Importance of Measuring success in Terms of Financial Numbers

Are you successful??

In order to even answer that you first need to know how success is measured.

So, let me ask you this – “How do you measure your success?”

Consider some random statistics:

  • Net worth of Jeff Bezos as of 2019 is $139 Billion, Bill gates is $100 Billion.
  • Mukesh Ambani is the richest man in India with a net worth of $47 Billion.
  • More than 2 billion people use the products of HUL
  • TCS is one of the top 10 employer in India with a headcount of more than 3Lakh people
  • Asian Paints has a more than 52,000 Retail outlet to reach its customers

Do we consider these individuals and companies as successful?

The answer cannot be anything but a big, loud, unquestionable “YES”

The point to illustrate is that Success is measured in terms of numbers, to be precise in terms of financial numbers. Like these individuals and companies, you too measure your success in terms of money or money’s worth.

In fact, most success parameters in life, whether for individuals or enterprises are financial. Only if you are financially successful, you are considered as successful.

So how do you achieve financial success?

Do you remember your younger self while learning a bicycle or a motorbike? You can ride it efficiently today because you spent your time to learn and master it. Financial success is no different.

In order to achieve financial success, it is imperative that you understand and master your personal and organisational finances. Only then you will be able to deal with them efficiently to achieve financial success.

Finance is one of the most ignored subjects by masses. When it comes to corporate world, Sales, Production, HR, Marketing rules the roost. Finance is considered as bean counters who are always pinching pennies and are seen as hindrance to approving any expenditure.

It is quite ironic that everyone loves money but are not interested in learning finance. Finance function is not just there to sit on pile of money to approve or disapprove expenses on their whims. Finance function is responsible for survival, growth and prosperity of the organisation.

Understanding finance helps the non-finance people to deal with finance teams more effectively.

A friend of mine is a CFO of a large company. He believes that when it comes to taking decisions, most of the middle and senior level executives assign last priority to finance. For them innovation, quality, experience, timely delivery and support takes precedence. While these aspects matter a lot, however, they need to evaluate, that all of this would come at what cost?

Imagine paying 60 % extra for getting one additional feature or marginal incremental quality, would hardly make any sense.

He gives an apt example of car variants. The same model comes in 3 to 4 even more variant these days. The top of the line variant has all the features and then the number of features reduce with reduction in price. But the widest price gap is often observed between the top of the line and one down, which is usually called the perception gap. The car companies usually want to make money out of the customer’s pride of ownership, since the two models would incrementally have just a marginal difference. Thus, knowing finance can put all decisions in a different perspective altogether.

“Price is what you pay, value is what you get.” – Warren Buffet

Hope this blog has brought some clarity in your mind with regards to importance of measuring success in terms of financial numbers. It is part of our endeavour (at ConTeTra Universal) to enhance the finance literacy of every professional out there. Our flagship training program Finance for Non-Finance and related resources (Finance Tube YouTube channel and Finance Books) are aimed at making you understand finance in the simplest way possible and ensure you fall in love with numbers!

Stay tuned to our blog section as we continue sharing more engaging content related to finance in future.

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