Numbers People in Action: The Scenario
August 6, 2009, 5:59 pm
Copyright © 2009 Integrated Profitability TM
A suggestion came in to
“…include a simple but meaningful scenario which you’d have the three Numbers People work through to posting, reporting and interpretation and planning…”
This is a great idea. It forced me to think about how the Numbers People work, and why they need to work together. This should be fun and, hopefully, enlightening.
First, a simple scenario. In the beginning, before the Numbers People, there are the Business People: those who come up with the ideas that become a business. Without a clear outline of a concept, and details about the transactions that will make the business successful, there is nothing the Numbers People can deal with. If Business People cannot describe what it is that will generate profit, the first wave of the Numbers People, the Accountants, can’t specify what needs to be done with the numbers associated with the business.
If the Accountants can’t set down the rules, the Bookkeepers can’t post the numbers.
If the Bookkeepers can’t post the numbers, the Finance people can’t do any reporting.
Without reporting, there is no analysis or interpretation.
And without conceptual or historical data, there can be no planning.
This initial step, taken by Business People, of describing how they are going to make money, explains why Business Plans precede Financial Plans.
Back to a simple scenario. Let’s say the business idea is:
● Going to a warehouse store
● Buying a variety of snacks
● Taking these munchables to premium “sweet spots” and
● Selling them for outrageous prices
What are examples of premium “sweet spots”?
● A mid-afternoon break at an accountant convention, where the participants have been cooped up all day wrestling with debits and credits
● A mid-day gap between back-to-back SAT’s, where the teenagers with uber-metabolism have just sat through three hours of intense testing and they need to return their brains to some semblance of grey matter before the next battery of tests
● The end of an adult soccer team practice where the players have just finished two hours of non-stop drills, are adults who know better, but don’t care
A straightforward demand-n-supply business.
Next up: Hand-off to the Numbers People
Bill
William A. Stong
Email: william.a.stong@gmail.com
SBF&P # 36
Copyright © 2009 Integrated Profitability TM
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[...] work through to posting, reporting and interpretation and planning…” The first article set up the simple scenario, the second dealt with Accountants & Bookkeepers. Now, it’s time for [...]