For some business owners, the answer is, "I don't know." But if you don't know the answers to basic questions about your company, you are flying blind with no navigational tools to help you avoid disaster.
I admire the ability of many entrepreneurs to follow their gut feeling. But there is no excuse for ignoring information and making decisions in the dark. Yet they continue to do so.
The president of a manufacturing company once decided to eliminate his older product line because it wasn't growing. He believed a new line represented the future of the company. He was instrumental in the development of the new line, and was not objective.
I convinced him it was too big a decision to make without more information. A thorough analysis of costs revealed the old, less glamorous product contributed all of the company's profit. Had it been eliminated, the company would have lost money.
Sometimes I wonder if we don't create information because we don't want to know the truth. If we had all of the information, it might tell us the job we want so badly, the one that we just won, is not a good job for us.
I've seen troubled companies where the latest financial statements are six months old, where job costing is "something we know we should be doing," and cash projections are a foreign concept.
Information must be a priority. Gathering operational data is easier and cheaper than ever. Technology makes it easy to turn data into information.
You cannot fly blind and expect to reach your destination safely. Use knowledge to avoid disaster. Joel Strom (firstname.lastname@example.org) is director of Joel Strom Associates, LLC, the growth management practice of C&P Advisors LLC. The firm works exclusively with closely held businesses and their ownership, helping them set and achieve growth objectives while maximizing their profitability and value. Contact him at (216) 831-2663.