People often assume that struggling businesses fail because they don’t win enough sales.
Sometimes that’s true.
But one of the biggest business transformations I was ever involved in proved something very different.
Many years ago, I was seconded into a business as Finance Director. The company was losing money, struggling to compete and, from the outside, looked as though it simply needed more work.
It didn’t.
The first thing I discovered was that the contract estimators were pricing jobs using out-of-date financial information. They didn’t know the true cost of labour, materials or overheads, so quotes were based on guesswork rather than facts.
The result?
Some jobs were priced so high that we never won them. Others were priced too low, so every contract we secured actually lost money.
Neither outcome was sustainable.
Then I started looking at the rest of the business. Every department was working hard, but they were all working in isolation. People couldn’t get the information they needed quickly enough because there were no clear processes. Everyone was doing what they believed was best for their own department, without realising the knock-on effect elsewhere in the business.
One example has always stayed with me.
The stock controller genuinely believed he was doing an excellent job because the warehouse was full of everything anyone could ever need. The shelves were overflowing. But nobody had stopped to ask some simple questions.
→ How much of that stock was obsolete?
→ How much cash was tied up sitting on those shelves?
→ How much of it would never be used?
On paper, the warehouse looked impressive. In reality, it was quietly draining the company’s cash.
As I dug deeper, the same pattern appeared everywhere.
❌ There were very few systems.
❌ Very few documented procedures.
❌ No consistent flow of information between departments.
People weren’t failing because they didn’t care. They were failing because they didn’t have the information or processes they needed to make good decisions.
Once I was given board approval to reorganise the business, everything began to change.
We introduced better reporting, improved communication between departments, documented key processes and made sure decisions were based on accurate, up-to-date financial information rather than assumptions.
The turnaround wasn’t instant, but it was remarkable. The company became highly profitable and grew into a multi-million-pound group. We even went on to acquire other struggling businesses and used the same principles to turn those around too. It’s an experience I’ve never forgotten.
But the same principles apply to small companies as well as large. Most business problems aren’t caused by one dramatic issue. They’re usually the result of lots of small disconnects that build up over time.
When your numbers are accurate, your departments or staff are working together, and everyone understands how their decisions affect the business as a whole, everything starts pulling in the same direction.
That’s why I still say today…
Know your numbers, grow your business.
Because your numbers don’t just tell you what happened yesterday, they help you make better decisions for tomorrow.