Know Your Financials Like The Back Of Your Hand
You know what I find funny?
Most people start a business so they can enjoy the benefits of the ‘extra’ money and wealth that owning a business can create.
Yet many business owners have no idea about understanding their own financial statements. And that’s where their money is!
To me it’s such an irony.
And it’s something that I definitely rectify with every client I work 1-on-1 with.
By the time they’ve finished with me – they know their financials like the back of their hand… in fact they showing their accountants a thing or two…
Over the years I have noticed that most small business owners don’t look at or understand their financial statements.
This can be for any number of reasons.
Maybe your accountant hasn’t taken the time to explain it to you.
Maybe you don’t want to learn them - after all who did understand math’s at school, or enjoyed doing it?
In my experience I have found that the typical business owner starts a business because they have the drive and the personality to influence and convince people.
And I have found that on most occasions, not all, that type of a personality doesn’t enjoy doing paperwork and financials.
And that’s okay… but to make it as a successful business owner and add another million or so to your business - I suggest that you really become excellent at reading and understanding financial statements.
Because the best and wealthiest business owners do.
As with any area of your business – you should know what you’re doing – but it doesn’t mean you have to do it.
So employ people to do your financials – but you’ve got to have the knowledge and the experience to know that the people that you are employing are doing it properly.
And this is certainly the case with your businesses and your personal financials.
If you don’t know how to read and understand them, you’ll wind up in big trouble with them at some point in your career… be assured of that.
So start now.
Don’t fall into the trap of LEAVING it to your accountant. It’s the biggest mistake you can make. You should be doing it WITH your accountant.
If you have an accountant now that you started with, the chances are that your business is heading into areas that they are not as competent in. Because when you started business – your business was small and you probably weren’t making great money. So you probably hired a ‘lower end’ accountant at that time.
And that’s fine. You just need to know because as your business grows this ‘lower end – accountant’ may not have the skill set to cope with your growth.
It’s like different levels of sport.
Take for example football.
There’s local football, inter-district football, state level football, and National Level football.
As the level increases – so does the expertise needed by the players, the coaches and the administrators.
And so it is with Businesses.
It’s the same with me.
My skill set is excellent with taking $1 million businesses up to $2 to $5 million. I can work with businesses that are smaller than that, or that are bigger than that – but I’m perfectly suited to the niche of taking $1 million business to $2 to $5 million.
So I concentrate on businesses in that niche.
Above this mark, or below it comes a whole new set of skills that I don’t particularly want to be involved in.
Now back to you…
You’ve got to take an active role in creating your financials.
Ideally you should know all your expense categories so that for any payment made in your business you know which category it should go into.
And you should know all your allowable tax deductions. Like the back of your hand.
It’s your business, your money and your life – so control them.
You should also have up to date and accurate financial statements.
Some of these statements you should be looking at daily. Some weekly, some monthly. Some quarterly.
And you should be actively involving your book keeper and your accountant in this analysis. So that you’re all up to date and focused on growing the business.
It’s what all top business owners do, and it’s what helps them to continue to grow and prosper – so that they can not only grow their business – but enjoy the rewards that only a well controlled and profitable business can provide.
On my 1-on-1 Business Coach Program I’ll take you through a process that will have your head spinning with how easy it is for you to understand your accounting reports. And how easy it will be for you to understand your financial position.
I’ll also take you through the best ways to work with your accountants so that you are kept up to date and accurate so you know exactly what’s going on in your business all of the time.
It’s such a refreshingly simple ‘demystifying’ process that all of my clients love once they’ve learnt it because they really know where every cent of their money goes. It gives them more control and understanding of their business.
They all realize just how important knowing their financials is for their business growth and success.
Know your financials like the back of your hand.
Copyright © 2006 by Casey Gollan. All Rights Reserved
Business Coaching expert Casey Gollan helps grow businesses by $1 million to $10 million in 1 to 3 years. Since 1996 his coaching programs have added over $375 million to small businesses. Go to his Melbourne Business Coaching website and watch a free business growth video series.