I wanted to chat today, about interpreting the data that’s in front of you.
You know, when I start to work with a lot of entrepreneurs, a lot of them have a lot of reports, whether its financial reports and/or marketing reports that are fed to them, but they really don’t understand what they mean.
For example, I was watching a video the other day and the presenter was saying how Richard Branson didn’t really understand the distinction between gross margin and net margin until he was about 50 years old. And it just happened that he was in a meeting one day, and his advisors were talking, and someone just happened to pick up that he probably wasn’t understanding everything that they were saying, so this person pulled him aside, asked the question, “Hey, do you understand this?” And he said, “No.” And then that person proceeded to sit down and explain it to him.
This is Richard Branson, and he was 50 years old. So he’d been in business for how many years?. And he didn’t really understand the distinction between net and gross.
It just shows you how challenging this can be.
But if you want grow your business with certainty you need to understand how to interpret your numbers and your information. And you need to do it frequently and regularly.
So there’s a couple of ways you can learn this. What did I do? I went to university and I studied accounting. But this didn’t teach me how to read financial reports for small to medium-sized businesses. I had to learn that myself, and I learned through mistakes.
The other thing you can do is get a translator. A CFO that’s going to translate that information with meaningful commentary so that you can make your decisions.
So if you don’t understand the numbers that are reading, first and foremost, go and learn what they mean. I think that every business owner has a responsibility to learn what their numbers mean, even if it’s just a basic understanding. And if you don’t want to go too deep, find somebody who can read and interpret them, so you can make data-driven decisions with certainty and confidence in order to grow your business and grow it fast.