What is it about the word DATA that makes some business owners recoil?
I just finished a bookkeeping consultation and I kid you not, my client would tensed-up every-time I mentioned “data” … So, I asked him “What’s your discomfort with data?” He responded, I just want to “keep it simple”.
If I had a dollar every-time a business owner says they want to “keep it simple”… Don’t misunderstand, I’m all for keeping it simple but when it comes to knowing your numbers, I wish they would replace it with “keep me informed”.
There’s no reason to be uncomfortable with data. In fact, you’re already collecting data; the problem is you’re just not collecting it in a way that tells you how your project is doing. Take for instance the job you currently have on the floor: How much of the allocated hours has the shop used? What’s your committed cost? How’s your actual costs comparing to your estimate so far?... He shakes his head, I’ve been asking to see that kind of information for months…
That’s what “data” can show you. It’s the details of your business; the who, what, where, why and how much.
We had a great meeting after that discussion. You can say I converted him from “keep it simple” to “keep me informed”. The plan going forward is to take a closer look at what’s being captured and separating his catch-all account buckets, breaking out expenses by cost centers and most importantly applying all job-related costs to the appropriate job.
If “keep it simple” is not working for you, you gotta consider changing to “keep me informed”.
What can you do to stay better informed?
Business owners or managers should make it mandatory that all business transactions are tracked and recorded in a systematized way.
Segregating your costs will enable you to know how much it cost to provide your product or service.
i.e implement job-costing procedures
Here's how to do it:
Develop a system that meets your specific needs
Focus on cost centers (labor, material and overhead expenses)
Leverage technology to help standardize data input
Utilize smart numbering system and automate tasks that can be automated
Customize reports to review & validate