There is an old saying that “a picture is worth a thousand words.” While I’ve never done the math, I suspect that is close to true. I often use charts and graphs to tell a story. Years ago I remarked to my boss that he had the most amazing pictures of his kids and asked how he did it. He told me that for every one I saw, there were a hundred that weren’t so great! The same is true of the charts and graphs I use (although I do a bit better than 100:1).
I often use the power of Excel (I suppose I should tell you that Excel is a registered trademark of Microsoft Corporation) to produce various charts and graphs in order to see what I think is interesting. Sometimes, nothing comes of it, but often I find something interesting by being able to visualize the data.
To the left is a chart showing revenue and labor dollars along with percentages to revenue. I don’t want to make a point using the specific data because it’s not relevant to you, but what would it look like if you plotted your data in a similar manner? This should easy for any business owner to do (or have someone on their team do).
The next graph is the before and after resulting from an accounting change. The variability in the month to month gross profit percentage has declined 78%. April really wasn’t as bad as the line appeared nor were June and August as good. This change helped the company get a better handle on operational efficiency and profitability. I’ve seen this same phenomenon countless times! Bad data either makes it appear as if the sky is falling or things are great, making it impossible to plan. One month you want to shut the doors and the next you’re singing “let the good times roll.”
Finally, we have a pie graph that shows where the dollars go. This consolidates a 100+ row income statement into a handful of categories. I like to start at the top and drill down. If I’m trying to cut costs, I’m not starting with engineering (the smallest slice of the pie); although I may ask if we are investing enough in that area!?
This is all real data. It’s not about what you think about some anonymous data. But rather can you gain some insight by using charts and graphs to look at your data?
If your business could benefit from fractional CFO services, I would welcome the chance to speak with you. Please give me a call at (314) 863-6637 or send an email to [email protected]
The archive of these monthly newsletters is posted at the Resources section of homza.com
your cash is flowing. know where.®
Ken Homza
Copyright @ 2022 Homza Consulting, Inc.