Almost 15 years ago, I took an intensive series of courses that encompassed personal growth, business, and wealth building.
During one of those courses, we were given a set of the affirmations related to building wealth; afterwards, we were encouraged to practice them daily.
One affirmation in particular stood out for me: “I am an excellent money manager.”
I so badly wanted to become an excellent money manager, especially around my business finances, that I practiced that affirmation daily.
It didn’t take long for me to realize that I wasn’t going to become one, just by repeating an affirmation daily! I had the will and desire, but my biggest problem was that I had no clue what it meant to be an excellent money manager!!!
I tried to learn from books and audio programs. I kept an open eye for training programs. For years, I still had no clue.
That was until I met Dan Bowser. For over the past 34 years, Dan has worked on multimillion-dollar business mergers and acquisitions and business valuations. Since the time I was introduced to Dan, he has become a good friend, trusted advisor, and indispensable business partner.
Among many things, Dan taught me the three key elements that go into being an excellent business money manager:
- Keep accurate financial records
- Turn raw data into information you can use
- Use that information to guide your planning and decision-making
Let’s look at each of these elements…
Keep Accurate Financial Records
It’s a mind-boggling fact that a lot of people in business don’t keep accurate financial records. There are at least two reasons why they don’t: One is they don’t know how; the second reason is that they don’t really see the wisdom of it.
I’ve heard this justification a lot: “I’m not a numbers person.” Well, that excuse was eliminated decades ago with the advent of personal computers. You let your computer do the math. You don’t need to be a financial wizard to become an excellent business (and personal) money manager.
All it takes to keep accurate financial records is a tracking tool, typically bookkeeping/accounting software, and a willingness to use it regularly. That’s all. The problem is the “regularly” part.
The issue isn’t one of complexity; it’s not mechanically difficult to do this. The issue is that most people haven’t made it a habit to use their financial software.
Let me ask you this: Do you brush your teeth every day? Most people will answer “yes.”
Okay, then pretend that updating your financial records is like brushing your teeth; you brush your teeth to keep them healthy. Likewise, you update your financial records to keep your business healthy.
Your numbers won’t bite you; commit to developing the habit of using your financial management tools.
If you follow football or baseball, you know that you have to keep score, right?
But what do you think of this scenario?
“Who won the game?”
“I think the Mariners won it based upon some of the runs that I marked down.”
“Well, I didn’t mark down any at all at first. They played five innings and I think they scored a run or two in the first inning, but I didn’t start marking down the total until after the third inning.”
Yet this is how many people handle their business and personal finances! Your financial records and reports are the scorecard for your business. If you want to win the money game with your business, you have to know how to keep score. And you have to keep score!
Turn Raw Data into Information You Can Use
If you’re keeping accurate financial records, you have a collection of numbers stored in your computer. While those numbers can’t hurt you by jumping out and grabbing you, they also can’t help you by being stored on your hard drive.
You have to turn those raw numbers into reports that are meaningful.
Basic financial statements are a means for organizing your financial numbers so they are easier to analyze. Two of the most important financial statements are called the income statement and the balance sheet. The income statement (also known as a P&L statement, or profit & loss statement) organizes your sales (revenue) and costs and expenses. The balance sheet organizes your assets, liabilities, and equity.
Use Your Financial Information to Guide Your Planning and Decision-Making
Your financial statements are among your most important scorecards. They provide information that must be used in your business strategic planning and decision-making.
Unfortunately, for most non-financial entrepreneurs, looking at financial reports drives them crazy. Consequently, attempting to learning how to read and understand financial reports ends up on the “someday, would be nice” list of spectacular things to do in life.
I know, because for years, I was frustrated and upset with the financial lingo and formatting used in these reports. I also recognized that I was not alone: most of my clients had no basic understanding of financial principles and terminology. Without an understanding of the information contained in their financial statements, it was difficult to understand how well they were doing and what needed to be improved.
As Dan helped me to boost my business financial intelligence, we quickly realized we wanted to do something about helping fellow entrepreneurs become financially savvy. As we researched the market and talked with entrepreneurs, we learned that many recognize their lack of financial knowledge and the resulting difficulties it causes. Many made considerable effort to gain that knowledge. The problem they encountered is that the readily available material is over their heads, too technical, and not easily applied. In addition, there is a lot of confusing, misleading, incomplete, and inaccurate information out there.
If you have ever struggled to understand the basic financial statements that your accountant may have given you or that you get from your financial software, we have created just the resource you need: Financial Statements Made Practical: A Step-by-Step Visual Guide.
Most of us were not taught or never learned how to read financial reports, much less how to use them to guide our business decision-making. Whether you are an entrepreneur, business owner, manager, corporate executive, board director, or investor, knowing how to read, understand, and use basic financial statements is a vital skill.
Unfortunately, developing this critical skill has historically been more difficult than it ought to be. As I mentioned previously, far too many books and trainings are filled with confusing jargon, incomplete explanations, and frank errors in principles, descriptions, and detail.
This guide was created to put an end to the confusion so you can spend more time doing what you do best and still be financially savvy.
Because All Business Owners Deserve to Be Financially Literate, Let Us Gift You the Make More, Keep More Training Program and Newsletter
Dan and I believe that all business owners must have a basic understanding of financial principles and terminology to increase their odds of success. For that reason, we created a free 24-part course, Make More, Keep More for Smart Entrepreneurs that also includes an ongoing email newsletter.
Some of the things you’ll learn include:
- Practical lessons and best practices for making more profit and keeping more of it
- A systematic way to understand and implement an effective business money management system
- a clear approach for creating a more profitable, valuable, and sustainable business
- A powerful link between marketing goals, sales goals and reaching your financial goals, and
- Tips and advice for building a more profitable, valuable, and sustainable business.
We invite you to register for this free course and the Make More, Keep More newsletter at www.SmartBusinessMoneyHabits.com/make-keep-smart-entrepreneurs
Over the past decade of working with entrepreneurs, I’ve noticed that the vast majority of my clients and scores of fellow entrepreneurs and colleagues I’ve met desperately need to become excellent business money managers.
The sticking point is that, for most entrepreneurs, making money is typically more fun and a higher priority than managing it. (More in a later blog post about why managing business finances ought to be a higher priority than trying to make the money).
So why bother becoming an excellent business money manager?
If you’re serious about your business, you must do both: make it and manage it. Making money without managing it guarantees that you’re limiting the financial potential of your business.
If you’re serious about building a more profitable, valuable, and sustainable business, I strongly encourage you take advantage of the resources I’ve mentioned here.