Jack Nicholson ad-libbed “You can’t handle the truth” in the movie “A Few Good Men.” The original screenplay had the line as “You already have the truth.” I love that scene!
I’ve lost count of how often business owners tell me that “I don’t trust my data” or “I don’t really look at my numbers other than my bank account, all numbers lie”.
There is a reason most of us hire accountants to organize our financial data. It’s mostly so that we can keep the most money. Your taxes are important but they aren’t telling you everything that you need to know. It is the data that your people, systems and processes produce that reveal the truth behind how well your business works.
At some point you may have to take the metaphorical stand and someone who is valuing your business is going to judge your business’ truth by your numbers. Those numbers confess the money customers are willing to pay you for value. Those numbers disclose the efficiency of the systems, data and processes that make those customers profitable. The truth is not based on your emotional perception of value. The truth is built on what the data actually tells us about your business’ performance.
You may be hoping to build a legacy business and have your heirs take it over some day. Unfortunately, second generations often struggle with keeping up the same level of growth. If you have seen the wildly popular show, Succession, you know that your kids aren’t you and your teams’ loyalty to you is not the same as it would be to your kids. The systems still matter in a succession plan.
When should you face the truth?
If you are like most business owners, you are just happy to keep your foot on the gas pedal and keep on accelerating your growth. One of our clients just sold his business for tens of millions of dollars more than he was offered just a year prior. How? He decided to get to the bottom of his numbers and use all that data to more than double his revenue on a monthly basis. Another client has had a great business but he decided it was time to grow it to a whole new level. He has seen some amazing growth the last couple of months but he realizes that in order for him to truly scale his business model he needs to optimize all the systems. He doesn’t trust his numbers because he knows the way they have been tracking things may be less than ideal and in the past he was just happy to see his revenue grow. Today, he is facing his truth and cleaning up his data, so that he can trust it and use it to grow.
If you were to take the stand today, could you handle the truth? As the original “A Few Good Men” read, you already have the truth! You just need to make sure it is working for you.
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