What is it that makes business owners avoid looking at the numbers? I’ve been pondering this question for some time, because, to me, it is a choice. It may be a choice by default, but it is still a choice you make.
There are some business owners who have made an effort to understand the core financial concepts. Yet there are others who shy away from any mention of the numbers.
Some time ago, I remember the head of a woman’s group putting up a post on social media, asking about why is it that women don’t talk about finances and money.
The funny thing was, no one responded! Well, it’s not funny, really. But I did think it was interesting that even the question about why was met with stony silence.
So why is it?
My theories on why you may avoid looking at the numbers are:
Maths was not your strong subject at school, so you avoid anything that is number related. I believe this is fundamentally a...
How Do You Choose Who You Learn From?
As business owners, we need to continue to learn to improve. We need to learn skills we weren’t taught earlier in life. We need to learn new skills based on changes in technology and the way businesses operate in today’s’ world.
There are three levels of learning when it comes to business skills. This includes both soft skills and hard technical skills that are industry specific.
When you’re looking to learn the basics of any skill, you need to find trainers that cater to your lack of knowledge in the area. They need to explain the concepts in simple, easy to understand language and allow you time to absorb the information.
Once you’ve got the entry level learning under your belt and feel reasonably proficient with it, it’s time to add another layer to that knowledge. This will provide you with the tools to apply it to different...
Christmas without cashflow can mean a crisis, but it doesn’t have to be.
The Christmas decorations are already out in the shops, and we’re starting to think about the holidays. It may be that you shut down your business for a week or two (or more), or it may be the impact of others shutting down business and/or taking holidays then to enjoy our Aussie summer.
Either way, as a business owner, Christmas may mean an impending cashflow crisis.
Here are my three tips to help you through this time:
Regular customers or clients can help with your cashflow if you have a conversation with them. Yes, a real conversation. You know the one. Pick up the phone and talk to them. Or if you’ve got a meeting, even better, talk to them face to face. Don’t be afraid to talk to them about cashflow.
Tell them that you’re looking into your cashflow over the upcoming couple of months and ask them to arrange to...
How is your reliability? Do you do what you say you’ll do? Are your actions in alignment with your words?
We’ve all heard the saying “Actions speak louder than words” (Abraham Lincoln).
While that is true, I recently came across another quote from Abigail Adams, wife of American President, John Adams, who said:
“We have too many high-sounding words and to0 few actions that correspond with them.”
While that was written 245 years ago, it got me thinking about what we do in business today. It’s more than about being reliable.
I believe there are three ways to look at and interpret Abigail Adams’ quote.
High-sounding words could be complex multi-syllable words that the average person doesn’t use on an everyday basis.
Equally, it could be the use of jargon, terminology or abbreviations which aren’t well known or understood.
In “accountants-speak”, like many industries, we have lots of...
Important business lessons can be found in the most unlikely places. I’ve recently been to Europe and visited two Benedictine Monasteries.
The drawcard for both, in the first instance, was the opportunity to visit their libraries, but we found so much more.
The libraries were the second most important places in the monasteries after the church itself. In the Melk Monastery in Austria, the oldest book is 1200 years old and is on mathematics and astronomy.
You see the monks didn’t just study the religious texts; they studied a wide range of topics.
Many researched and wrote books on subjects completely unrelated to their religious beliefs.
From a business perspective, it is important to not only read books and become an expert in your area of expertise but also to read more widely.
For me, this first of three important business lessons is a no-brainer. I guess the weekly trips to the library with my librarian mother instilled...
Are there times when you don’t have enough money in the bank account to pay the bills, wages or the ATO? Does this cause you to freak out about your cash flow?
There are several times during the business lifecycle when cash flow challenges will arise unless you have a sufficient buffer of funds in the bank to carry you through these times.
One circumstance is during periods of growth when you’re required to pay out costs before the higher revenue is received into your bank account. This could be the need to pay additional wages when the income from their work isn’t received until 30 or 60 days later.
Another circumstance is when your clients or customers delay paying their invoices to you. This frequently happens in the construction industry but can happen to anyone.
Let’s face it, cash flow challenges are part of doing business. It’s a struggle during those time periods but there are 3 steps you can take to minimise the impact of a shortage of money....
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
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.
A lack of knowledge is the cause of many a case of numbers being ignored. The reality is that the vast majority...
It’s time to spring clean your business by reviewing your goals for the future. Consider what impact it has on your budget and financial results.
Spring is in the air; the early flowering trees are putting on their beautiful display and the days are getting longer and warmer. In the natural world, spring is a time of new beginnings, deciduous trees come to life with green shoots and many animals give birth to their young.
Growing up in Canada, spring was a special time when the snow melted, the temperature climbed above freezing and it was time to get the bicycle out again. Spring felt like a release. both a release from winter and from school, even though I loved school. It meant freedom was around the corner, long summer days, bike riding on the prairies, and exploring the world around where we lived.
It was a truly magical time.
Whilst as an accountant I tend to work in financial years and quarters, I still do whatever I can to recapture that sense of freedom when spring...
Dealing with inventory is the trickiest part of accounting. It is imperative that you match the sales revenue with the purchase costs that relate to those specific sales for your accounting reports to be accurate.
If you have an accounting system that handles inventory you’re well on the way to accurate reports, but I’ve found that many businesses don’t have this and as a result, their accounting reports are not showing their true gross profit and net profit.
My top 3 tips for dealing with inventory are:
Add doing a stocktake to your end of month checklist and do it without fail. Create a list of your inventory items and manually count how many you have on your premises on the last day of the month. Ideally, create this in a spreadsheet so you can enter the inventory count. This will then automatically calculate the value of your inventory.
The reason for this is that if you’ve purchased stock in a...
I often use the phrase “follow the dots” about accounting processes. Bookkeeping processes were designed many years ago and while the systems we use have changed, the fundamentals haven’t.
Once you have your accounting system set up and running for a few months, it’s mostly just doing the same as the transactions previously; hence “follow the dots”.
When you have procedures documented, your team and new team members can undertake the task by following the procedure.
Yes. There are times when they are necessary for showing information in a different way. However, they shouldn’t be used to replace your accounting system; rather as an addition to it.
I’ve recently been working with a client who has a number of extensive spreadsheets that they maintain. A new team member had been updating them and adding in new information. When reviewing the data and ensuring the numbers...