Starting and a growing a company is an inherently nebulous process. Often, you won’t know the right course of action, and your best way to move forward is to simply make a decision, evaluate how well it worked, and refine your strategy based on the results.
Being entrepreneurial doesn’t end at starting a business; it means constantly striving to perfect your business model and swiftly adapt to changes.
Entrepreneurs have started trying to capture as much data as possible in order to make decisions. And in the process, “big data” has become its own cottage industry. But overlooked in this data grab is the importance of financial data and accountants, specifically.
When faced with a tough decision about their company’s future, entrepreneurs almost always forget to consult their accountants. You may just think of your accountant as a number-crunching tax handler, but he or she actually holds the secret to what is going wrong (or right) with your company.
What the accountant has is troves of financial data, and with the right amount of financial data, a good accountant can almost instantly identify a business’s strengths and weaknesses.
Is one of your salespeople underperforming? Do you have a manager whose team is particularly productive? Are your costs of goods sold too high? Are you prices too low?
Your accountant likely has the answers to all of these questions and the numbers to back them up.
Entrepreneurs tend to make decisions using their gut. This is not necessarily a bad thing as being an entrepreneur requires a healthy amount decisiveness and self-confidence. The problem with this mindset, however, is that we as business owners end up making decisions to serve our bottom line, when we should be looking at the financial data first and making decisions based on that information.
A smart entrepreneur doesn’t just consult his accountant at tax time. He or she knows the underlying reasons why your business is succeeding or failing and should consulted a minimum of two times per year for non-tax-related purposes.
That is, until your company gets big enough to warrant hiring a CFO, at which point, financial data should be at the root of every decision.
As told to John McDermott.