As a business consultant and coach, I probably hear one question more often than any other: “Where did my cash go?” It is among the most important questions in business because turning cash into more cash is the purpose of business.
The Statement of Cash Flows tells us where our cash went, which is the first step toward managing that precious resource.
Read MoreCould you imagine Russell Westbrook, the 2017 NBA MVP, playing without a scoreboard? No doubt he would play hard all the time, but he plays differently when he knows the score. We know that because he is constantly checking the scoreboard for the score, fouls, time remaining, time outs - the information he needs to manage his game.
The Balance Sheet is the ultimate scorecard for business. As a business coach, I’ve noticed that owners, like Westbrook, manage their businesses differently when they understand the score.
Read More“Our income statement shows we’re making a profit, but it sure doesn’t feel like it.”
It was a contractor’s wife who had a pretty good feel for how their business was going.
The P&L and the math are simple, but depending on how they’re prepared, P&Ls can show wildly different results. To get an accurate, useful report, we have to understand what goes into it and why it matters. My experience as a business coach has shown that there is a lot of confusion about that.
Read MoreThere is a saying often attributed to Edwards Deming that “We cannot manage what we do not measure.” Numbers are the measurement that make management possible. The corollary of the quote is: “If we don’t manage it, everything that happens to us – good or bad - is an accident.” We might survive by accident, but we cannot thrive, which means we cannot thrive without numbers.
Now don’t panic. As business owners, WE do not have to collect and compile numbers. We don’t even have to know how it’s done, but we do have to understand what numbers tell us.
Read MoreAs a business coach, that is probably the number one question I am asked by business owners. Payroll this week, suppliers next week, debt service the week after, and tax deposits, seemingly, all the time. Everybody wants our cash. If you own a business, you know what I mean because you’ve asked the question yourself. Even when we make a profit, it feels as if business is a perpetual scramble for scarce cash...
Read More“What would it take to double your profit?” I was talking to Brent, a contractor. We had rearranged his income statement, and his margins were visible for the first time.
“What do you mean?” he asked.
“I mean, based on last year, how much more would you have to sell to double your net profit?”
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