Simplicity In Numbers

Not a finance person?  It's ok. As an entrepreneur, the key to the numbers that will drive your business usually lies in the simplest of measuring sticks. You don't need a green visor and a Ph.D. In economic theory to get your finger on the pulse of your company's results.  

I am the product of entrepreneurship. One day, when I was a toddler, my dad came home and announced to my mom that he was quitting his job and starting a business. My father is one of the most dedicated entrepreneurs I know. His customer service is nothing less than an obsession and our livelihood as I grew up benefitted from his willingness to take that leap from the corporate world and venture out on his own. 

But his entrepreneurial journey in turn created a position for my mom too. She was now the head accountant for the business. The one that made sure all the clients were billed and all the bills and employees got paid. My mom's approach to accounting has always been very low tech but incredibly straightforward. In the mid eighties, as I was old enough, my job was to stamp the company letterhead onto the Deluxe brand generic client statements. As I got older, I was entrusted with labeling the columnar pads. (For those of you too young to have any idea what I'm talking about, I've included pictures). 

These are Statements and columnar pads that my mom uses to this day. I'm still not sure who she found who could possibly fill the shoes of my stamping and labeling prowess when I moved out, but I digress...

Every year she closes her books in an old school fashion. She reconciles the bank account, prepares an accounts payable aging, a balance sheet and all of the basic accounting reports that a company needs. But the difference is she does it manually. By hand. Written out, with a good old fashioned pen on yellow sheets of lined paper. I often refer to my mom as the most organized client I have.  There is brilliance in simplicity but I didn't always appreciate this. 

After I graduated from college in all of my twenty some odd years (still young enough to think I knew better than my parents), I took all of the numbers from my parents books and told my mom "Don't worry. This will be much better in an accounting system. You need software. Upgrades. Systems. Processes."  My view at the time being that things needed to be more complicated to be effective. I stand corrected. In my two plus decades of a career as an entrepreneur and accountant since I've learned to appreciate and embrace simplicity in numbers.  

The reality is that the most important characteristic that your numbers need to have in order to be valuable to you is that you need to understand them. If the numbers make no sense to you or you can't seem to get to accurate information, you need to change things up and get your hands on it. Do what you need to do to get the information you need to run your company. 

Your measurement of your results does not have to be complicated. It needs to make sense. There is no right or wrong answer of what you should be measuring. I have very different metrics that I use to manage my firm versus other firms like mine that are out there. But that works for me. Just like my moms straightforward accounting works for her. 

Focus on getting the information you need and that makes sense to you. Your company and your sanity will benefit in the process.