Wall Street Journal bestselling author Candy Valentino in his book The 9% Edge has invented a word called Numberthritis.
definition: a detrimental condition caused by neglect of numerical data and financial metrics, resulting in the development of a diseased business and inefficient operations.
an affliction marked by the avoidance or dismissal of financial indicators, leading to financial disarray, instability, and death.
“Numberthritis, akin to its medical namesake arthritis, manifests as a debilitating condition that afflicts entrepreneurs who neglect the development of their financial skills. Just as arthritis causes stiffness and inflammation in the joints, Numberthritis stifles business progress by hindering entrepreneurs’ ability to grow and sustain those levels of growth. Symptoms include a reluctance to read financial documents, an aversion to analyzing business metrics, and a general discomfort with key financial indicators. This entrepreneurial trap ensnares business owners who procrastinate on mastering their financial acumen, who don’t pay attention to their finances, won’t run a cost analysis, or won’t weigh opportunity cost. These activities are directly correlated to the number-one reason businesses fail: lack of profit.”
Candy Valentino suggests a number of ways to increase your financial acumen and decrease the side effects of Numberthritis. Top of the list is to seek assistance from financial professionals such as accountants, but also building the discipline to regularly review financial documents and reports enabling you to identify cash flow trends, spot potential financial issues, and capitalize on opportunities.
I see this as akin to keeping your eye on the road when driving. It has to be a habit. You won’t necessarily see an issue every time you look, but if you aren’t regularly looking you may miss the bend and drive off the road.
This blog kindly provided by Warren Hardie (WH Accounting & Advisory)
Visit Warrens website here www.whaa.co.nz
