12 Habits of Effective Entrepreneurs-Habit 2

July 19, 2023

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12 Habits of Effective Entrepreneurs-Habit 2

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Habit #2 – Numbers-Focused

“Things are looking better and better,” said the CEO, as even the least analytical in the crowd looked incredulously at the chart showing otherwise.

Within two years, the company closed its doors for good. Over 16,000 people lost their jobs, including the CEO and the people in that room.

Why did this happen?

It is because the leaders failed to pay attention to the numbers. Like many leaders in business, they focused on growth and income; but, also like many, they failed to give due attention to the expenses. And everyone paid the price, from employees to investors.

The Story of Numbers

Numbers tell the story of a business. Income and expense tell the story of profitability. Engagement numbers tell the story of the people and what is of interest to them.

“But I’m not a numbers person.”

This is the lament of many small business owners. “I love ideas, but spreadsheets are like Kryptonite to me!”

That’s okay. But they’re trying to tell you a story.

You don’t have to love spreadsheets, but you will need to work with someone who does.

This is where knowing your strengths and weaknesses comes into play. If, for instance, you know that you are a driven, idea-focused leader, then be sure to offset your strengths with someone or a team who has the strengths of discernment, analytics, and detail. A business needs both the expansion and the containment that each brings to the table.

Another reason for those statistics mentioned in the first article in this series is a numbers-related issue somewhere in the business.

How can you cultivate the numbers-focused habit, even if you’re not a numbers person?

Determine what results you want to measure.

There are myriad of numbers in a business. Determine which ones actually indicate the success of your business. Vanity metrics may make you feel important, and you may have a strong following. But what numbers will actually show you the conversions to sales? You may only need to review a few numbers each month to get a clear indicator of the health of your business.

Review them in a way that resonates with you.

Ask a team member to gather the numbers for you and present them in a way that tell you the story. Do you need to see numbers graphically or in an infographic format? Do you need top level information without every single detail? Know your style and apply it to the numbers you need to know.

Manage them with regularity.

When it comes to finances, there is normally a very rhythmic cadence for each month, quarter, and year. Develop the routines you and your team need to address the numbers for each of these time spans. As you develop these routines, numbers will become more manageable and less threatening. Sometimes you just have to face them and stare them down to a manageable scale.

Understand the basics.

As the leader of a business, you don’t have to understand everything to the level of a CPA, unless, of course, you are one! But you do need to understand the basics. Work with an accountant who is willing to explain these to you at the onset. This helps you lead the business with good insight.

Interpret the data.

Data is best interpreted from two vantage points – top down and bottom up. Determine where your strengths are and find someone with opposite strengths. This will help you balance the numbers in the business and see things from the different vantage points that may not be evident from just one angle.

Apply the people side to the numbers.

Many leaders fail to tie the numbers to people. This is a fatal flaw, since business is ultimately about people – the people who are customers and clients; and the people who serve them. As you look at the numbers, ask what the numbers are telling you about the people. What are they indicating your customers and clients need and want? What do they say about employee engagement? What do they reveal about vendor relationships?

Understand that income does not equal profit.

Entrepreneurs tend to be optimistic overcomers. As such, their focus is on creating sales. Almost any challenge is met with an effort to generate income, and so it is often about the next launch, the next promotion, or the next product. But they often fail to count the cost for creating the products and programs. It surprises them to learn that what they thought was their most profitable program, for instance, was actually costing them more to produce than the income it generated. This is why paying attention to both sides of the equation (income and expense) helps to ensure profit. And this is a very important habit to develop.

Make it a habit to give attention to the numbers telling the story of your business. Be the CEO who can stand in front of your team and lead the charge in a way that protects them and the business. Make your story a successful one by making the numbers count!

As the CEO of Strength Leader Development, Deb Ingino is a highly sought-after international executive mentor, coach, trainer, and speaker. Deb is well versed in global business operations and helps business leaders and their teams to discover and leverage their strengths, so they can create highly collaborative teams that deliver great results. With a refreshingly direct style, and using the Maxwell Method, Deb helps leaders and teams to deliver profitable results. Connect with Deb to learn more about her mentorship and coaching programs to equip you with advanced strategies to elevate your results