Numeracy Advantage for The Entrepreneurs
Entrepreneurs are constantly on the lookout for more opportunities and beneath all opportunities, there is a common language: numbers. Numbers are all around us from the national to the sector and the company level. How would those different tiers of number translate down into numbers which are relevant to you? Yes, I understand that this would seem abstract. Let me provide an example.
On the national level on 05 October 2020, Deputy Prime Minister Heng Swee Keat estimated a lower operating revenue of 16% than the previous estimate in February 2020. Due to the recovering economy, absentee payroll will be lowered from $10/hr to $7.50/hr from January 2021 onwards.
The Temporary Bridging Loan Programme will be extended for 6 months until September 2021. Debt relief for small businesses will be extended until 30 Jun 2021 for up to 80% of principal repayments.
How would all these national numbers affect your sector and how would it affect your company’s finances and operating model? How would it affect your operating budgets, estimates of your company’s revenues and expenses and most importantly cashflow?
Numeracy is the key skill that any entrepreneur must have to make sense of such developments and seize the opportunities. You might not have the exact numbers but based on the estimated number, you can start to plan for new initiatives that can bring your company to the next level.
Numeracy is defined as understanding how maths is used in the real world and being able to apply it to make the best possible decisions. This applies to entrepreneurs and other roles that we may play in society.
However, not all entrepreneurs are numerate. Some entrepreneurs face the issue of math anxiety which refers to the discomfort faced when confronted with a maths problem. This can be due to being in stressful situations, negative past experience and/or cultural bias. There are 8 psychological strategies recommended by Dr Tom Hunt to overcome math anxiety.
Advantage 1 – Faster Decision
The first advantage of better numeracy skills for entrepreneurs would be the ability to make faster decisions. He would be able to see the relationship and connection better because numbers describe the natural world. He can recognize patterns and see the loopholes between ideas, numbers and trends.
Speed is crucial in a competitive environment because it would allow you to make a faster and better decision. This will allow you to gain market share and adapt to situations better when problems arise. If you are not good with numbers, the second paragraph would not mean anything to you. If you do, you have already won.
Advantage 2 – Leverage Data-Driven Trends
The second paragraph above tells a general picture of Singapore’s national finances. If you dip into the micro level, you will realise that in our digital world, all of our actions leave behind digital footprints. There are digital tools out there that can extract these data into meaningful numbers for the astute entrepreneur to leverage on.
If you are the entrepreneur for this business above, how would you interpret these data? What strategies can you implement to boost your business by 200%? Which are key information to base your information?
Advantage 3 – Better Execution
Execution is the key to business success. Before business hit the execution stage, the entrepreneur will have to understand the business opportunity better. The understanding will determine the business decision. The quality of the business decision will determine the best cause of action among all the possible cause of action.
The quote from Steve Jobs underlines the supreme importance of execution. Even multi-billion consultancies such as McKinsey and Bain had moved from old competencies of generating ideas to helping multi-nationals to execute upon their ideas. The entrepreneur with high numeracy skills would be able to generate the best method of execution while recognizing operational limits and probabilities of success.
General Underdeveloped Competency
Deloitte found out that only 10% of companies are leveraging on the insights provided by their numbers. Most companies do not believe that advanced forms of numbers such as analytics are important to the growth and progress of their companies.
As MIT had proven, the companies where all members are numerate and involve themselves in analytics would have a much higher chance of exceeding their goals. Therefore, we would encourage all entrepreneurs to hire employees who have achieved at least numeracy level 2.
These employees will have the minimum competency that will help them to build the confidence to use analytical data to drive decisions. All these small decisions will add up to the major decision which the entrepreneur will eventually produce and determine the fate of the company.