The Number You're Avoiding Might Be the One You Need Most

Numbers are information, not judgement

There is probably a number in your business you would rather not look at.

Maybe it is your current bank balance, your revenue for the month, your outstanding invoices, your expenses, or the amount you are actually paying yourself. Maybe you already know the number is there, but you keep putting off looking at it because you are afraid of what you might find.

You tell yourself, “I’ll look at it later.”

The problem is that the longer you avoid a number, the longer you are making business decisions without the full picture. And sometimes, the number you do not want to see is the one that can help you understand what is really happening in your business.

A number is information, not a judgment

One of the things I want business owners to feel more comfortable with is looking at their numbers without immediately deciding that a number is good or bad.

Take revenue, for example. Maybe it is lower than you planned this month. That does not automatically mean your business is in trouble. Perhaps an unexpected event caused you to take some time away from your business. Maybe you had fewer clients or projects than usual, or some work you expected to complete this month was pushed into the next one.

The same is true of your expenses. Maybe they have crept up over the past few months. Several vendors may have increased their pricing. You may have added a software subscription you no longer need. Or you may have had some larger one-time expenses that will not repeat next month.

The number itself does not tell you whether something is wrong. It gives you a reason to look closer and understand what is behind it.

One number rarely tells the whole story

Your bank balance is another number that can be difficult to look at, particularly when it is lower than you want it to be.

But a low bank balance does not necessarily mean your business is doing poorly. Several large bills may have hit your account at the same time, even though your business is profitable. You may also have money tied up in outstanding invoices, meaning you have earned the revenue but have not received the cash yet.

On the other hand, a healthy bank balance does not necessarily mean everything is fine. You may have upcoming bills, tax obligations, or other expenses that will reduce that balance in the near future.

This is why it is important to understand what your different numbers are telling you.

Your bank balance tells you about the cash you have available right now. Your Profit & Loss tells you about the revenue and expenses of your business. Your accounts receivable tells you about money that is owed to you. Your Balance Sheet shows whether your business owes more than it owns, or owns more than it owes.

When you look at those numbers together, you can start to see the story behind them.

Maybe you discover that some of your most reliable clients are taking longer to pay, leaving more money sitting in unpaid invoices than you realized. Your revenue may be fine, but the timing of your collections is affecting your cash flow.

Or maybe you notice that you have been spending more than you realized in a particular area of your business. You may decide the expense is completely justified because it saves you time or helps you generate revenue. Or you may realize it is something you no longer need.

Either way, the number has given you something useful: information you can use to make a decision.

Understanding your numbers gives you choices

Once you understand what is behind a number, you have choices.

If revenue is lower than expected, you can determine whether you need to bring in more business or whether this was simply an unusual month.

If expenses have increased, you can decide if those expenses are necessary, you need to adjust your pricing, or there are costs you can reduce.

If your accounts receivable is growing, you can take a closer look at your invoicing and collection process.

If your bank balance is lower than expected, you can look at what is coming up and make a plan instead of simply worrying about the number in your account today.

And sometimes, you may look at a number and discover that what you were worried about is not actually a problem.

This is where learning to trust your numbers comes in.

Trusting your numbers does not mean every number will be what you hoped it would be. It means you understand what they are telling you and are willing to use that information to make decisions about your business.

You don't have to be good at math or be an accountant to understand and trust your numbers. You just have to be willing to look at them and ask, “What are you telling me?”

So, I’ll ask you: What number have you been avoiding?

Take a few minutes this week to look at it. You might not like what you see. You might discover something that needs your attention. Or you might discover that the situation is not nearly as bad as you imagined.

Either way, you will know more than you did before. And that gives you the information you need to decide what to do, or not do, next.

You have the numbers.

Understand them. Use them. And, over time, learn to trust them.