That is what my dad always used to say, but in French. Those of you who can recall the orange flowery carpets of the 1970s may be able to better visualize what he was referring to; but he meant that if you can manage to trip on the pattern of flowers on a carpet, then you are really tangled up in details.
As we end this great year and envision the prospects of a brand new year, budgets and resolutions are on everyone’s mind, but my dad’s words ring in my ears still. Very often, we get so caught up in the details that we forget the big picture, significant milestones, and people that matter. In the spirit of the holidays, I’ve been spending some time with my parents at their home on the east coast of Canada. —and a few hours in a makeshift office in their basement. Reflecting on this year’s business challenges and successes, memories keep intruding, including some of my dad’s favorite sayings. I’d like to share a few of those with you, all French idioms, which I have translated to English, because they all apply to your business strategy and your financials.
Dad’s Words to Live and Lead By
1) Don’t get your feet caught in the flowers in the carpet.
(Enfarge-toi pas dans les fleurs du tapis.)
Accuracy is great but as successful executives and business owners know, communication is even more important. You need to know how your numbers tell the story of your business at a high level. In this age of technology, it is easy to get over-detailed and want perfect numbers, to the point of costing everything instead of understanding costing and sales relationships, for example. Use weekly, even daily numbers; even if they’re not perfect, they are better than numbers a month after month-end. Keep the numbers simple, focusing on key drivers of sales as well as key drivers of costs to generate those sales and to execute. Sales, contribution margins, and real operating margins per FTEE (per unit or project) are great places to start. But always keep the big picture in mind so your feet don’t get caught in the flowers in the carpet.
2-) Do you have two feet in the same shoe?
(As-tu les deux pieds dans la même bottine?)
You get the picture: It’s hard to move forward if you have two feet in the same shoe. To be fast and nimble, to stay on top, looking ahead, you need timely, actionable data that speaks to you. Very often, financial staff can get caught in spreadsheets, over-analyzing the data, lost in the details while people that can use the information do not see it. Your financial staff should focus on the key points and share it with key people quickly so they can get insight and act.
My dad was always quick to move and expected as much from us. Anticipating is important for leading; it’s so much better than reacting. If your numbers only look backwards and are not tied to your business drivers, outcomes, or market metrics, you cannot be fast on your feet.
3-) This changes the water in the beans.
(Ca change l’eau dans les “beans.”)
If the situation changes and the data you are using to make your decision does not reflect that change, it can lead to ill-informed decisions. Do you know your true costs and how those costs change with a change in activity as well as the return on those costs? Traditional accounting systems are focused externally and account for the past. As a result, they disguise true costs as sales, production and expectations shift. Successful companies I work with act on true revenue, costs and cash flow data, to leverage their best assets. They are looking forward to growth and adapting, not relying on archaic numbers that were perfect yesterday but no longer reflect reality.
Call to Action
1-) Are you spending more than you are bringing in, even if your sales are increasing?
2-) Are you building detailed fixed budgets that look backwards and do not reflect reality or using dynamic forward looking actionable numbers?
3-) Do you know your true costs, the return on those costs and the return on each sale?
4-) Is your financial data stale or fresh and actionable?
5-) Are you setting strategy and tactics with confidence or are you shooting in the dark, hoping for the best?
Thank you all for being part of a growing community of business partners. I wish you a bountiful 2016, in every aspect of the word!
