Don’t get me wrong, the numbers are critical but they are only a rePRESENTATION of the value created by the company for their customers and the market. The value creation should be at the forefront of the entrepreneurs mind each and every day and a knowledge of the numbers is critical. But not just knowing the numbers, its about interpreting what they mean in terms of creating monetary value (whatever that means for the owner).
Numbers are the language of business and its critical for anyone in business to understand what they mean (and not just have them produced for tax purposes! Or because it’s a monthly routine).
Here’s the 3 keys to using numbers powerfully to create value:
- Make sure that they are accurate and produced on time;
- Don’t just look at them in isolation at the end of a period (month, quarter, year etc), understand the trend and the underlying business model – is value being created or eroded;
- Be fluent in the language of numbers or get a competent and knowledgeable trusted interpreter (Adviser, CFO, Board member etc) so that you take control of the process.
At the end of the day, the ongoing and exit value is a reflection of the business operations manifested in the numbers.
Take control of this area today!