Fantasy Sports & Serious Business

I confess to having been an impassioned fantasy sports player for many years, mostly baseball. I collected my share of trophies and other prizes, even some nice cash winnings on occasion. I was pretty good at the game. By studying the numbers I often spotted trends that allowed me to see when a player was ready to break out, meaning they were primed to have their first really big season.

A few of my success stories included drafting Mark Prior before his big season with the Cubs when he struck out 245 batters, and drafting Cecil Fielder for my 1990 team after he returned from Japan. He slugged 51 home runs that year after never hitting more than 14 in his major league career, up to that point. Perhaps my best move of all time was drafting a big hulking first baseman named Frank Thomas in 1991. Thomas had his first great season that year and went on to a Hall of Fame career.

Naturally  I had to be focused  on what I thought was going to happen in the upcoming  season, but the data I had to work with,  historical statistics, was all about what had happened in the past. This was all that anyone had to work with.

Business statistics can also be fun to analyze, especially if it’s your business. Here the prizes for making the right decisions are serious cash, net bottom line profits that belong to you. Just as in sports, much can be learned about future potential by studying historical data and spotting trends.

I recommend lining up your last 5 years income statements side by side, and doing a financial evaluation.  These income statements can easily be printed from Quick Books if you don’t have them from your accountant. After studying the stats for a while you may be able to see some things that are going on in your business that you did not realize. Are certain overhead costs creeping upwards as a percentage of your sales? This can be eating into your profits.

Identifying the problem areas and taking corrective actions could have a huge impact on your net income next year.  Has your gross profit percentage been shrinking?  Finding a way to lower your unit costs may improve your gross profit percentage dramatically. Or it may be necessary to increase your prices if market conditions allow for that.

Comparing your company’s historical performance against other companies in your same industry is another great way to see how your company is really performing. While you may have been satisfied with your company’s earnings last year you may be surprised to learn that your percentages are lagging when compared to others in your industry.

Not everyone has a passion or the knack for analyzing financial statistics.  It could well be worth the investment to sit with your accountant for a while and go over the figures together. A trained eye is likely to spot trends that you might otherwise miss.

Your company may be primed for its breakout season in 2015. You don’t want to miss it!

-Donald R. Karlewicz, CPA, Managing Partner