We are forever preaching the importance of knowing your numbers, and we will forever continue to do so. Reporting on metrics (and therefore being held accountable for them) is one of the Keystones of Dan Bradbury’s teachings to our members, and something he has instilled in us as a team from the day we were brought on. Every week, without fail, we meet to report on our metrics and answer any questions Dan, or the other members of the team, may have.
When your metrics are good, it’s quite a fun thing to do. In fact, it’s a great deal of fun. But when your metrics are bad, it’s not much fun at all.
In fact, it’s genuinely quite painful.
But, in the many, many weeks (spilling into years) that I have undertaken this task, it has dawned on me that this is a necessary pain.
When we repeat the mantra “know your numbers”, it often pays to remember that this is not limited to the bank balance, or even the financials. Sure, those are the “priorities” which should take precedence over everything else, but in order to fully understand the financials, you must first know where they’re coming from. This is typically reflected in other numbers. the kinds that are too often overlooked… much to the peril of those who miss them.
I must stress at this point that, perhaps to your relief, I’m not about to plunge into a piece concerning balance sheets, P&Ls and cashflow forecast statements. Yes, those things are very important and as a business owner it does pay (quite literally!) to know what they are and how to use them, but I’m probably the last person (in this company, at least) to teach you all of that… and, again, those not the only numbers you need to keep an eye on.
What else you track is largely dependent on your business, your industry and the specific roles within. in our case, it’s member numbers across the many and varied business units, alongside a number of other things related to that. In order to understand the financials and why they are the way they are, you have to know where they come from and what makes them that way.
Not only will this help you understand your outward figures, but it will also show you where you need to improve, or develop in order to grow.
But here’s the thing. Looking at the cause can be painful. Heartbreaking, in fact, if this is something you believe in and have spent a long time working towards. So it’s no wonder, perhaps, that the tendency to look on the sunny side of the figures to make things seem a little rosier than they actually are. This is often not a “deliberate fudge”, but perhaps mitigate or casually overlook a few details that might not seem relevant at the time.
As tempting as it might be to do this, sticking your fingers in your ears and scowling in the direction of the bad news does not prevent the bad news from being real. In business, all ignorance can ever do is either speed up the process. If something is going horribly wrong, only quick, decisive action will fix it. Impossible to do if you’re too busy scowling.
Remove the emotion (but not the passion, you’ll need that) and strip it back to the facts. Emotion won’t fix the problem, but the facts will. Only data clarity will lead to those facts, no matter how unappealing that data may be once you dig a little deeper.