This question and answer series of articles provides scenarios for business owners to find answers to business frustrations. Today we talk about the money in your business.
Q: I know I’m in the ‘money’ business, but I’m ashamed to admit (and thank goodness for anonymity) that I really neglect this side of my business because I don’t really know what I should be watching, or what questions I should be asking. Can you advise?
Not knowing what is going on with money in your business is an abdication of your responsibility as a business owner. You are not alone, we come across many, many businesses where the owner only watches the bank balance and makes a decision based on that. If you are to make educated decisions on the direction of your company, you need to know how everything it does impacts your numbers and the health of the business. As well as a big picture strategy for your business, you need to have a financial strategy that meshes with that big picture. If you find profit and loss statements, balance sheets and ratios a mystery, and prefer them to be someone else’s responsibility, then perhaps the business should be theirs also. However, if you decide you really want to be in control of your business then get help and learn to love and understand those figures that tell you how and where you are going. Get a business coach or a sympathetic and understanding accountant and learn how to read those reports and interpret the significant points they reveal. Train yourself to measure costs accurately and continually. Figures were never my thing, but now after years of practice and self discipline, even I can find budgets engrossing, fascinating and informative – sometimes even exciting. Who’d have thought?
Q: Accounting and numbers are not my bag and I have always handed this to my accountant to look after while I concentrate on what I do best – selling. But I feel I need to be asking better questions of the accountant. What should I be looking for?
You should be looking inside your business. Financial management isn’t something separate from your business, it’s an integral part of everything your business does. As the owner of the business it is your responsibility to increase its value and to know everything that affects it. I am not saying take the finance back from your accountant, far from it. We all need their expertise, but you are the owner of your business and you are the one responsible for internal business management and your figures are what tell you what is happening in the business. It is from these that you will make decisions about the operational actions you need to implement. While the taxation department and the government make decisions about your responsibility for external financials, you are responsible for determining what’s right and wrong, effective and ineffective within the business.
Watch for Part Thirty-Seven of the Q & A series…coming later this week!
Until next time…
P.S. Learn more about working ON your business with my FREE eBook! Get it HERE!