Benefits of Knowing Your Business Numbers
Mar 14, 2016 07:28PM
By Warren Williams
"The language of business is accounting." - Warren Buffet, billionaire investor and philanthropist
One of the most common shortcomings of many business owners is a lack of appreciation for and understanding of the financial results of the business. Too often, the financial analysis goes no further than balancing the checkbook and minimizing taxes. While these are important issues, the numbers generated by the business can tell you so much more, if you care to listen and learn.
A recent blog post at Inc.com included a short list of reasons why business owners neglect their numbers:
"I don't understand them! Why bother?"
"Things are fine. I'm making money, so what difference does it make?"
"I don't have the time. I'll get to it someday."
"I'm afraid of what they will tell me. What if I find out my business is a failure?"
"I can't afford a bookkeeper."
"It's just me! As a solepreneur, why do I have to keep track of the numbers?"
"I don't know where to begin."
Do any of these ring a bell? Let me encourage you to take the time to master this important part of managing your business. The benefits are numerous, but here are a few:
Finding loose change: Exploring your monthly financial statements can help you identify opportunities for savings.
See where you are going before you get there: When tracked over time, your numbers will help you spot trends (both good and bad) so you can respond appropriately.
Negotiate from strength: When you need a loan, knowing your numbers goes a long way towards a successful loan process.
Fact vs. Feeling: While gut instinct is a valuable ally, why not increase your odds of making right decisions by understanding the financial impact before you make them?
The courage of knowing: there is strength in knowing what's really going on.
"Running your business without knowing your numbers is like driving a car without being able to see your direction or speed." --Dileep Rao, president of InterFinance
When it comes to building a successful business, use every means to achieve it. This includes educating yourself on your financials. Your numbers tell a story, if you take the time to listen!
Warren Williams is the president of TurningPoint Coaching for Business Performance, Inc.
Every business, no matter how small, has the potential to be great. The road to greatness is full of turning points, of opportunities and challenges. Each turning point provides a chance ... Read More »