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Enhancico Limited

Consultancy, Project Management, Business Services
http://www.enhancico.com/

New Blog Post! Understanding The Numbers You Can’t See

If you want to improve your business, long before you can actually make changes and set those initiatives running, you first need to identify what you want to change.  

Of the organisations that I’ve worked in and been involved with, very few have had a really good handle on the numbers that really matter.  The simple reason for that is that finance / accounting systems are built around keeping score of what comes in, what goes out, and meeting Government requirements like VAT reporting.  Revenue and profit at the top and bottom lines aren’t unimportant, but they don’t answer the questions you really want to answer when it comes to making choices about your business.  You may well have other metrics too, perhaps from online selling say, or booking management systems.  Like your finance system though, what you’re being told is basically what has gone on.  It’s another form of keeping score. 

What you really want to do when making choices about improving your business is to be able to play around with costs, margins, and relative quantities of sales of different things.  If you have the numbers and can test scenarios, your knowledge of both your supply side and your market will quickly lead you to some very well-grounded improvement ideas.  The problem though, is that getting your data in a form that you can ‘play with’ is not particularly straightforward.  Your finance system is all-knowing in that every penny going through your business, is tracked there. 

However, it’s designed to focus on things like total revenue, or spend by category (marketing versus travel say).  It probably doesn’t know what it takes to make a product or provide a service.  If you sell online, have inventory tracking, or any kind of booking system you’ll probably know a bit more like which products or services are the most popular and the quantities in which they sell.  That’s all good stuff, but it’s still not what you need to know.  The fact that product A sells better than product B doesn’t mean that product A is more profitable, and nor does it give you any insight into how adjusting the costs within product A (assuming you can) could change the game.    

Read more in my blog post, as I explore why you need to expose them and how to do it.