Know the Numbers
/The following is based on a section of my new book, “How to Have a Wildly Successful Career in Compliance,” which will be published on June 19th! Pre-order is available HERE.
Does this joke sound familiar to you? “I got into compliance because I don’t do math…” It’s a variation of the “Since I can’t do math, I went to law school,” retort, but for many of us, we think it’s true. It doesn’t have to be though, and to advance your career at the fastest possible rate there are numbers you need to know. These include:
What is our Stock Price or Forecast?
It’s critical to know where the business is now. If you’re publicly traded, it’s easy to see the movement of the stock price. Just Google the company’s name and “stock price,” and you’ll get a graph of the stock’s movement over the past five years. If it’s up, congratulations! Your management is probably happy. If it’s trending downward, you may be in for a bumpy ride.
If your company is not publicly traded, try to find out how the company has been doing. Has it been paying bonuses? Has it been giving raises? Has it been laying people off or
restructuring? Try to find out all you can about the current state of the business and where it hopes to go financially.
What is Our Revenue?
Revenue is defined by the Business Dictionary as “The income generated from sale of goods or services, or any other use of capital or assets, associated with the main operations of an organization before any costs or expenses are deducted.” In other words, it’s all the money the company brought in that year. Knowing the company’s revenue is useful, because you can see how it improves or falters year-on-year. A company’s revenue shows how much it sold.
Major investments, new product development, paying staff, and other costs will be deducted from the revenue to give you the next most important number: Profit.
What’s Our Profit?
The Business Dictionary defines profit as, “The surplus remaining after total costs are deducted from total revenue, and the basis on which tax is computed and dividend is paid. It is the best-known measure of success in an enterprise.” Profit is what’s left over after salaries are paid, office rent is paid, and marketing costs are taken out (among other expenses). Profit is a critical number, because it tells you if the company made any money this year. Revenue only shows how much money came into the business. If costs exceed revenue, then the company won’t have made any profit, which can be a dangerous situation to be in.
When you consider profit, you should think about any exceptional costs the company has had over the period of time you’re looking at. If they recently bought a competitor, this may have bitten heavily into profit for one year but is also a sign of a desire to grow.
What’s Our Plan?
Once you’ve got a solid grasp of the numbers, your next task is to know where the business is going. What product lines are selling well? What new products are being developed? How is changing technology or other potential disruption affecting the sales and marketing plans for the company?
The more you know about where your company wants to go, the more you can be a strategic partner. And the more you know about the numbers, the easier it will be for you to communicate with the business.
