If you ever have problems managing the money and numbers side of your business then…
Are Your Numbers Like The Elephant in the Room
I may not be the first person to call the elephant in the room. But I am the first person to call the numbers.
Are you treating numbers like elephants in the room, where they are looking at you while you try your best to ignore them?
What is it about the numbers that freaks you out?
I’ve found the top 7 reasons why people don’t look at the numbers
1. Is it that you don’t want to know what the numbers are?
This usually arises when you’re struggling; cash flow is a challenge, you’re stressed out, losing sleep at night and worrying about how to pay the wages, the rent, the bills and taxes. When times are tough, and you already know that, the last thing you want to do is look at the numbers and make yourself even more depressed when you see just how bad the situation is.
2. Is it that you don’t understand what the reports mean?
A lack of knowledge is the cause of many a case of numbers being ignored. The reality is that the vast majority of people go into business with no education about financial reports, what they are, what the numbers mean, and how to use the information. This can be easily fixed by spending time learning the basics of the numbers, the information you need to know as a business owner about how to use the information in the reports.
3. Is it that you have a cash flow problem?
The most common reason for hiding behind the numbers is when you’re having a cash flow crisis. I know, I’ve been there. When you know there’s no money in the bank; you know you’ve got to either chase up outstanding invoices from clients or customers and get the money into your bank account, or get out and hustle hard to get money in the bank through more sales. While this is important, it’s also important to look at the numbers and see what other decisions you can make that will positively impact your results.
4. Is it that you’ve been told you’re making a profit, but there’s no money in the bank?
If I had a dollar for every time I’ve heard this, I’d be a wealthy woman. Cash and profit are two different ways of looking at the numbers. And while they are inter-related, you can have either one without the other for a period of time. Yes, you can have money in the bank but no profit. More often, though, it’s the profit with no money in the bank. The difference lies in the two accounting methods of cash vs accruals.
5. Is it that you’re no good at maths?
I’ll let you into a secret… accounting is simple maths; it’s mostly adding and subtracting with a bit of multiplication, division and percentages thrown in on top. What’s even better than this is that accounting systems do all the maths for you. As a business owner, you only need to look at the reports the accounting system produces which doesn’t require any knowledge of maths at all.
6. Is it that you believe your accountant or bookkeeper looks after all that money stuff?
This thinking horrifies me. It’s your business, and you have a responsibility to know what is happening in the business. The reality is that most accountants believe their role is to do your taxes for you, and many bookkeepers see their role as ensuring your accounting records are up-to-date and accurate. Neither one is looking after your interests as the owner of the business, and neither one is likely to tell you if there are issues arising (unless you are paying for business advisory services).
The worst case of this I’ve come across was a gentleman who admitted to me that he’d been in business for 25 years and had no idea about the numbers at all. He relied on his bookkeeper and accountant and just signed whatever they told him to.
7. Is it that the bookkeeping is only done once a quarter, so you don’t have figures to look
Another situation that makes my blood boil. If you don’t have your accounting system reconciled every week, how do you know who owes you money? How do you know what bills to pay? How do you know if you can afford XYZ that you’re considering spending money on? And how do you know if you can afford to employ another team member? I could go on, and on.
Are the numbers your elephant in the room that you’re hiding from, hoping that somehow miraculously they will disappear or become irrelevant?
Time for me to call this elephant in the room and time for you to start looking at your numbers on a regular basis.
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