"Growing Your People Monthly" Newsletter

February 2010

"A good decision is based on knowledge and not on numbers."

You'll recognize this Plato quote from last month, when we discussed the importance of numbers and financial intelligence. While it is important to know what numbers matter to you, you also need to have the knowledge of what those numbers mean to your individual situation. Are you familiar with the benefits of a strategic financial analysis? Read on!

Be well,

Yvonne Kinney-Hockert
National Speaker, Business Consultant & Coach
Consulting Solutions, LLC.

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What Are Your Numbers Telling You?

Many people are operating under the misperception that any financial professional can simply look at their financial statements and quickly assess what the numbers mean. Whether you want to know if your business is on track for growth, or if there are any problem areas that you need to address, a simple review of the numbers will not tell the whole story - the story that is uniquely yours.

As you hopefully already know, it's your job to have the numbers that generate the financial statements, and you need financial intelligence to ensure the numbers are accurate, but it is important to go beyond basic understanding. As Berman and Knight stress in their book Financial Intelligence, financial statements are based on assumptions that are naturally part of the financial reporting process. You need to look at all of the factors impacting your current financial situation and then apply this knowledge to many of your business decisions and the strategic planning process.

Some factors you will want to take into account are your company's legal and organizational structure, your business revenue generators, industry comparisons, and how you work with vendors and customers. You then need to consider how this all works together to impact the plan you have for your business. This is where the true benefit of strategic financial analysis comes in. In this type of analysis, your financial data must be carefully reviewed and compared - this can be most effectively completed by a company specializing in analytics. The strategic financial analysis will identify the various parts of your financial picture, based not only on a review of your financial statements, but also the underlying facts and assumptions the numbers are based on. You need to know which problems impact each other, or which may be a source of other issues rather than just a symptom.

At Consulting Solutions, we find that many small to medium-sized companies either don't have the time or internal expertise to gather and analyze this information. As we plan and strategize with companies to meet their goals on issues such as sustainability, growth, or succession, we can help facilitate and work through this more formalized analysis process to help make a significant positive impact on their company.

As Plato urged, identify what numbers matter to you, but then take the full story of your financial picture into account so you can strategically act upon your knowledge.

Your Call To Action. . .