by Jane Glazer
Entrepreneurs often brag about their "instincts" and capability of “shooting from the hip". These skills can only take one so far. Eventually, if a business is to progress past the start up stage, instincts need to be supported by down and dirty number crunching.
Anyone can hire an accountant, a statistician, or a spreadsheet guru. The trick is to read between the lines. Understanding what the numbers mean and how to make them change is they key to building and maintaining a profitable business.
I met someone the other day that ran a Laundromat, and we talked about business for a little while. He told me that after playing with numbers, he realized that all he had to do was run the dryers for 6 minutes rather than 8 minutes at $.25 for his business to turn a profit- and it did. Imagine, 2 minutes, 2 cents, profit.
A couple years ago, I changed my products from a retail of $9.95 to $9.99. My customers probably didn't even notice. Just for analysis, suppose I sell 10,000 products a week. That is 4 cents more times 10,000. Go ahead, do the numbers. That is a wonderful addition to my bottom line, and I didn't even use my calculus skill set.
Although these examples are quite simple, the ability to figure out what the numbers say and how they can be improved upon is the secret to success. Whether by way of balance sheet or a nightly bank deposit, knowing the numbers AND interpreting where they were generated and how to change them is the road to owning and operating a profitable business.