Know Your Numbers –
Accounting is only a mechanism to help you record and organize and quantify the various inputs and outputs of business. What is important is the financial understanding of how the inputs and outputs net together and result in business performance. Operating and making critical decisions with a business is comparable to reading a book in a foreign language and then explaining to someone what it is about and predicting the sequel. One must measure and understand before moving blindly into the future. If you can’t measure it, you can’t manage it. Take a hard look at how to capture the information and how it can be improved, accuracy and timing are important.
Cash is King -
As stated above, you must know your numbers, of which the most important one is cash. The fundamental measurement of accounting and finance is really distilled down to how much cash do you have now, how does it compare to yesterday and will we have enough for tomorrow. It is easy to get lost in the multitude of transactions and spreadsheets but keeping cash at top of mind will help keep it with you…and if you’re lucky, grow it exponentially. In the end, all business needs cash to operate and to grow. Keep your eye on it!
Take Off Your Rose-Colored Glasses -
Anything in life should be looked at objectively. In business when one falls in love with its product or makes personal assumptions about what customers should love, trouble will follow. It is easy to lose sight of customer expectations and value they place on the business product or service. Customers change, markets change, competitors change, so it is crucial to objectively evaluate your product and service, the value it provides and where it fits into the market. I encourage all business owners to reflect often on what sustainable competitive advantage they bring to the market. This also applies to your numbers. It is important not to use excuses when reviewing your financial results.
The Right Team -
It has been said many times before… make sure you have the right people in the right place. It is redundant but true, after all, it is the people that make up the business and represent your brand to the world. Sometimes a person doesn’t work out…better to act quickly and fairly and move on. If it isn’t working for you, most often it isn’t working for them and that means trouble for the rest of your employees, much like a spreading a virus through the organization.