Money is at the top of the list of tough stuff for most entrepreneurs. When a business issue (versus a personal issue) is the core reason for failure, 65 percent of the time it is due to financial mismanagement. If you hold yourself fully accountable, money doesn’t have to be one of your tough topics. I have employed two simple steps around this with absolute success:
Step 1: Embrace that your financial knowledge is pivotal to success, no matter how small or large your company. This is half the battle, I swear. I swear, because I’ve seen too many business owners put their heads in the sand on this first step.
Step 2: Grow a reasonable base of knowledge if financial principles are not in your wheelhouse. Learn to create budgets or build a business plan or focus on profit margin through weekend seminars. Learn the basics of accounting via QuickBooks classes. You have a responsibility to know these things, and it will serve you well in managing every aspect of your business.
Related: 4 Reasons to Have Your Business Financials in Order
It is necessary to get comfortable with money and accounting
A command of all things financial also allows for management of personal and professional finances as integrated parts of a whole, a superior approach in the early years when you are the business and the business is you. This is critical for earning a commitment from a spouse or partner whose finances may also be on the line. When it comes to financial matters, too many entrepreneurs make erroneous assumptions about the scope and value of bookkeeping and accounting services to deflect a lack of willingness to be responsible at the appropriate level. They attempt to pass the buck. This is always a mistake. The buck stops with you.
It is not acceptable to say, “I’m not a math person. I’ll rely on my bookkeeper and accountant to understand the financial details of my business.” It is necessary and valuable to get comfortable with the money. It is not your bookkeeper’s responsibility to know the cost structure, gross margins, recent marketing spend, payroll and benefit expenses, and net profit of your company. It is yours. They handle the administration. It is not your business consultant’s or accountant’s responsibility to know the potential return on a new product or service or to predict when your new business may be profitable for the first time. It is yours. It is not your CFO’s job to hold full responsibility for knowing the company’s financial strength for investing in growth endeavors. Ultimately, it is yours.
You might think this is tough stuff, but know that your strengths are another entrepreneur’s weaknesses: no one is good at everything. Yet every entrepreneur must look at her business with a skillful mindset and own it all.
Take command and don’t let opportunity pass you by
Far too many entrepreneurs have had phenomenal opportunities pass them by because they would not focus on the money. I know many who were passionate but didn’t seize an opportunity to grow, or were never able to hire the talent they desired, or invested in new ideas with reckless abandon. In every case, a core issue was the failure to focus on money. Even with strong financial expertise, focusing on the money can still be an issue. When opportunity presents itself, don’t be one of those businesses. Focus on the money and seize it.
Sign Up: Receive the StartupNation newsletter!
Tough talk to get the elephant out of the room
You do not have to become a financial expert to get the elephant out of the room. Strong financial skills are a bonus, a confidence booster and may eliminate the expense of accounting and financial professionals in the early stages. They are not necessary for success, but the absence of these skills is in no way an excuse for not going where you want to go. It is worth the work, time and hassle for a working knowledge and average skills when it comes to your revenue, expenses and profit. This tough talk may be the very thing to give you the perspective and courage needed to make a change. The challenge will foster new skills and determination, which are integral to business success.
