Strategy

9th November 2017

Safety in Numbers

I met up with a very well known and successful entrepreneur a while ago. I was surprised that his opening words were, “the trouble with most businesses Ian is that they don’t know their numbers”. After I had gotten over the initial surprise that those should have been his opening words and when I had time to reflect on them I realised how true his comment was.

Most businesses, particularly SME’s, in my experience, either don’t know their numbers or don’t pay enough attention to them. I have found that those businesses that are really on their game are those that really understand their numbers and can differentiate between the vitally important numbers and the merely interesting ones.

Recently I had a startling contrast. On the same day I met with senior executives of two different firms, both in the same industry sector. One was concerned that as a shareholder and director he had not yet had sight of the financial numbers from the financial year that had ended six months before our conversation. The second organisation, on the other hand, knew their numbers for last month, the six months preceding that and they even knew where they were likely to land at the end of the current month in terms of revenue, profit and cash. Now this is my point, if you were a stakeholder in either of those businesses which one would you feel safest about?

Which of the two businesses most closely resembles your business and what are you doing about it? If our understanding of our business’s numbers grows in advance of the business growth we will be safe; we will be in control. If, however, the business is ahead of the numbers, either their availability or our understanding of them, we will always be vulnerable.

There is indeed safety in numbers.