Financial Details Can Mask the Big Picture

Do you sometimes find yourself bogged down in the financial details of your business? If so you may be missing some important insights. By insights I mean seeing and comprehending the true essence of something. When it comes to the financial aspects of your business the financial details can mask the big picture if you get caught up in them.

A Picture of What I Mean

One of my hobbies is painting. There are times when I get so focused on the details of a picture that I lose sight of what the finished work should look like. I regularly remind myself to step back and look at the overall picture to see if it makes sense. A picture is intended to communicate a message or feeling to the viewer. Because of that, if the artist becomes overly focused on certain details there is the danger that the details fail to come together as a whole that clearly communicates. The viewer may not even notice some of the details that the artist worked on so meticulously. So, while the artist may be trying to convey the beauty of a particular place in a landscape painting, the viewer may come away thinking they saw just another painting.

Artist

The same danger lurks for business owners and managers who focus only on the details yet fail to step back and consider just what the big picture is. This is a little counter to what I previously wrote about in The Details Matter in Business, but now I’m making a different point. While in that article I was pointing to the importance of understanding how many seemingly small expenses could add up to a lot and cause significant harm or even sink a business, it is equally important to keep the big picture in mind. Since financial details can mask the big picture it is very important to try to keep the big picture in mind.

An Example

Let’s imagine you are analyzing your inventory stock status. As you do so you are alarmed that you have what seems to be excessive quantities of certain items. But, before you start panicking perhaps it makes sense to step back and consider where the business is headed. It may be that the sales team has a special program in place that they have a high level of confidence will require more of certain products to fulfill customers’ needs. In other words, see if there is a way that this inventory detail makes more sense when viewed with other details to create the big picture. Then same holds true when analyzing expenses. It may be that certain expenses are out of line with projections, yet because of certain decisions to seize opportunities they are now in line with new expectations. Yes, we do want to use a budget or forecast to control what we spend, but as I mentioned in The Flexible Business Plan there needs to be some provision in our plans to allow for a change of course. While that change of course should not be made lightly, it is sometimes absolutely necessary. So, if we get so focused on making sure expenses are within budget we may lose sight of the fact that changes are needed to reach our business goals. This is a case where financial details can mask the big picture to the detriment of the business.

So, remember that both the details and the big picture matter. Knowing the details can help keep us on track and control spending, but it must always be considered in light of the big picture.

If you want to know more, contact AimCFO – Contact

As always, your comments are welcomed.

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