Does it all add up

“The answer to the ultimate question of life, the universe and everything is 42”*. It’s a number. And numbers are everywhere. But it’s the interpretation of numbers that really matters.

When you are running your business the numbers that crop up the most are those monetary values. The income, the direct costs, the overheads and any permutation of those to produce the information you need. The important thing is that you get that permutation correct. We all know that numbers can lie, you just need to look at a set of statistics to know how many variations are possible.

Some numbers can’t lie
Your bank statement will always balance, a supplier invoice will show an amount due and your sales invoices show the amount you expect to be paid and so the entries that lead on from there must be correct. But those amounts will usually be allocated via an accounting system to a code used to collect together all other similar items. That code is usually a number and giving it the right number can give you very valuable business insights.

It’s not just monetary values that count. Using other numbers can be extremely helpful to obtain information, spot trends and help you to plan your business activity. Your stock turnover both in quantity and time will give you an indication of how something is selling. Your Facebook ‘hits’ will tell you how many people or businesses you have reached. And the numbers on your demographics will tell you how to best direct your advertising.

But when you are looking at the numbers make sure that the numbers you are using are as accurate as possible. Using those ten little digits well can be extremely helpful, getting it wrong can mean that nothing adds up.

Although Douglas Adam’s choice of the number 42 was allegedly totally random there are a whole list of events associated with the same number. Did you know, for instance, that Titanic was travelling at a speed the equivalent of 42km/hour when it hit the iceberg. So you need to use the numbers correctly to make sure your business doesn’t sink.

To discuss your ‘Business Guide to the Galaxy’ please give us a call on 0191 4879870 or email us at info@csaccounting.co.uk we can also arrange a free business health check.