We’ve been working with women entrepreneurs in Manitoba since our Centre was launched 16 years ago. We have learned how many small business owners look at the financial aspects of their enterprises. Too often they take the financial statements prepared by their accountants for tax purposes, send in the tax form, and file the whole shebang deep in a big gray metal drawer under the file name CRA 2010.
Sadly, they don’t know that they are burying treasure in that file, never again to see the light of day (unless they are audited for some reason).
So what’s in that big metal box that could turn into gold, if only it was discovered and mined?
Numbers. Beautiful numbers.
Numbers that tell the real story of how their businesses are doing; what’s being done right; where things are going wrong; which customers are buying what products at what time of year; how often the customers are buying; what percentage of which suppliers’ goods sell at full price and which are mostly discounted; which services bring in the greatest value in dollars, in repeat business, in word of mouth advertising. Numbers tell us about our inventory turns, our liquidity, our use of capital, our debt and leveraged dollars, our return on investment, and, ultimately, whether it’s all worthwhile.
If you aren’t speaking with your accountant about these things, or don’t know how to get the answers on your own, you are missing out on some essential knowledge – knowledge that you will need to sustain and grow your business.
Over the next few months, we will be doing research in the area of business acumen and financial literacy. We hope you will share your ideas and opinions on how you use your financial data. If you aren’t using it in a studied and thoughtful way, why? What are the barriers to your full understanding and use of your beautiful, golden numbers? Are they gathering dust in the back of your file cabinet or are they front and centre in your strategic planning?