The biggest profit mistake we business owners are making today isn’t what you think. It’s not overspending, it’s ignoring our books.
But wait, you say, isn’t overspending precisely the reason why business owners don’t profit as much as they should?
Yes, of course it is. But overspending is the symptom. Not paying attention to our finances is the illness.
Why do we business owners ignore our finances? For various reasons. We might know that we’re not as profitable as we could be so we choose to ignore the problem and keep plugging away on sales. Or we don’t know how to confidently read an income statement or balance sheet, so we just hope it all washes out at the end of the year.
Whatever the reason, ignoring our books won’t make us more profitable, it will only allow expenses to pile up, cash to evaporate and debt to creep in.
So if you’ve been making the critical profit mistake of ignoring your finances, then you need to take concrete steps to turn that ship around.
If you’re not confident with your understanding of financial reports, find a trusted advisor or seasoned agent who does who can coach you up. Ask them to explain some of the accounting behind these reports so that you get a deeper understanding of where the numbers are coming from – and trust me, very few people will be annoyed that you came to them for advice!
If you’re just ignoring the books because they’re too painful to look at and you would rather just stay focused on sales, then you need to get some leverage and some accountability for yourself. Put a recurring appointment on the calendar to look at your books regularly. Get your coach or financial advisor (or Fractional CFO) in that meeting too. Make it a competition and figure out how much fat you can cut and how much profit you can squeeze out of your business. Salespeople like to win after all!
Some upfront work today tending your finances might be difficult, but the savings in time, money and stress over the long haul will be exponential. Treat the illness, and the symptoms will be gone!