It is scary to me how many business owners cannot read their own company financial statements let alone understand them. Any business owner who wants to grow their business should have at least a basic understanding.
So here we go:
The two basic Financial Statements are the Balance Sheet and the Profit & Loss Statement or P & L.
NO! It’s a simple word but can be incredibly powerful for business owners.
When working with my clients to help them figure out why they spend all their time working with their clients but are failing to be profitable. I often learn that the owner is spending time and resources on clients whose demands are outside of the businesses capabilities. Even more discouraging they are failing to grow their business. In the owners desire to get the sale they do not recognize that their business is actually losing money by trying to meet a client demands. These very clients are usually “Time Vampires” and need to be fired.
The days of the barrel-chested bully pushing you into a purchase are over. The charmer without substance now loses more than they win. Potential clients are more aware, more strategic and more educated.
We all need to take a breath and embrace the humbling – perhaps even embarrassing – truth:
A couple of years ago, I was retained to help a struggling business regain its profitability. After six days, I told the CEO that the problem was not sales-related. The problem was too much overhead and debt. The CEO disagreed with my assessment – and to my great relief my contract was quietly terminated. The company went out of business eight months later.
Running a debt-free business is probably contrary to everything that you have ever learned. And you might wonder why you should do it.