Tweet

Acting in Business - on the Financial Data!

Guest post by: Stan Prokop

Article Overview: The article provides insight into the value for business owners and financial managers to use financial data to address problems early and to use that financial date in the context of their business experience and their industry .

Acting in Business - on the Financial Data!

In many instances business owners have financial data available from their business, but they find themselves unable to act on this data. How can business owners use very basic financial data as a tool to make better decisions or diagnose business problems?

Deciding what to do with respect to a financial challenge and then to actually go about doing that can be a problem for the business owner. Numbers are in essence measurements of our businesses - sometimes they are very basic, other times somewhat complex. Generally the numbers tell the truth, but solid business judgment around those numbers and their meaning comes from experience as seasoned business owners well know.

When a business person has financial data that suggests a change he or she may not necessarily believe that any changes made in the business will prove the desired result.

Let's look at a simple example. Let us say that the financial numbers reflect a rent expense ratio of 5%. That is to say that the 5% of the total costs of the company are reflected in rent. Let us also assume that for the last several years this number was only 3.5%. The business owner wants to know what the problem is. Experience business people already know the answer, which is 'it depends '. That is because maybe sales have increased dramatically, or newer and better locations have been maintained by the firm. Maybe in general the local rental / leasing economy are very bullish.

What we are of course saying is that financial information in effect, that is good financial information, allows us to ask questions. There are probably ten questions that any seasoned business owner can ask relative to our example of rental expense increasing on a year over year basis.

So we are saying that the numbers force us to think - and posing simple questions around the numbers will often lead us to continued positive progress in our businesses.

Business owners should also have a healthy skepticism about the numbers when that makes sense. For example:

Are the numbers seasonal?

Is what we paid for items still the current value?

Is one part of our business being analyzed, or all of our business?

Are the actual numbers really accurate - i.e. incompetence, etc?

Financial stat's measure the past, what about the future;

So what is our final bottom line? It is as follows: The financial data we get from our business can help us in revealing business problems; they can also alert us to financial problems earlier, rather than a later. At the end of the day the numbers are not an absolute substitute for common business sense, and the numbers will not, on their own, fix a business owners problem. But if management is willing to use the numbers as a tool. , they can be a very valuable took in the business owners toolkit!

Related Articles
  Develop your talents even if bored
  Part 8: Financials
  Financial Reporting: Now it is Easy to create your own Financial Report
  Banking Relationships - Is Information the Key?
  Why It is Critical to Verify Your Data in QuickBooks
  Reasons & Sources for Business Data Collection
  Data processing Requirements
  Financial Analysis
  Integrating Web Analytics into Your Daily Internet Marketing Campaigns
  The data storage prayer
  How to maintain data privacy?
  Too small to fail
  3 Keys to Reaching Your Financial Goal in 2011
  Data Loss - The Scariest Term in Business Today
  Data, One of Your Most Important Assets
  Credit Information Bureau India
  What is Your Data Quality Gameplan
  Don\\\'t Ignore Data Backup on Your Computer or You Will Probably Eventually Loose Your Data
  How Business Owners Should Choose a Financial Planner That Will Protect Their Money & Their Future
  The Best Data Recovery Software

Article Tags: business decisions, business experience, Financial data



Related Forum Posts
Private Equity Needed - I am entertaining the idea of going back to private equity for my Business due to the lack of interest and stability from the Financial Institutions. I had private equity in the past for my business and I believe it works best for me and my company. Should anyone have an interest or would like to point me in the right direction, I would love to hear from you. Sincerely, Kyle Lowe President H&L Motorcars
My entry - 1. The Best Business Books Ever: The 100 Most Influential Business Books You'll Never Have Time to Read - this is a fascinating book about the history of Business theory, and I'd recommend it to anybody. 2. The Big Book of Small Business: You Don't Have to Run Your Business by the Seat of Your Pants, by Tom Gegax. Ditto. 3. PADI: The Business of Diving Book Okay, so this book won't be of use to anyone who doesn't want to start a scuba store, but I did, and this book was of course invaluable to me in reaching that goal.
Future Financial Corporation - I've never heard of Future Financial Corporation is this a new company?
Exclusive: Interview with Results - Hi Forum Members, I'm helping start up a Business Coaching and Consulting company here in Toronto, Ontario, Canada (a Subsidiary of RSC Business in Los Angeles). As a Research and Development Intern I am required to practice my listening and interview skills by surveying Small and Medium Businesses on thier Business. This Survey is designed by RSC Business to also assist the Business being interviewed more insight into their own business. I am looking to interview about 30 businesses across North America over the span of 3 months. At the end of these interviews I will be publishing a report of the results and they will be made available for free to the Interviewees. The Report data will include responses from a minimum of 100 interviews. I would like to extend this opportunity to members of the Forum. If you would like to have this short 20-30 minute interview conducted on your Business and you reside in North America please send me an email or PM. Please contact me at andy[at]jvprosperity[dot]com to arrange our interview and to get free access to the results when they are published.
Re: Does Your Website Have a Robots.txt File? - HI Carol, Your robot file is correct; no lets work on your Page Titles & Meta Data. Do you have access to create different page titles for each page of your website? Do you have your FTP information...please do not post it here but just let me know if you have access. Jeff


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Executives and Elevators Perfecting That Pitch

How do you keep it together on a daily basis?

The Digital Diet by Daniel Sieberg

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.