This ensures your finances are moving in the direction you need to go and the work you are doing now is keeping you on the right path to reaching your long-term goals.
Moving beyond the numbers, this also ensures that leaders in all departments are on the same page and are completing tasks and working toward a like vision.
1 Year and 3 Year Plan
Speaking of reaching goals, in most cases, goals are typically tied to revenue. Whether it’s increasing revenue or finding ways to generate new revenue streams, this is a primary focus for most businesses.
In an EOS process, you create a 3 year vision and 1 year plan for your business. This eliminates a generic focus on growth for growth’s sake, and connects real results to your goals.
Profit versus Revenue
When you rely on good accounting, you can easily track and manage the relationship between your profits and revenue. This is essential because as you know, additional revenue is great, but additional profits are better. Profit leaves room for scaling and flexibility with your team and growth.
Working with an accountant who not only has ideas and a strong understanding of the relationship between revenue and profits in your business but also frames those ideas in a way that helps you reach your goals keeps all aspects of your business moving in the right direction.
Good Data for Accountability
Good data is another essential piece of accounting, but it can also be used as a tool for accountability. Scorecards are a great way to track and record this data.
A scorecard will include a combination of the KPIs you need to reach your business goals. They are built specifically for your business and can be used to gauge your numbers for any set period of time (weekly, monthly, or quarterly). You don’t have to overthink your scorecard, try including just four or five of your most important metrics.
Where they begin to work as an accountability tool is when you allow your team to help you build the scorecards. You will ask your team how they would measure a good week and include those metrics in their scorecard. From there they will update them and use the results as an accountability tool.
Scorecards also allow you to quickly identify issues when you fall off track. You will be able to pinpoint discrepancies in your data and make swift adjustments to get it moving in the right direction again.
Again, the idea behind this is to ensure everyone is on the same page and taking actionable steps to execute that vision. A scorecard matched with your EOS will help you do that.
Consistent with Your Values and Approach
As an EOS company, your processes should be driven and strive for predictable growth. In order for this to happen, your entire team needs to have a strong understanding of your values and approach to business.
Your accounting system is no different. It should be consistent with your overall business approach and focus on producing the results you need to see success.
To achieve this consistency across your business, work with an accounting firm like New Economy. We are trained in EOS and understand the importance of incorporating your accounting system with all other aspects of your business.
In fact, it’s our mission to help entrepreneurs gain control of their finances and make smart business decisions. Contact us today to learn how we can help you!