Money, money, money
by Kelly Schwedland
Money, a subject that always seems to be present in the mind of most small business owners. We talk about it. We think about it. We worry about it. We plan for what we’ll do when we have plenty of it, and when we don’t have enough of it, we reveal our fears, frustrations, and resourcefulness.
Money is the single largest underlying frustration of most small business owners. Lack of money is also one of the main reasons so many small businesses fail.
Yet, billions of dollars are sitting in banks, venture capital funds and investment pools. There are individual “Angel” investors that have earmarked funds for small business investment. There are fund brokers that actually spend all day trying to find viable small businesses to put money into.
With so much physical, mental and emotional energy being invested into one area, it’s amazing that so few small business owners actually understand how to handle it.
Let me demonstrate. If tomorrow, you actually had somebody that wanted to invest money in your business, how could you show them the strategy as to how that money would produce results? Could you show them the bullet proof systems that you would use to attract additional customers, produce additional sales, and fulfill them without missing a step?
Could you show a potential investor the financial ramification of every dollar that you spend? How it would improve efficiency and produce a return and what kind of return it would produce? 10% or 100-200%
If asked, would you be able to show them the management systems that you have in place? Those that insure that as the company does grow that the quality of your product and service stay at the top? How about the process you have for hiring and training additional employees? Could you present them with quantifiable proof?
What I am talking about is not just a vision (or an illusion) of what you would like your company to be, but a strategy on how to accomplished that vision.
If you were to view your company as the product you are creating, then you would change every aspect of what you are doing. You would begin to quantify everything. You would look at every dollar you spend and ask what is my return? How will I measure the return on my investment, in number of new client dollars, or in reduced costs? How will you measure improved customer satisfaction? Because if you can’t measure it or if you aren’t measuring it, you shouldn’t spend it.
For most small business owners financial statements are nothing more than something you do at tax time, and your accountant might as well work for the Internal Revenue Service.
That is not the way it should be. Your financial statements should be able to tell you what is happening in your business, monthly. Your accountant should be there to help you manage your business. The format should tell you what is happening so that you in turn could prove that your vision works. You should be able to take it and show anyone that this business is worth investing in, your banker, an “Angel," a venture capitalist, even your mother in-law.
Kelly Schwedland is president of American Business Dynamics, a small business consulting firm focused on issues related to growing companies.