I love numbers but…

I absolutely love numbers. Maths was always my favourite subject and when studying Maths, English and History at A-level it was always my maths homework that I wanted to do first. There were ‘right’ answers and the ability to complete the exercises, in a way that didn’t apply to essays as they could always be tweaked. 

However, throughout my accountancy training and as I started doing more financial analysis, I realised that the “but” was increasingly important. My “but” is that numbers out of context mean nothing – and what I actually  love doing is creating the context and drilling down into what the numbers are really saying (or hiding). 

For example, “I sold 5 today” – could be amazing (selling 5 $1m houses) or unimpressive (selling 5 thumb tacks). “We grew by 200%” could be amazing (you already have a very strong base and continued to grow at that rate) or unimpressive (selling 15 thumb tacks!), whereas growth of 1% in a shrinking market could be very impressive. Numbers need context and to be questioned.

You also need to be wary of comparatives and again question what was actually happening in both time periods. For example if you sell Easter eggs and you are comparing your March 2021 vs March 2022 sales you might have been very disappointed this year – however given that Easter was on the 4th April 2021 and on the 17th April 2022, far more Easter eggs were likely to have been sold in March 2021 than March 2022. On the face of it, this year’s numbers don’t look so good but with context and doing the comparative by combining March and April’s numbers, you will get a far better picture of what was going on. 

Numbers are a great way to tell a story but they are rarely as objective as many people believe and instead need further analysis and questioning. Don’t be afraid to ask about the data source, the comparatives that were used and any numbers that you don’t think are being shown.

For a fascinating deeper dive into this I strongly recommend Tim Harford’s “How to make the world add up” (‘The Data Detective’ in the USA/ Canada) or his podcast ‘More or Less’. It reminds us all to dig into the numbers and really question them rather than take them at face value – especially if your initial reaction to a number or statistic is “really?!?”

And if you need help really digging down to understand your numbers, then don’t hesitate to get in touch. I work with businesses to bring their numbers to life – to create clear reports that highlight metrics that should be being managed, do full cost analysis and help your team bring their numbers to life.