At MSPCFO the first thing we do with new clients is review their information. We look for missing wages, abnormal costs in agreements and other pieces of information that don’t properly reflect the business. We have been doing this a while so we are pretty good at finding mistakes. You may ask why we do this. Go ahead…ask. We do it because the only thing worse than having no information is to have false confidence in bad information. If you are going to have a difficult conversation with a client or an engineer, you should know that such a conversation is appropriate. You don’t want to put a productive engineer on probation or raise prices on your clients that are already your most profitable.
Taking a Lesson from Teddy
Think about the movie Rounders. Teddy KGB, our hero’s nemesis is confidently betting that he has a better hand than Matt Damon. He makes large bets thinking the chips are his for the taking.
(spoiler alert)
He should not have had confidence in his position. That was not a good hand for Teddy. **
What About Dirty Data?
It may seem almost trivial to do review your data, but imagine how easy it is to not have the right information. Remember, your PSA must push accurate revenue numbers to your accounting package so you can file taxes and invoice your clients. It also has to track tickets well because that is fundamentally what you are paying for. To accomplish the core tasks of your PSA, costs and wages really don’t have to be correct. Obviously, it is far better if it is for reporting purposes, but until you are ready to take reporting seriously, certain information can be wrong.
When we start working with partners, it is because people want to be serious about reporting. The partners want to understand what levers to push, what dials to turn (that’s all the metaphors I have for now) to make their business run smoother and more profitable. We help them do just that. There is one thing that stands in our way – confidence in the data.
Stay tuned for our next post where we discuss the specific ways that data should be reviewed and cleaned and the challenges you might face if you are to trust your reporting.
** For those of you who have not seen the movie or for whom poker references are not appreciated, sorry.
