Often, we speak to business owners who feel they don’t have clear visibility on their numbers or what drives their businesses’ performance. Time and again they use the same phrase…”I’m flying blind.”
Normally these are businesses that are struggling in some capacity, whether it is managing cash flow or profitability, or trying to understand what’s going on with their accounting.
Owners who admit to “flying blind” are typically experiencing one of these scenarios:
- They are in a place of desperation because they have some big financial problem they can’t get to the root cause of.
- They are in a place of resignation that they’ll never get clean numbers.
- They are in a place of intimidation and don’t know where to start because it all seems overwhelming.
- They are in a place of self-induced isolation (ignorance).
There are other business owners who are flying blind but don’t care. They run their business using their bank account and sales numbers. They’ve been successful despite not having a command over their numbers and downplay the importance of their financials.
I’m not sure I’ll ever be able to convince a “successful” business owner that they need to change their ways, but for those that want to make significant improvements in their businesses, flying blind is no longer acceptable.
One thing that we hear a lot is that most of these owners are frustrated with their in-house accounting staffs. They try to get them to make changes, but not being financial people themselves, can only say, “I want to see ____,” but can’t provide direction to the staff on how to get to the end result they desire.
Some business owners have abdicated responsibility to one or two people in the accounting department and rely on them to tell them when something is wrong. “I’ve never been a numbers person,” they say. Many of these situations turn out badly, as sometimes the people charged with running the finances are out of their league but would never admit it. In many cases, the accounting staff knows that no one is looking and they steal massive amounts of money from the business.
In other cases, the financial problems are multi-faceted and complex and the owner doesn’t know which problem to tackle first, so they don’t tackle any of them at all. Or, they spin their wheels looking at multiple reports, only to wind up confused and unsure of what actions to take.
Here’s the thing, whether you admit to it or not, flying blind is EXPENSIVE. And here’s a hint… it’s a lot more expensive to operate from a place of ignorance than it is to hire someone to help you get clarity.
Getting visibility requires a few things:
- Timely financial reporting. It doesn’t help if you have numbers two months after the fact; you can’t really do that much with the knowledge you get, and you’ve wasted a lot of time.
- Continuously working toward credible numbers. Everyone wants to believe their numbers but it can be a slow process to get them to a place of believability. As you review each month you’ll find you will tackle one or two things at a time—whether it is fixing errors or broken processes or incorrect mapping from upstream systems.
- Optics can help you decipher the numbers. Sometimes reading a financial statement can be hard for those not used to it. Create some charts or graphs to spot the trends and trouble spots.
- Understanding what to do with the numbers once you have them. Whether it is sitting with your in-house staff to help you, or taking seminars or reading books to improve your financial intelligence, it’s important that you have some guidance on what to do with numbers and take action.
Flying blind is never good, but it is amazingly common among small businesses. Don’t wait until the end of the year to ask your accountant how you did. By then, you’ve missed an entire year’s worth of opportunity to increase profits, manage cash or grow. Take the blinders off: learn what the numbers are telling you—get some help and you’ll find you’ll start “seeing” the dollars right in front of you!