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The Math Ain’t Mathing

The Significant Digits of your Business Significant digits are the numbers that can significantly impact your business performance. Significant digits are also called key performance indicators (KPIs) or critical success factors (CSFs).



Significant digits are not to be confused with significant figures. The latter is a measure of precision, expressed by a number of digits of fractional parts recorded during measuring processes. On the other hand, significant digits are raised to indicate how much something has changed relative to its previous state or how much it contributes towards an outcome. Therefore, significant digits help you understand where you have deviated from the last period's result and thus can indicate areas where improvements need to be made for your company to achieve optimum sustainable growth.


Are you measuring the right significant digits?


When determining what Significant Digits to measure, it is important to first identify your company's core business objectives. Once these have been identified, you can then determine the Significant Digits that best measure your progress against these objectives. Measuring the wrong Significant Digits can lead to inaccurate results and misdirection of resources.


To correctly measure Significant Digits, ask yourself the following questions:

· What business objectives am I trying to achieve?

· What Significant Digits will help me measure my progress against these objectives?

· How frequently should I be measuring these Significant Digits?


Below are examples of how a company might go about identifying its Significant Digits:

  • Core Business Objectives Significant Digits to measure Significant Figures Frequency.

  • Driving sustainable growth in the short-term Net Profit Margin %, Return on Sales ROI Monthly.

  • Grow market share in the long-term Revenue Growth, Customer Satisfaction Index CSat Weekly or Monthly.

  • Recurring revenue for shareholders Gross Profit Margin %, Recurring Revenue Run Monthly or Quarterly

  • Operating expenses and cash management Operating Expenses as a percentage of revenues Ops Exp Ratio Quarterly

Are you measuring the right significant digits? Significant digits are critical for effective business performance measurement and management. Significant digits can be classified based on the following criteria:

  • Significant Digits compared to last period's result-- The deviation between this

reporting period's significant digit and last period's Significant Digits gives you an indication of where you have deviated from the last period's Significant Digits, which means that it is crucial to track these Significant Digits over time (i.e., quarterly or monthly). Significant Digits that fall above or below their previous value indicate whether key measures are improving or deteriorating, respectively.

  • Significant Digits related to core business objectives -- These Significant Digits help determine how well your company is doing towards achieving key goals such as increasing market share, generating more revenue, or improving customer satisfaction.

  • Significant Digits that impact financial outcomes -- Significant digits that significantly impact your company's bottom line are called financial Significant Digits. Financial Significant Digits can be used to make better resource allocation decisions by identifying which business functions contribute the most to your company's profitability.

Significant digits are important for all businesses, regardless of size or industry. Understanding and measuring Significant Digits is critical to effective decision-making and can help you improve your business performance across all areas. Significant digits can be used to measure any aspect of your business, including:

  • Sales

  • Marketing

  • Operations

  • Finance

For example, Significant digits can help you measure the following:

  • Significant digits related to an increase/decrease in sales (e.g., percentage increase in revenue)

  • Significant digits related to an improvement in sales growth rate

  • Significant digits related to the impact of your marketing efforts, including advertising and promotion

  • Significant digits that help you analyze changes in manufacturing or inventory costs

  • Significant digits that help you better manage cash flow by measuring when receivables are expected to be collected and when payables are expected to be

paid out.


Significant digits are also important for all businesses, regardless of size or industry, in order to make better decisions and improve overall business performance. Significant Digits provide quick insights into key business metrics so you can identify where you have deviated from last period's Significant Digits, which means it is crucial to track these Significant Digits over time. Carry this information forward each month, quarter, and year to help your business achieve its desired performance outcomes.


Significant digits are important for all businesses, regardless of size or industry, in order to make better decisions and improve overall business performance. Significant digits provide insights into key business metrics so you can identify areas where you have deviated from the last period's result and need to take corrective action. By tracking Significant digits over time, you can ensure that your company is on track to achieving its desired performance outcomes. Thanks for reading!

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