As an accountant for whom ‘measuring what matters’ to analyse business activities and performance and  inform decision making, the amount of air-time and column inches devoted by the media and press to so-called opinion polls beggars belief.

Although billed as a ‘general’ election, the forthcoming election is far from being a ‘national’ election. It is in fact 650 local elections for which national opinion polls are useless in predicting the likely outcome.

An overall lead nationally for, say, the Conservatives may result in nothing more than an increased majority in seats they already hold and have no impact of Labour held seats. Conversely, a small swing to the SNP in the 13 Scottish seats held by the Conservatives could have a huge impact on the outcome of the election.

Unless meaningful data is collected, analysis will be meaningless and possibly result in erroneous decisions making.

This applies equally to the data you collect and report about your business performance.

I encourage business owners to measure their gross margins on a regular basis, but if the business sells a mix of products to numerous customers its overall gross margin may be misleading and hide the fact that some products and customers are less profitable than others (or even unprofitable), which data on gross margins by customer, channel and product would reveal.

Similarly measuring the return on investment (ROI) of marketing expenditure is a vital metric for every business, but unless the ROI of each marketing pillar (Google ads, Facebook ads, direct mail and so on) is measured separately it will be impossible to measure which marketing activity is performing best and in which activity further investment should be made.

Too few entrepreneurial owners receive (or even know they can access) the amount of data they need to properly evaluate their business performance. They are driving in the dark with their lights turned off, but just as flicking a switch in your car to illuminate the way ahead is quite easy, so is getting accurate and detailed data about how your business is performing. Modern cloud accounting software when set up properly to produce the required data is inexpensive and widely available.

So if you are thinking of moving to Xero, QuickBooks, FreeAgent or one of the other systems on the market and you need assistance in setting it up to report the data you need give me a call on 07768 350762.

 

Noel Guilford