Original Post By Micky Deming
Why don’t entrepreneurs connect their vision to their financial information?
I should clarify what I mean. From experience, it seems like the majority of small business owners have a vision. They want something and are moving toward it.
These same entrepreneurs get financial reports every month (at best) and typically don’t get much from these except an affirmation that things are still operating.
I believe the reason why is because financial information is too complicated. I don’t mean it’s too difficult to understand. I just mean what comes back to the business owner often looks like this:
It’s just a bunch of numbers, and none of them stand out or have any real meaning. And they are looking at the past, which you can’t do anything about.
So there is a gap. There is a vision for something you want. And there are financial reports that have very little impact on that vision. So they entrepreneur is left working very hard to grow, but not really having a great understanding of what it will take to get there.
I believe the key to bridging this gap is to dramatically simplify.
The 80/20 rule, the law of the vital few, states that for many events roughly 80% of the effects come from 20% of the causes.
The 80/20 rule basically is saying that whatever it is you want does not depend on a million factors, but a few things that are most important.
So the key to business, and the key to financial savvy is uncovering what are those “Key Drivers” to success and then tracking them relentlessly. Here is how we break this down in our new course, DRIVE: The Entrepreneurs’ Financial Roadmap to Success.