Deciphering your data and knowing your numbers!
Nov 18, 2019
It can be easy to get caught up in the day to day busy-ness of running a business, and not take the time to check in on the numbers. Success in business is often influenced by having data you can trust, that is current, that you understand, and that you can build your strategy on.
Think of it like forming a new habit. Let’s say going to the gym. The first day you go, you need to learn a bit about the machines – understand how they turn on and off, understand the correct technique etc. The second day you go, you may have forgotten some of the information you learnt first time round – so you go over it again. The third day you start to feel a little more confident, you feel comfortable using a few machines. By the 10th day, you know where most things are, and how they work. And you will have a few favourites because you like the results you are feeling.
Using numbers in business is the same – the first time you read the data it may be a bit overwhelming, and you need to take some time to understand what it is telling you. The second time, you remember some of what you learnt the first time round, but still need a refresher. By the time you get to the 10th time, you understand your way around the numbers, and you are understanding what influences them. Regular review of accurate, relevant data is a sledgehammer in your toolbox for smashing your way to success.
So – how do you know what numbers are relevant?
Every business is different, and some businesses will track more specific numbers that are relevant to their business. A great starting point is to compare your figures with the previous year – with a focus on Income/Sales, Gross Profit and Net Profit. This will tell you if your business is performing on par with the previous year, and if you are profitable or not. Beyond that, utilising your in-house software package and developing a snapshot dashboard that you can regularly check key data is great! If not, reach out and ask your accountant or professional advisor for help. We regularly build dashboards for our clients so they can see in a clear snapshot how they are performing.
What if you have trouble understanding the numbers?
If you haven’t previously been involved in the financial side of the business before, then this can be a learning curve. It is important to spend time to get to know the numbers, and what they are telling you. Ask for some time with your accountant or professional advisor – get them to talk you through not just what the numbers are, but what they mean and why (in your language!)
How often should you be looking at the data?
Formalise a quarterly strategic review of the numbers with your key management or leadership team. This is a great time to discuss what’s working, and what’s not. Regular strategy review is vital. Other than that, monthly reports through your in-house software should be reviewed each month.
And if you don’t trust the data? Make it a priority to identify the key issue – whether its software, personnel or training - and get it fixed. Utilisation of relevant, accurate data is your secret strategic business weapon.
Need help with your numbers? Contact a Sudburys advisor for an easy to understand data discussion!