As a business owner or organizational leader, you need to love the details... even if they don't show you much love back!
Hopefully you had a chance to read my previous post regarding money and knowing your numbers. Now you need to figure out the “why’s” behind your numbers. Meaning… “Why do you have a net loss rather than net profit?” “Why did your cash balance decrease from last month?” “Why did your expenses increase ?” Knowing your numbers not only refers to knowing your bottom-line, but also understanding how you got there. For example, review each line item in your income statement, both revenues and expenses. Or, if you review financial ratios on a regular basis, such as a labor cost ratio or operating margin, then review your ratios. When your financial metric has significantly differed from the prior period, then it’s time to do some digging. Knowing your numbers is critical, but knowing why you ended up with the financial outcome you did, is even more important.
Jeff Newkirk, Founder & CEO, PEM Consulting Group
– a management consulting firm
pemconsultinggroup.org | 281.591.4747