Lies, Damned Lies and Statistics – Business Maths
A quote commonly attributed it to Benjamin Disraeli. However, it is far too easy to suggest that business maths has no relevance. The importance of numbers and management information is not in the absolute but the informing of further questions and clarification.
The fact is that statistics don’t tell lies; it’s people that tell lies. Statistics however, provide a benchmark for informing questions. If you submit unproven statistics then expect some difficult probing questions … if of course, you get to that stage.
Over the last three years I have worked with numerous businesses to access start up loans and/or SEED investment. If you chose to submit a business plan for a loan or for investment you must prove the hypothetical ‘reality’ of return. (It’s an oxymoron I know!)
You cannot do this without some serious market research and the production of statistical evidence. Whilst most recognise that bringing a new business to market has a 60% failure rate in the first three years – no-one wants to invest in a failure deliberately. Whatever the tax breaks!
So without some kind of validation of concept; why would a Banker loan or an Angel invest? Both will want to know that you have a product or a service that has some credibility even if it is a completely new concept that the world has yet to experience. They may be open to some risk of varying degrees but neither will go with their gut instinct alone.
Do your cashflow and P&L maths first then justify with as many statistical pieces of information as you can muster. Investment will be a judgement call based on fact and gut. Not gut alone.