Have you ever looked at a balance sheet or any other financial document and simply haven’t been able to make heads or tails of it? The numbers all just seem to swim together, and you think that maybe, possibly, you know what it means, but you aren’t sure?
If so, you aren’t alone. Many entrepreneurs, while they have great ideas and plenty of drive, freeze up when it comes to basic finance or accounting tasks. As a result, they either end up spending more money than they need to hiring other people to manage the numbers side of things, or they make decisions and manage their business in such a way that they don’t reach their full potential – or worse.
The fact is, there really isn’t any such thing as a “numbers person.” Yes, there are some people who simply seem to understand numbers and don’t have any trouble with even the most complex concepts and equations. But, even if just the very idea of dealing with numbers makes you break out in a cold sweat, if you follow these steps, you can get more comfortable with it and learn to make better decisions for your business.
Step 1: Change your mindset
The first step to becoming a numbers person is changing your own mindset. Stop telling yourself that you aren’t good at numbers and that you’ll never understand them. Research in the UK revealed that about 50 percent of adults struggle with math, and for many of them, it stems from a bad experience at some point in school.
Now that you are an entrepreneur, it’s time to move past that mean algebra teacher in high school or the calculus course you failed in college. Even if you have struggled in the past, know that with the right training and review, you have the capability to understand numbers, and you can improve.
Step 2: Get help
Most business finance isn’t rocket science – it’s actually simple accounting, and you don’t need a degree in mathematics to figure it out.
However, if you don’t have a background in business or math, it’s useful to get some training and education in this area so you can more easily understand and work with your company’s numbers. Consider taking some accounting and finance courses at your local community college, or enroll in an online business certificate program to give you the foundational skills you need to run your business.
Remember that you aren’t trying to become a world leader in business accounting – or even a CPA. Your primary aim is to get a grasp on the business basics so you have the confidence to make better decisions for your company.
Step 3: Learn to put numbers into words
Simply understanding the numbers in front of you and being able to run calculations isn’t enough to run a successful business. It’s arguably more important to be able to turn those numbers into an action plan and use them to make decisions and plans and set goals. Therefore, it’s important that you develop your analytical skills and find ways to take what you learn from the numbers and put them into words.
Being a numbers person as an entrepreneur means being able to look at the numbers, understand what the data is saying, make a recommendation for action based on that information and predict an outcome or impact to your business based on that action. In other words, it’s not enough to just know what your profit margin is, but you should also be looking at ways to increase that margin and what the potential effects of those actions are.
As an entrepreneur, you are likely to find this last step the most compelling, as it requires you to be strategic and take action in your business – not just collect data for data’s sake. However, without a basic understanding of your business’ numbers, it’s all but impossible to be strategic.
Therefore, you need to stop making excuses and saying you are “bad at math” and start taking steps to improve. Get help, ask questions and if you need to, seek out a mentor who can walk you through some of the trickier concepts and help you stay on the right path. When you do, you won’t have to worry about not being a numbers person anymore.