Hello and welcome to Business 300.

My name is Philip Kulenshov and this is 300 seconds about business.

We're all a busy people, so I have five minutes or less to get my point across.

We don't have much time left. I'll just get to the point. In all your undertakings, you want substance, not fluff. We're tempted towards fluff, but as business owners, we really can't afford it. There's no place for it. The temptation for fluff is especially true in finance. Fancy charts and complicated spreadsheets masquerade as substance. Irrelevant ratios and misleading statistics might give a

semblance of control. It's easy for fluff to arise from finance. And it's nowhere of

more consequence that it doesn't. It's critical that finance presents and reports accurate and relevant

information that gives clear direction and drives good decisions. So what should your finance

department produce in order for its output to be meaningful and valuable? I have four things to work

through. The first value ad that finance should focus on is data. This has to do with individual records,

transactions, and longs. Now, there is, of course, an endless opportunity to collect and track all

sorts of things. There is way more irrelevant and useless data than there is useful. But that doesn't

mean that there isn't anything useful. Some obvious data that is useful to collect at the top of the

list are the accounts on your financial statements. I've talked about financial statements on some

earlier episodes. You can look them up. This is all your revenue produced and expense outlet on

your income statement. This is your assets and liabilities on your balance sheet. This is your

inflows and outflows on your cash flow statements. The records pertaining to these accounts should be accurate in order for you to even start understanding what is happening in your business.

Other data logs have to do with secondary records pertaining to the financial statement accounts.

For example, what was the revenue made up of?

How many of which products did you sell this month?

How much overtime versus normal labor hours compose your labor expense? This is where things

could start to unravel. You need to make sure that the logs and data that is being collected

and tracked is relevant for the decisions needing to be made. Otherwise, it gets out of hand fast.

...