Now you know I’m an accountant and as you expect I quite like numbers. Give me a good set of accounts or a Profit and Loss and I can pore over it for ages. Now I can hear some of you say – ‘Gloria you need to get out more’!! But the reason I find them fascinating is because of the information it gives me – NOT for the numbers, it’s a means to an end.
Let me explain. When I look at a client’s Profit and Loss I’m looking for what this tells me. Is the gross profit margin higher or lower than the industry standard? Has it increased or decreased since last year? Are they spending too much on wages compared to their turnover? What percentage of turnover do they spend on advertising/marketing? Is this higher or lower than last year?
Is there anything else significantly different from last year?
Now these questions (and the P&L) won’t actually tell me ‘why’ things are different. But it’s a bit like being a detective, it tells me where I should concentrate my attention. If the client has an electronic bookkeeping system then I can delve deeper to find answers – like what’s the average spend per customer? Has this increased or decreased since last year? Is this a strategic decision by the client or has it just happened by accident?
If you don’t look at the important numbers in your business regularly it could be too late by the time you notice something is wrong. And if you don’t keep your numbers organised then it’s going to be difficult for you to find out the information in the first place.
The days of keeping your financial information on spreadsheets or paper are over. It’s easier now than ever to know your numbers if you use the likes of QuickBooks for example.
If you’d like help getting to grips with your numbers so you can grow your business email email@example.com
or call 0141 889 4247.