“Our income statement shows we’re making a profit, but it sure doesn’t feel like it.”
It was a contractor’s wife who had a pretty good feel for how their business was going.
The P&L and the math are simple, but depending on how they’re prepared, P&Ls can show wildly different results. To get an accurate, useful report, we have to understand what goes into it and why it matters. My experience as a business coach has shown that there is a lot of confusion about that.
Read MoreThere is a saying often attributed to Edwards Deming that “We cannot manage what we do not measure.” Numbers are the measurement that make management possible. The corollary of the quote is: “If we don’t manage it, everything that happens to us – good or bad - is an accident.” We might survive by accident, but we cannot thrive, which means we cannot thrive without numbers.
Now don’t panic. As business owners, WE do not have to collect and compile numbers. We don’t even have to know how it’s done, but we do have to understand what numbers tell us.
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