How much do you really know about your business?
That may sound like an odd question to ask the president, owner or CEO a person whom you’d think would have his or her finger on the pulse of the company but when it comes to evaluating your company, it is clearly a valid query.
Unless you’re an absentee owner, you surely know the basics of your business revenue, costs, number of employees, looming large-scale problems. But beyond those, do you have a more detailed snapshot you can provide your banker, an investor or a partner?
Consider the following group of questions: Are you growing your most profitable product division or service? Are you rewarding your best salespeople? Do you know which projects are profitable and which managers are responsible for them? How many paid-on-time accounts do you have? Do you know your fuel costs for delivery trucks?
Odds are you do not know the answers to those questions. Further, you might not even collect it. But without it, you probably don’t have enough data to run your business efficiently and effectively. And the answers to those questions are just a small sample of the nonfundamental information that the savviest CEOs develop mechanisms to track.
Don’t get me wrong. If you don’t have that information, you’re not necessarily in the midst of a downward spiral. However, when times get rough, the more data you can analyze, the better off you’ll be.
One of the most captivating types of stories our writers tackle is the turnaround piece. The turnaround story usually chronicles how a president or CEO identified a problem, stopped the bleeding and fixed the company. A common theme in these stories is that the CEO didn’t have accurate data on the company to ensure proper decisions were being made, and therefore, the company faltered.
So how do you determine if you have the information you need at your fingertips? That’s the tough part. What can be considered valuable information differs slightly from company to company, depending on the industry, product or service. But fundamentals are fundamentals, and the more sound financial data you have, the more informed you are about the top- and bottom-line results.
And, the more ways you’re able to slice that information department, product line, division the more apt you’ll be to identify your profit and loss centers and see the yellow flags before they become red ones.
Contact Editor Dustin Klein at firstname.lastname@example.org