I’m sure you remember doing Paint by Numbers art? I was always excited because all of my aspirations of being an amazing artist could be realized simply if I followed the number and color map provided. Blues were ones, Reds were twos, yellows were threes and so on. I think we have all had the satisfaction of creating a work of art through Paint by Numbers. I remember thinking, “This isn’t so difficult, I can be a master artist after all!”
I have noticed business can operate the same way. I train many business owners on how to build their business by numbers. At first they are always nervous and a little bit overwhelmed as they tackle the math of their business. Questions like, “What’s the difference between Gross Profit and Net Profit?” “What is break even?” or “What are the most important numbers for me to be watching?”
At first pass these questions can seem foreign and overwhelming to business owners. The initial feeling is to go back to business as usual doing what they know how to do: their craft and hope all that numbers stuff works out by the end of the year when they sit down with their accountant to figure their taxes! Unfortunately, the numbers in business don’t work themselves out, and it’s usually a much bigger mess at the end of the year because they didn’t address the numbers earlier.
The good news is with a little direction and discipline, just like the satisfaction and simplicity of painting a picture by numbers, building a business by your numbers can be just as simple and even more satisfying as you master what you thought was impossible. Your financials are the most valuable and yet often the most neglected business tool in your box. Your numbers will predict very specifically how healthy your business is, when to buy the next vehicle for your fleet, when to hire the next employee and even when the best time is to transition out of your business.
Running your business by the numbers will move you quickly from surviving your business to thriving regardless of the economy or competition you are dealing with. If you’re frustrated with unaccountable or inconsistent employees, your numbers will take the emotion and headache out of management and your employees will be happier too as they know exactly what to expect and how to win. Your numbers will take out all the guesswork, frustration, and wasted money on marketing because you will know exactly what marketing is generating a good return on investment and what campaigns need to be kicked to the curb.
One of my favorite business tools we use is called a Flash Report. It is a financial dashboard that empowers the business owner to make excellent decisions without any of the guesswork in minutes.
I know by asking one question if a business is running by numbers or by sheer heavy lifting. I can also see the toll the business has on its owner physically and emotionally when they are running their business on their gut feelings instead of the numbers. It’s hard to watch.
If you want to look at how to simplify your business leveraging numbers, email us or call us and let’s look at it together. It really is easier than you would think, just like matching the colors with numbers!
Here’s to your new masterpiece!
Chad Harward – Business Analyst