This is a guest post from Fiona McKenzie at Blue Note Solutions Ltd:
Although I am a Finance professional I would be the first to admit the possibility that numbers can be meaningless and thus boring. Numbers should be able to give you essential (and interesting) information about your business. The crucial issue is context.
So if you’ve ever looked at accounting information and thought ‘so what?’ you are not alone.
The number is 50,000!
??? (blank face, yawn)
It’s Acorn Ltd’s profit for the year!
Is that good?
Acorn had sales in the year of £20 million.
Not sounding so good?
Last year Acorn Ltd had a flood at its main premises and made a loss for that year of £1 million.
Forecast loss for this year was £200,000
Not sounding so bad?
Most other companies in the same industry made losses in the year.
Now sounding like a better result?
By drilling down to the figures in the context of what you know about the business and comparing to previous periods, budgets and forecasts, you obtain information not just about how the business has performed but indications of relevant action points for the future.
About the author: Fiona McKenzie is the Director of Blue Note Solutions Ltd. Fiona helps SMEs gain clarity and control of their businesses financial performance. Website: www.bluenotesolutions.co.uk Email: firstname.lastname@example.org