In my estimation, the two most important things you need to know to
be successful in your business are 1) Where does my money come from?
and 2) Where does my money go?  Those are listed in order of importance
so we’ll look at where the money comes from in this post.

I’ve worked with a variety of struggling
businesses in a variety of industries in my career, and the thing that
has impressed me most is that companies that struggle almost always
have a management team that doesn’t really know what’s going on in
their business.  The conversation almost always goes something like this:

 Me:  “Who are your top three customers?”

They can usually answer that — at least who the biggest customer is.

 Me:  “How much did you do with each of them (in total dollars) last year?”

Them:  “Well, I don’t know exactly.  I’d have to check.”

 Me:  “Okay.  How much did you do with each of them last month?”

Them:  “I’m not sure.  I’ll have to check on that for you as well.”

 Me: “Okay.  Who is your most profitable customer?”

Them:  “Again, I’m not sure.  We’ve never captured that information.  We can get it, though.  Do you want me to have the accountants go to work on that?”

 Me:  “No.  There are several things we need to do first.”

 And then we talk about the importance
of having the information you need to make management decisions right
there – right with you at all times.  If you, “have to go check” you don’t know what’s going on in your business.  Plain and simple.  Yes, you can find out, but you don’t know.  Because the truth is, you won’t go check every time someone asks you a question.  You’ll wing it, based on the info you’ve got right now.  Most times it won’t make a huge difference.  Other times it will kill you.

 It’s important to understand that if
the information is simply “available” but not currently in your own
personal knowledge, when a team member asks you a question, you’ll
simply answer that person with a response based on the portion of the
info that you possess right now.  The quality of the
answer will be directly proportional to the quantity of information you
can summon up from your memory, and the skill with which you process
that information.

 Having the information locked safely away in the computer gives you a false sense of security.  “There’s nothing I don’t know about this business,” you think.  But the actual truth of the matter is, “There’s nothing I can’t find out about this business.”  It
seems a subtle difference on the surface, but when you get right down
to it, it’s really what makes the difference between winners and losers
in the business world.

 Understanding your business is critical to its success.  
Understanding your customers is critical to understanding your business.