Business Tip: Street Smarts - Follow the Numbers

It's the best way to spot problems before they become life-threatening.

To be successful in any business, you need to develop a feel for the numbers. You need to get a sense of the relationships between them, see the connections, figure out which ones are critical and have to be monitored. Why? Because numbers run businesses. They tell you how you can make the most money in the least time and with the least effort--which is, or should be, the goal of every company. You can give it all away if you want. But first you have to earn it, and the numbers can tell you how to do that as efficiently as possible, provided you understand their language.

Tracking the numbers by hand is the best way I know to learn that language, at least as it applies to your particular business. You can switch to computer tracking once you've mastered it, but if you let a computer do the work in the beginning, you won't develop the same intimate connection with the numbers. As a result, you may miss important signposts later on, when the numbers start to change. Those changes can be significant, especially if they come as a surprise. They may herald new competition arriving or indicate a shift in your customers' preferences or reflect unseen problems with your products or services. There could be any number of reasons for the unexpected changes. But you'll see them--and be able to respond quickly--only if you get into the habit early on of looking for them and trying to understand what they mean.

Source: Norm Brodsky in Inc. Magazine