Would you be able to scan your quarterly profit and loss statement and know if something was amiss? Would you be able to instinctively sense that something in your numbers didn’t make sense? Would you be able to point to why it didn’t make sense?
The numbers in your business are a sign of the health of your company. As a business owner, paying attention to and being familiar with those numbers is a key driver for your business performance.
How can looking at a quarterly summary make or break you?
Last week, when looking at a summary of Q1, I noticed something very alarming when it came to my net profit. It was alarming because it was much lower than I expected it to be despite my focus to increase sales by 10% this year and reduce costs by 5% (That simple focus can have a dramatic impact on profitability.)
When I looked at this report, I immediately began to ask questions. Was the US currency converted to CAD in the reporting? Why was the payroll number so much higher than it was last year? Why were the sales listed for two of the three months lower than the sales reporting I receive weekly?
Lost And Found
Turns out there were issues in all three of those sections.
There were some year-end adjustments that my accountant hadn’t made. Someone forgot to adjust US currency to CAD which impacted sales. Then, somehow there was an accounting error that caused almost $100K in sales to be removed from Quickbooks.
The good news is that all is well, and all has been corrected. The bad news would have been if no one noticed…
Fixing It Before It Happens
As a business owner, it is your responsibility to know your numbers and to pay attention to what is going on. When I looked at the, I instinctively knew there was a problem. I could see that the sales reporting didn’t match what I receive weekly and I could see the outliers related to costs compared to last year and asked someone to drill down.
This is because I look at these numbers carefully every week, and every month. If I didn’t then chances are, at the end of 2022, we would have had a big mess because we wouldn’t have reconciled properly for the year. Someone would have had to spend a lot of time trying to figure out where and why things didn’t add up.
Don’t take your year-end or the performance of your business by chance. It’s important to learn how to look at and interpret your numbers.
Don’t be afraid to ask questions, in fact, practice asking questions about your numbers all the time, so you get better at understanding them.
If you work with a coach or advisor and they don’t know how to help you with this, consider finding someone new. The financial success of your business is too important to leave to chance.
Do you know your business inside and out? If not, I am challenging you to really get to know the numbers of your business.