Do you dare to dream?
If you knew you couldn’t fail, would you dare to dream?
I’m prying in an attempt to put you in the mindset of my clients, business owners and entrepreneurs. Many of you are already there without my help, but for those of you who aren’t, understanding this mindset it will help you understand the rest of this post. Entrepreneurs like my clients take that risky leap, making what others would deem dreams their reality. Creating and running a business involves taking risks most others would not take. It’s the job of CFO’s like myself to reduce that risk. When a business owner puts the onus of risk reduction on their CFO, it gives them more time and freedom to find and create opportunities.
I have a lot of clients, and the most successful ones have this in common—they know their numbers (meaning they understand their cash flow, their costs, and they have at least a basic understanding of their balance sheet. Obviously this is the kind of knowledge that helps you make better business decisions, therefore reducing your risk factor.
It all starts with accurate financial statements, and for those you’ll need a bookkeeper to accurately maintain your books and records, or you will absolutely run into trouble. Strong sales will cover a lot of mistakes, but eventually those sales will slow down and the strategies you choose to get you out of those bad times are based on your financial analysis. If you have bad numbers, you’re done before you can even start.
In good or bad times, accurate financial statements are what enable good business decisions, while conversely, any decisions you make with inaccurate information are going to be ill informed and simply bad. Once in a while I come across people who claim that they don’t make any decisions based on their financial statements anyway, therefore don’t need to worry about the accuracy of those statements. I counter that argument by pointing out that they’re using a management style called “flying by the seat of your pants” if they really don’t take their finances into account at all when making decisions for their company. I also like to point out that their completion immediately has the edge if they consider their finances even a smidge more than the “flying by the seat of your pants manager”. Honestly people who make that argument always get crushed in an economic downturn or when sales slow down.
Knowing your numbers will put you, the business owner, in control of your decisions and greatly diminish your chance of risk—important because the free spirit of the entrepreneur is especially prone to risk.