Don’t go forward by only looking back

My silly question for today.  A car pulls up.  Mud streaks the entire windshield. But the driver assures you, “No worries! I have my rearview mirror!”  Do you get in? 

Of course not. But why not? Your driver is an expert at driving mud-covered cars. You can count on other drivers to avoid a collision. The car is loaded with technology. And you’re a risk-taker who loves the thrill of the unknown! Now would you get in?

We’re taught to drive looking forward.  I still remember “IPDE” from driver’s ed.  Identify. Predict. Decide. Execute.  

So why do so many business leaders run their business only looking through their rearview mirror, aka as financial statements?

Income statements and balance sheets offer a muddy picture of you’ve been and where you are. They don’t tell you where you’re going. Unfortunately, too many business leaders don’t understand how to use them. The result? Too many businesses are “managed” by how much is in the bank account, right now.

The owner of a small marketing company reluctantly admitted two things I’ll never forget.

• “I think I know what my income statement and balance sheet tell me, but I have no idea what to do with them!”

• “Every business coach I’ve worked with said I had to do a cash forecast, but none ever showed me how.”

Wow.  And she is not alone.

We talked about her business so I could better understand her needs. A week later, after reviewing what I created for her, she told me something else I’ll never forget.

“You make this really fun! I get it now!”

What we did was wash the mud off to give her a clearer view of her financial performance, and where she was headed. We created the ability to:

• See customer profitability

• Forecast profits and cash flow

• Understand spending in groups instead of an ABCD list of expenses

At Data2Profit, we have ways to take the numbers out of your monthly review.  It’s not necessary to spend hours trying to decipher your P&L.  We believe in teaching you what you are looking at, why you are looking at it, and what you should do next. 

Bottom line (pardon the pun!), regularly check your rear-view mirror. But the pot-holes, bumps, and wide-open roads are ahead.  Enjoy the ride!

Magically yours,

Lynn