Pooth & Associates Business Advisors

9/20/10

OK, let’s party! Balance sheets! Cash flow statements! P&L! Budgets, anyone?

A lot of business owners feel the urge to run out of the room at the mere mention of financial statements or accounting. The eyes of many who are presented with a page full of numbers glaze over immediately.

The truth is, though, that business is all about numbers, and this goes way beyond finances. Really successful business owners recognize the power of operational and marketing metrics as well as financial data. They define numerical measures by which they will be able to gauge such things as quality, productivity, and marketing ROI (return on investment). They document development, production, and installation costs on timelines for every job or project. Such documentation becomes a key tool in creating estimates for similar jobs as well as defining personnel and other resource requirements for the business.

Ignoring the numbers is the downfall of many a business. In fact, the #1 reason why startup businesses fail is lack of startup capital, which is often exacerbated by the business owner’s lack of knowledge about financial matters. Many business owners keep themselves busy from morning until night doing all kinds of work in the business – except dealing with the numbers. This is a blueprint for disaster.

The good news is that business owners don’t need to become accountants in order to run the financial side of the business effectively. Step one is to hire an accountant. Step two is to provide the numbers that the accountant says he or she needs. But even that can be a real challenge for many business owners. Enter the bookkeeping service. QuickBooks (for example) is a great system but becomes really powerful only in the hands of people who are truly skilled in using it. So, if you’re a business owner who doesn’t like to deal with the books, hire a professional to do it for you. You’ll be amazed at the kind of information that can be gleaned from those numbers to guide your business strategy as you move forward.

Once you have a system in place to keep track of the numbers, everything gets easier. Your accountant will be happy, your tax returns will be in good shape, and – most important – you will have laid the groundwork for positive results in the ultimate business metric: profitability.

10/22/09

Let’s talk about delegation vs. the cost of doing everything yourself. Very often, when I suggest that a business owner hire someone else to do non-managerial work for them, they tell me: “I have to do this myself, because I don’t trust anyone else to do it right.”

Is that the way you think? If it is, then here are a couple of questions to ponder:

1. Do you think for one minute that the big winners in business think that way?
2. Have you ever tried to think of a way to stop doing some kind of non-managerial work?

Of course you can’t just hand your work off to the first person who walks past your office door. But you really need to shed the notion that no one else can do the work that you do. Your own time is too valuable to be spent on non-managerial tasks. Sometimes the cost of a business owner’s time is referred to as “opportunity cost.” In other words, the business owner’s time lost translates into lost opportunities.

Pick a specific non-managerial task that you now spend two hours a week on. Commit to yourself that you will find a way to stop doing that work without letting it fall through the cracks. You may need to train one of your employees to do the job. You may need to hire a part-time employee or contractor. Or perhaps you will choose to pay an external service provider – this is often the quickest solution. Find out what each option would cost. Write down the pros and cons of each potential solution, and then pick the one that makes the most sense for your situation.

Now make a plan to win back two hours of your life per week! Estimate how long it will take to implement your solution. Write down the steps involved and a target date for completing each of them. Don’t be overly aggressive with the dates – remember that you are actually going to be doing more work until you get your new solution in place. The key is to make a plan that you will be able to stick to.

Once you start implementing your plan, hold yourself accountable and do all you can to stick to the dates. Beat them if you can! And if something happens and you fall behind, jump right back on the wagon as soon as possible. Many people find that it helps to have someone else who keeps them accountable – a spouse or a high level employee, for example. I can’t emphasize this enough: Stick with that plan until the job is done!

In the end, the extra work will have been worth it, when you find that you have two hours more each week to spend on improving your business, building partnerships, or developing your employees to make them happier and more productive.