Going Beyond The Numbers
Photo by John McArthur on Unsplash
It’s a fact that strong financial management is fundamental to sound business management. If your revenues don’t exceed your costs on a consistent basis, you will be out of business soon enough.
There’s simply no arguing with that. You can layer in whatever complexity you like, but that truism still holds (which is why it’s a truism).
The problem, though, is exactly that. We do, many times, tend to layer complexity into our financial models, and then get caught up in them. To the point that these financial machinations soon outweigh the more fundamental considerations of running a business. Considerations such as:
Are we selling to the right client?
Is what we’re selling valued by our customer?
Are we offering the very best way to service the specific need(s) we’ve set out to meet?
Are we spending enough on the things that actually matter?
Should we be increasing our expenditures in specific areas?
There are more considerations than that, but you get the point. The numbers matter but they only tell part of the story. Yes, of course, we all know that and we’ll nod our heads and affirm that statement. But when it comes to the crunch - the actual “Dollars leaving our pockets” crunch - we’re not quite so affirming.
The underlying theme here, if we want to translate this to a financial perspective, is whether we’re allocating our resources in the right way and ‘converting’ those resources towards their best intent. Intent that is focused on a long term trend of ‘Revenues greater than Costs’ and not simply near or even medium term Dollars in pockets.
That bit tends to get lost in the midst of complex models and financial ratios and quantitative analyses. Those aspects aren’t to be minimized - they’re critical to a well run business.
But it’s a bit like the ‘forest for the trees’ idea. That is, let’s not forget why we do what we do, what we offer and who we do it for.
Those are the foundational considerations, and the success of any business starts and ends there.
