Financial Planning

Little (coffee) shop of horrors (part two)

If a familiarity if not a deep understanding of the numbers in and around your business was not necessary, we wouldn’t be here.  But it is and we are definitely here for you.  So grab a coffee if that’s your thing and we can also finish the story about our café.

But before we go there, we wanted to help you understand why numbers are important instead of just saying they’re important over and over again.  Now remember, there are two sides to every coin and that goes for numbers that relate to your business as well.  Let’s take a look at the pros and cons and find out why numbers aren’t always enough.

The pros and cons of numbers

Numbers can’t be all good though, can they?  We think that numbers are all good but it takes a skilled listener and experienced practitioner to interpret and translate them into profitable actions.  Nonetheless, here are the pros and cons - shortlisted.

Pros:

  • Honest - When it comes to profit and loss, the numbers are absolute quantities.  They don’t lie because they cannot lie.
  • Translatable – language, especial the English language is very much open to interpretation. Income of say $800k per annum versus $1.2m in outgoings per annum means trouble in any language.
  • Indicative and interpretative – a number of financial services providers are at pains to ensure that you (potential clients) understand that past performance is not an accurate predictor of future performance.  Numbers however can and should be used to let you know what is working in your business and what needs to be adjusted.

Cons:

  • In the hands and calculators of the uninformed numbers can be made to paint pictures that are not entirely accurate or even misleading.  It’s important that the people working on your numbers are on your side and share your code of ethics.
  • Numbers can become more and more complex the deeper you dig.  Knowing when to say when to avoid “analysis paralysis” is key.
  • Delving into the figures before arriving at a conclusion isn’t as sexy as just going on gut feel and running with an idea – but dealing with sizable losses isn’t very sexy either.
So whatever happened with the café?

We love coffee and we love numbers but we couldn’t serve two masters.  The numbers helped us to decide that doing good for our clients with our accounting skills was logical, practical and best for all.

We still love to give our all to our Inspire clients and we still don’t sic the clock and timesheet on you if you need to enquire about something.  And we most certainly still relish the opportunity to have a coffee with you – we’ll just get it from the local coffee shop instead.