We can only MANAGE that which we MEASURE.
In order to do this we must set some financial targets.
Then, we must follow this up by looking at our numbers at least monthly, if not weekly or even daily.
In one company I worked with I insisted on a Daily Gross Profit.
The managing director loved the idea but as you can imagine the production director wasn’t overly happy.
His team had to stock count every day.
But guess what?
Our stock-turn reduced, waste reduced, lead time reduced.
In all, money invested in stock reduced. Cash cycle shorten – ie. More of our money in our bank.
Just one example of how strong financial control can improve bottom line performance.
This is why I have always held the view that accountants must move from overhead to profit contributor.
In fact, I always renamed the accounts department – Financial Control Department.
Then I moved the Department from Cost Centre to Profit Centre.
Bold or what???
But it works.
Now we must be looking at our numbers – all the time
I read a great article by Senator Feargal Quinn – an Irish business icon that I had the pleasure of working for when I was a teenager.
This is what he said,
“I was never passionate about the financial aspect of my business; however, I recognised it would be critical in determining our success or failure.
I see many businesses with the same lack of passion in the financial area but who have not recognised that the business needs to employ someone who will drive
this end of the business in a very strong way and would be strong enough to stand up to the business owner on certain business critical issues.
…Someone needs to be watching the numbers all the time.” Feargal Quinn
Now, truer words have never been spoken.
I have spent most of my working improving performance at businesses I worked with, fixing broken businesses, bringing some of them back from the brink and then being on the winning team that leads to success.
Stronger sales, with stronger margins, stronger financial position – leading to growth, easier access to credit, leading to even stronger growth.
Watch the numbers. They force us to make decisions.