As an accountant, you know just how important numbers can be. And having just the right person analyze and explain financial data can be crucial to a business’s success. But what do you look for?
In addition to standard accounting information, Entrepreneur.com author Dave Lavinsky shares 5 things to look for when analyzing a business’s data in his recent post entitled, “Numbers You Need to Know to Grow Your Business.” Here we share three:
1. Know how far you are from reaching your goals. It’s not surprising that most successful businesses set measurable goals that can continually be monitored and accessed. If you can help clients determine reasonable goals that can be measured through your accounting data, you help them stay informed and make immediate decisions that can impact their business’s profitability and success. Lavinsky suggests tracking daily revenue and profits in order to stay on top of a company’s status.
2. Pinpoint and manage key underlying issues. Some information can seem a bit more allusive. Success often begins with key actions that can be tracked. Lavinsky provides a short list: number of outbound sales calls, number of live connections, number of proposals given, proposal close rate, and average price per sale. When a business is struggling, this is often where you can begin to find key problems that may can stagnation. Change these numbers and you can change crucial outcomes.
3. Discover problems before it’s too late. When you track some of the key underlying issues (like those listed above), you can find problems before it’s too late. For example, if you can determine that few proposals were given one month, you can expect a drastic decrease in revenue which can be addressed immediately in the current month. However, if a business waits too long, they feel the negative impact of those shortcomings before there’s sufficient time to redirect one’s course.
Often the true value of your job is in explaining financial data in such a way that clients can understand and appreciate what that information represents. When you can share information from their accounting system so that they can see how it’s impacting their profitability, and what they need to do to make positive changes, you’ll find it’s much easier to secure client loyalty.
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Lavinsky, Dave. “Numbers You Need to Know to Grow Your Business.” 12 June 2013 Entrepreneur.com