Paying Attention to the Numbers Is Critical to Running a Business

Paying Attention to the Numbers Is Critical to Running a Business

In a line made famous by the movie Jerry Maguire, Rod Tidwell, the football player portrayed by Cuba Gooding, Jr., exhorts his manager, played by Tom Cruise: "Show me the money!"

Savvy business owners intent on success know that they have to keep an eye not only on the money, but also on the when, where, why and how of the manner in which money flows into and out of their operations.

Whether they come from profit-and-loss reports, balance sheets, income statements or other sources, financial numbers and performance metrics are some of the most powerful weapons available to business owners in their battle to stay on top of their companies' financial condition and operational capabilities.

According to Trendsetter Barometer, a periodic PricewaterhouseCoopers (PCW) survey of CEOs at 383 of the fastest-growing private companies in the nation, 78% of fast-growth companies use five or more metrics to track their business performance. Chief among them is operating income, rated as "very important" for managing their business by 88% of fast-growth CEOs.

Others include revenue growth, rated "very important" by 81%, on-time performance for customers (67%), product/service line profitability (66%), product reliability (59%) and customer response time (54%).

The survey also found a direct correlation between the number of performance metrics used regularly and the average size and growth of the companies polled. Those using 10 or more metrics were larger than average and had been growing at a pace 5% faster than average over the previous five years, despite their greater size.