I was going through the numbers with a client recently after they'd had a particularly difficult month.
Something in the business hadn't performed as expected and, once it had been properly accounted for, it was going to have a fairly significant impact on the year-to-date figures.
Obviously nobody particularly wanted to see that.
There was a perfectly legitimate accounting adjustment available that would have softened the impact and made the overall position look a little better.
So we started talking about whether they should use it.
We went back and forth for a short while, when my client said:
“We're just papering over the crack really, aren't we?”
That was exactly it.
Making an adjustment might make the management accounts slightly easier to look at, but it wouldn't change what had actually happened in the business.
Personally, I'd rather see the brutal reality.
Not because there's any virtue in having a bad set of numbers, but because once we accept what's actually happened, we can start asking much more useful questions about why, and that's where the conversation went next.
What was interesting was that there wasn't one obvious person to blame.
As we unpacked what had happened, it became much more about communication and the systems around the work.
Something hadn't been picked up when it should have been.
And, strangely enough, that's useful.
Because now we've got something we can work on.
I think there's a wider point in this for business owners.
We all like good numbers. If we've had a poor month, there's a natural temptation to look for the explanation, the exceptional cost, the timing issue or the adjustment that makes things look a little less painful.
And sometimes those adjustments are completely legitimate.
But I think you have to be honest with yourself about what you're trying to achieve.
Are you trying to make the numbers more accurate?
Or are you trying to make yourself feel better about what they say?
They're not necessarily the same thing.
One of the reasons I spend so much time looking at numbers with clients is precisely because they can start conversations that otherwise wouldn't happen.
A disappointing margin might lead us into pricing, productivity or buying efficiencies. A cash problem might take us somewhere completely different - the ownership, structure, frequency and cadence in their invoicing and collections process or how they position their terms of business with clients in the first place.
Something that's gone backwards unexpectedly might expose an issue in the way information is being communicated between people.
You don't necessarily know where the conversation is going to take you until you're prepared to look at what's really there.
And I suppose that's what stayed with me after this particular session.
The bad number wasn't actually the most useful part.
What mattered was resisting the temptation to make it look better for long enough to understand why it was bad in the first place. Getting to the root cause so you can fix it for the long term. Not ‘paper over the cracks’.
So if there's a number in your business at the moment that you're not particularly enjoying looking at, perhaps don't rush to explain it away.
Spend a bit of time with.
It might be telling you something useful.
Got a number in your business you're not particularly enjoying looking at?
Let's talk about it. You can book a FREE Growth Strategy Session with me here and we can work through what it might be telling you.
P.S. Curious about your own business strengths? Try the Business Success Scorecard. It only takes a few minutes.
