In the spirit of the Holidays I give you the gift of numbers!
Yes, you read that right, I said gift.
When you take the time to dig into the financial numbers of your business there is a gift. The gift of the truth.
The numbers don’t lie. Well, at least the numbers don’t lie when the bookkeeping is done right, but that’s not what this blog is about.
The numbers give you the facts of your business. And the facts are the truth staring you in the face. Can you handle the truth? 😉
If your accounting systems are set up right, the numbers give you the truth of how your business is doing compared to last year. The truth shows up in how your business is doing compared to your industry, compared your forecasts or projections, compared to how the banking lender would like to see your business doing. Even in how your business is doing compared to investor expectations.
On all these fronts you can get the facts of how your business is performing in terms of top line revenue growth, overall gross profit percentage viability, gross profit per customer or product line, net profit percentage stability, weekly and monthly cash flow, customer receivables aging, vendor payables aging, liquidity ratios, return on invested capital, revenue per employee, and on and on. All these are the cold hard facts of your business, and the picture of where the business stands today.
Often when we are faced with the facts, our minds immediately go to the question of why.
We start to think about why facts are facts, and what caused them to be so. And go right ahead.
As humans we need to explore the stories behind the numbers.
The reasons, justifications, and rationalizations of why the facts (numbers) don’t perhaps look as good as we would like, or meet outside expectations, or fall in line with our grand plans.
So, explore the stories, and explore the feelings associated with the stories. But don’t stop there.
Whatever you do don’t stop there.
Once the stories and the feelings are out, it’s time to ask yourself some hard questions.
What it is you don’t ever want to experience again regarding the current truth of your business? Now that you know exactly where the business stands, what are the new targets you’d like to hit?
In other words, how do you want the stories about your business to change?
What will that mean for the facts (numbers) of your business? What are the 3 or 4 things that must happen in the next 90 days to impact the numbers in the direction you desire?
Ah, there’s that gift of numbers again.
They allow you to measure your progress and guide you to the next level.
What is the truth (the facts) behind where your business has been in the past, where it is today, and how does that stack up to where you want it to be today?
Now that you can see all that, at this very moment, what must happen to change the results to hit the future targets. You’ll know what must happen if you go through this process.
That’s the gift of the numbers.
The facts force you to strip away all the stories, feelings and rationalizations. They force you to see the truth.
They help you understand what must change so that the facts (numbers) tell a better story in the future.