I devour Fortune Small Business magazine monthly; my favorite section is “Start-up: Taking Ownership” by Jay Goltz a very savy man who is the author of “The Street-Smart Entrepreneur”. I’ll read that this summer over a beer on the beach.
The June column is entitled “Seven Deadly Sins” in which he defines the ‘business-killing traps that every entrepreneur must avoid.”
NUMBER ONE is sloppy accounting!
He says “Done properly accounting is a diagnosis of everything that’s right and wrong with your company.”
He’s not the first to say something like this but he says it very well at a time when every business owner needs good numbers from which to manage for this very unpredictable future.
Down a couple paragraphs he next says “Crucially, you need to understand the ratio of sals to expenses that will result in profitability.”
I couldn’t have said it better – right now we’re all working hard, we’re all focused on surviving this indefinite downturn. Some are doing better than others – some started with more cash, now in many cases depleted, some started with better credit or a good backlog of clients with good credit.
No matter who you are, no matter what you sell, it is the owner’s job to assure that every sale results in profitability: not just gross margin profitability but net profit as well.
Lastly, he says “I used to think that if you worked really hard, profits would inevitably follow.”
Only if you’ve got good numbers: by that I mean numbers which are accurate, completely and timely. Any less than that puts your company in jeopardy. Don’t risk it.
Find the article here plus all his other columns, equally good: http://magazine-directory.com/Fortune-Small-Business.htm , then type in Jay Goltz. You’ll find the list – choose the June column to read this one.