You’re Checkbook is Making you Moody

by Dan Lacy - March 3rd, 2011

Tom was in a great space. He had been in business 12 years, had just expanded into a new market, and both of his sons were active in the business. Tom was comfortable and had enough free cash flow to fund one of his passions: “racing”. But his satisfaction level with his business and employees would vary greatly from one week to the next, sometimes even day to day. His office manager studied this phenomenon for a few months and came to the conclusion that Tom’s attitude was attached to his checkbook balance. He was friendly, agreeable, and focused on the business when the bank balances were high, and grumpy and hard to get along with when the
balances were low.

This is a trap that many small business owners fall in to when their only
gauge of their businesses performance is their checkbook balance. Tom only
had feelings if the weekly or monthly performance in the business was making
or loosing money. He did not know until March or April of that next year if
all of the activity from the pervious year was actually producing a profit
or not.

Tom knew it was important to manage his business and make a profit because
his future and retirement depended on it, but he wasn’t committed to do
anything about it. He didn’t want to re-allocate the funds from his hobby
(where he was having the most fun) to an accounting system and controller
that could generate “accrual” based financial statements so that he would
have a monthly “report card” on the performance of the business. This would
have told him when and where he was making or loosing money, and would have
made him much happier.

Tom is just like many business owners. Here are a number of common reasons
why business people do not make a commitment to have the information they
need to grow and make money in their business:

* They are too involved in day-to-day crisis management to take a step
back and look at what is happening.
* They do not realize that financial management is one of the 3
pillars that hold up the business; the other two are: 1) sales/marketing and
2) product/service.
* They do not know when to stop working and start managing.
* They do not know what they do not know – that financial management
is just as important as sales management, or making sure that you have a
great product or excellent service.
* Their accountant has failed in helping them understand the
importance of accumulating good data (particularly financial data) on a
monthly basis.
* They have never been trained on how to manage the financial side of
the business.

Do you fall into any of these categories? Do you have a good handle on the
monthly financial performance of your business? What is working more
efficiently in making money and what is not? Do you wish that your financial
statements were better, quicker, and were more meaningful (from a management
perspective) to you?

Your chances are four times better for making millionaire status as a
business owner than you do working for someone else. Are you maximizing your
opportunity?

Dan Lacy
Growth & Profit Coach, Financial Strategist, Cash Flow Doctor, CEO Mentor
dan@dynastybuilder.com
phone: 765-644-8887

Tags: , ,


  • Twitter
  • LinkedIn
  • Digg
  • Technorati
  • Facebook
  • del.icio.us
  • StumbleUpon
  • Google Bookmarks
  • email
  • RSS
  • FriendFeed
advertisement

Leave a Reply