“I’m ready, Ellen, to clean up the mess we’ve made of our financials,” he said. “Please, will you help me?”
This call came from a friend I have known for 27 years. He has reached out for help about a dozen times over the years. But when the time comes to do the financial cleanup work, he comes up with lots of reasons why it can’t be done – or not right now.
What about you? Can you relate to my friend? Are you still struggling with the financial area of your business?
I’ve learned a few things, having guided thousands of business owners down the river. Here are my top seven tips for reducing resistance and mastering the financials.
1. Get clear on what you want. Do you want to operate with your head in the sand? Do you enjoy worrying about how you are going to cover payroll? Is it rewarding to guess at how much debt you really have? I thought not.
2. It’s your money. That means it’s your responsibility to know where it is and where it goes. As the owner, you are the financial manager.
3. Enlist your bean counters. I have worked with lots of accountants, controllers and bookkeepers. The best ones are committed to helping the owner become a good financial steward. Set blame and frustration aside and work together to get the books current and accurate. Establish due dates for digging in and fixing all account balances, and for creating new data entry procedures.
4. Root out the fear as you work elbow to elbow. Some bookkeepers are protective of the owner’s data and see the work as an invasion of privacy. Some are threatened and think if the job is streamlined they may be downsized. Some are afraid of being “found out” as not being as adequately skilled or even doing shady things. Your commitment to understanding the financials keeps you from being held hostage – or ripped off – and will protect your bookkeeper. Do what you can to reduce the resistance. When you work together you both get smarter.
5. It’s a course of study. You’ll need more than one “Financials for Dummies” webinar or YouTube video on double entry accounting. Books, articles, videos and webinars can be of terrific value. Your bookkeeper and accountant can be super helpful when it comes to de-mystifying the numbers. And you may save some time and energy by hiring a consultant. But you still have to learn it – at least well enough to know what you are looking at and determine if it’s right.
6. It’s not an endless course of study. For instance, golf is an endless course of study. The game will challenge you the rest of your life should you decide to study golf. Accounting, not so much. There are about a dozen transactions to figure out. Money in. Money out. Payroll. You’ll need your accountant for a few of them, like buying or selling a vehicle. If you drop the resistance, you can figure out your financials in a few months of focused study.
7. It’s not mind-boggling in its complexity. The words are weird. The math may be new to you. But there is nothing about accounting and financial reports that you can’t figure out. If you don’t know what something is or how the numbers are getting in there, ask and ask again until you get a straight answer.
Business is easy. Once you know the score, then you can consider if this is where you want to be. If so, keep doing what you’re doing. If not, increase profits and cash. Do something that may impact those numbers. Then, look for the results on the financial reports.
Let go of the rocks, and go with the flow.
Ellen Rohr is an author and business consultant offering profit-building tips, trending business blogs and online workshops at EllenRohr.com. Her books include “Where Did the Money Go?” and “The Bare Bones Weekend Biz Plan.” She can be reached at ellen@ellenrohr.com.
