When I say that "Data drives the enterprise," I'm not talking about an episode of Star Trek: The Next Generation." I'm referring to one of the key lessons I learned in founding an international startup company and overseeing its tremendous growth. The lesson can save you a lot of heartache and may even save your business.
During the seven years since its founding, SynFiny has witnessed more than one occasion when we got so busy driving revenue and delivering projects for our clients that we - no, scratch that - I didn't keep a steady eye on our company's financials or key data metrics.
In our third year of operations, we had already built ourselves into a multimillion-dollar business. There was lots of excitement and celebration as the revenue came in. It was so intoxicating we didn't step back and assess the growth. It was virtually all -- 90 percent of that year's revenue -- derived from a single client. When the project ended with the client, we were back to the beginning and needed to somehow offset the lost revenue. With a lot of hard work, patience, and persistence, we landed new clients and diversified our client base to become less reliant on a single revenue source. Today, no single client contributes more than 20 percent of annual revenue.
Learn from my mistake. The data was staring me in the face, and I chose to be in the present and celebrate our success. What I should have done was analyze the past, project the future, and use those insights to chart a new course for our enterprise.
This story is repeated time and time again in the world of business. An entrepreneur starts a company, and it gets off to a great start. The business grows rapidly. Revenues take off. Profits soar. The organization grows by leaps and bounds. And all during this time, the founder makes jokes about not knowing the first thing about accounting or other key data critical to the success of the company.
Well, often the joke's on them because it's right about this time that it all tanks because there suddenly isn't enough cashflow to keep everything going. The Wunderkind entrepreneur is left to wonder what happened. As they stare in the mirror amidst their dark night of the soul, an entrepreneur who is in over their head will look for a scapegoat and that's not going to fix anything.
The one who will turn things around and eventually succeed, however, realizes that the person staring back at them in the mirror bears the responsibility. They were the one who got so caught up in the flush of early success that they neglected to check the basic financials and review trends from income statements, revenue and expense trends, balance sheets, and other data metrics.
The problem is a basic one: In the excitement of a new business and early success, it's easy to forget the critical importance of consistently reviewing broad-based data. Or it may be easy to focus on familiar, exciting, or positive data at the expense of the rest of it (sales, marketing, quality, legal and tax, expenses, labor, supply chain, etc.). Don't let that happen.
It doesn't even need to be the CEO or founder who consistently monitors key data. The COO, CFO or CIO can bear that responsibility, provided they have the appropriate expertise in reporting and drawing insights from that basic information.
If the old adage "Cash is king" still rings true, then in today's fast moving global economy the new adage is "Data is the kingdom." I'll say it again: "Data drives the enterprise."
Remembering that will go a long way towards helping your company live long and prosper.