Article originally published in the Orange County Business Journal.
So, tell me about your business!
As you get out there, network, and present your company in the marketplace, you likely hear this common conversation starter all the time. You have your business cards in hand, your elevator pitch prepared and your passion for what you do on lock. Perhaps answering this question feels like a complete breeze to you — you know your business inside and out!
But do you really? Of course you know what your company does, and maybe even some of your brand’s best qualities. But do you know where your business stands, and where you’re headed? If you don’t know your numbers, you don’t truly know your business. Not fully.
Despite impressive industry expertise, a surprising number of entrepreneurial growth companies unknowingly fly by the seat of their pants, using cash in the bank and tax-time calculations as sole measures of financial success.
While this information may help companies survive in the here-and-now, it is certainly not best practice, and a business operating in this way stays afloat by fortunate strokes of luck at best.
This way of functioning is unsustainable. For a company to achieve business longevity, its leadership team must have a finger on the pulse of their financial data, using the data to develop a sustainable strategy that will propel the company forward.
Hunches and feelings can only take business strategy so far. In order to know what course of action makes the most sense in any area of a business, the leader must sit down with their numbers and analyze where their monetary success is truly coming from, where changes are needed, and even where the leadership team should pull the brakes completely.
Financial data is key in the best of times, but its importance especially rings true when times are tough. When you know your numbers, change informs your path, but it no longer impedes it. If you aren’t equipped with timely and accurate data, your business will frantically react to market volatility.
Take COVID-19 for example. While the pandemic had a global impact on the business landscape, some companies successfully adapted to change, while others went under. The key difference: whether the company had an objective, data-driven understanding of the impact of the crisis on their business. In other words, whether the roadmap forward was based on frantic guesswork, or on what the data demonstrates.
You can’t truly know your business without knowing your numbers. The good news, however, is that the opposite is also true. When you utilize your financial data in support of your company’s growth, it can become your superpower — equipping you with the arsenal you need to plan for profitability instead of merely hoping for it.