“Money talks.” Usually this expression refers to talking with your cash. But it’s far more valuable to listen to your money. When you listen it will teach you some valuable lessons. If you try to deaden it’s voice you’ll soon find that your money has up and left.
The failure or success of a business can be seen in the bottom line of its balance sheet. Profitability is not the only measure of success, but without profits it will die. Businesses that do not regularly review their balance sheets, their profit and loss statements, their budgets, and their cash flow will often fall into the deadly illusion of mistaking “cash flow” problems with simple lack of profitably. And if you want to hasten the death of your business just start borrowing from a line of credit to “cover short term cash flow problems.”
Unless you’re an accountant, managing and reviewing your finances is probably not the most enjoyable part of your job. But it is part of your job. If you do not know how your total equity is trending, if you can’t accurately predict your expenses and evaluate your profit and loss statement, if you don’t have benchmarks for allocating budgets to each major area of expense (payroll, office space, cost of goods), if you are not doing these things you are not running a business–you’re flying blind.
Examining the financial health of your company is often an unpleasant thing to face, but if you don’t face it, it will confront you soon enough.
I’m no accountant either but I’ve learned the importance of being diligent in this vital “blocking and tackling” part of running a healthy business. I help my clients get a handle on these reports, on their budgets, and help them identify where there are problems in revenues and expenses–getting them back on the road to fiscal health. And while financial stability hardly guarantees enjoyment in work, without this fundamental reward all your toil may indeed become futile.