Part 1 of Series: Four Top Money Mistakes – The Business Owners Edition.
Mistake 1 – Not Getting Clear About What YOU Want From Your Business
This is a series of 4 videos done on Facebook over a period of a month.
The video, which was a Facebook live, is posted below. If you don’t want to watch the video, you can read through this post to get the full gist of it. I’m also including a few more things on this post that I may not have mentioned in the video.
When I work with business owners in a higher level capacity, as part time CFO or on a consultative basis, one of the most important things for me to understand is – what do they want from their business. Now – very important – this does not mean what are your sales/revenue goals, where do you want to be in 5 years etc, or any of those boring standardized goals that put you to sleep or cause full on anxiety.
What this DOES mean is what does your business mean to you and how do you want it to give back to you.
a) Person A may be someone who wants their business to fund a very comfortable retirement. Or they want to make as much money as possible in the next 20 years.
b) Person B may be someone who wants to make a difference in their community and uses their business as the vehicle to do so.
c) Person C may be someone who wants to change the way an industry works and wants their business to be the platform that gets that done. For e.g. my business mentor wants the world to change their perception of accountants and is doing a great job at that. Another person I know wants to change the way the food industry operates.
d) Person D may be someone who wants to create a large business with multiple national locations.
Now if you look at each of the above examples, they all have very different requirements of their business. It is my job as accountant to make sure that this requirement is coded into their financial statements and what the business does for them.
For person A, I would want the biggest and most fancy retirement plan possible and would search for the best financial planner around. And i would consistently evaluate their expenses and make sure that cost control is THE MOST important thing that we focus on. Dont spend that extra $10 if you dont need to.
This may not be as relevant to person D who would need EVERY cent of cash available for expansion options. A retirement plan and cost controls are much lower on the list. Person D would also likely need a very progressive banker, multiple options for financing and consultants in other states regarding various aspects of taxes that one person may not be fully aware of.
Person B may want to have a non-profit company set up on the side to be ready to go for additional community service.
And person C may need an army of very high paid consultants, and so profit margins could be tight and an issue. Naturally, the accountant would need to track numbers very closely to be sure that cash is available for regular operations as well.
When I ask clients what they want, I usually get the standard “I want the highest refund” or “I want to pay the least amount of taxes” which is as generic a request as “I want to be happy”. What I want all of you to think about is in context with the above – what do you want of your business.
When you get clear about this – you will have different expectations of your business. And your business and team will start responding to your clarity.
Watch the video below and leave me comments! Did this resonate? What resonated? What will you change? How does this look different from typical sales/revenue goals [i.e. the dreaded million dollar goal]?