{"id":713,"date":"2013-02-12T23:33:49","date_gmt":"2013-02-12T23:33:49","guid":{"rendered":"http:\/\/www.success-academy.org\/home\/?p=713"},"modified":"2013-02-12T23:33:49","modified_gmt":"2013-02-12T23:33:49","slug":"rear-view-mirror","status":"publish","type":"post","link":"https:\/\/www.success-academy.org\/home\/rear-view-mirror\/","title":{"rendered":"Rear View Mirror"},"content":{"rendered":"

W.Edwards Deming<\/strong> said “Managing a company by looking at financial data is the equivalent of driving a car by looking in the rear-view mirror.”<\/p>\n

Financial data is basically \u2018historical data\u2019.<\/strong>
\nThe Profit and Loss Statement<\/strong> is for the prior month or prior year and the Balance Sheet<\/strong> is a snap shot of\u00a0the business at a specific date in the past (even if recent).
\nHow useful it is to predict trends<\/strong> depends on both how old and how accurate the data is. You will also need\u00a0something to compare it to, prior months or years and competitor or industry data.<\/p>\n

\"money-computer\"<\/a><\/p>\n

In the past,<\/strong> when change was not the \u2018unchangeable\u2019 factor, when business cycles, technological advances\u00a0and customer trends were months or years, financial data was a solid basis to build upon.<\/strong>
\nNow cycles and trends may only last weeks and the only certainty companies have is that they either\u00a0innovate or die.<\/p>\n

To manage a company you need to look to the future, predict the trends and position the business\u00a0accordingly.<\/strong><\/p>\n

So what data is important for looking ahead?
\nThings like the number of customer calls salesmen are making<\/strong> can indicate future sales if you monitor the\u00a0average conversion rates and the average order value.
\nThe number of calls and conversion rate<\/strong> is information that should come from the sales department but the\u00a0average order value<\/strong> for most businesses is the same as the average invoice value,<\/strong> which should come from\u00a0the accounting department.<\/p>\n

Your future cash balance depends on your recent sales and the average time it takes to collect from\u00a0customers, less amounts that have to be paid.\u00a0All of this data should be available in real time in the accounting department.<\/p>\n

Of course a good understanding of the business and of finance is important to make the necessary\u00a0calculations and analyse trends.<\/strong><\/p>\n

Financial data will show you where you are and where you will be soon,<\/strong> but you need to know your\u00a0customers and your market<\/strong> well, so that you can predict the changes<\/strong> and use all these data to stay ahead of\u00a0your competition.<\/p>\n

Stop looking in the mirror and use your financial data to look ahead.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

W.Edwards Deming said “Managing a company by looking at financial data is the equivalent of driving a car by looking in the rear-view mirror.” Financial data is basically \u2018historical data\u2019. The Profit and Loss Statement is for the prior month or prior year and the Balance Sheet is a snap shot of\u00a0the business at a […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[11],"tags":[],"_links":{"self":[{"href":"https:\/\/www.success-academy.org\/home\/wp-json\/wp\/v2\/posts\/713"}],"collection":[{"href":"https:\/\/www.success-academy.org\/home\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.success-academy.org\/home\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.success-academy.org\/home\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.success-academy.org\/home\/wp-json\/wp\/v2\/comments?post=713"}],"version-history":[{"count":4,"href":"https:\/\/www.success-academy.org\/home\/wp-json\/wp\/v2\/posts\/713\/revisions"}],"predecessor-version":[{"id":970,"href":"https:\/\/www.success-academy.org\/home\/wp-json\/wp\/v2\/posts\/713\/revisions\/970"}],"wp:attachment":[{"href":"https:\/\/www.success-academy.org\/home\/wp-json\/wp\/v2\/media?parent=713"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.success-academy.org\/home\/wp-json\/wp\/v2\/categories?post=713"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.success-academy.org\/home\/wp-json\/wp\/v2\/tags?post=713"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}