Over the past few weeks we have been exposing the accounting and finance problems many small businesses experience. This is the final in a four-part series- once we’ve thoroughly understood the issues, we’ll then explore the possibilities that come with solving them.

The fourth accounting and finance problem that many small business owners face? 

Well, I’m going to label it the Attitude Gap. 

And it’s no fault of your own. 

It’s a normal reaction to something that is not your natural wheelhouse. Most of you are really good at marketing and selling, or production and delivery. It’s totally within your comfort level and your natural strengths to spend your time and effort in one of these major areas of your business. Hey, I do it as well. Accounting and finance is absolutely my strength, and it’s just natural for me to spend my time and effort there.  

The problem is all three areas of the business are equally important. 

Each has to be strong if you want to grow a business that is built to last. 

Our poor attitudes towards any of these major business processes only hurts our business.

My own poor attitude is facing marketing and selling. It is totally out of my comfort zone to try to master these crucial business processes. I have to work really hard to keep myself on target.  I must force myself to get outside of my comfort zone, and still I am by no means a master at it. Thank God for my marketing firm, who actually knows what they are doing with the marketing and selling. They work hard just to keep me on track. 

I have to admit that for many years I knew I had a big weakness in marketing and selling, and I kept my head in the sand. I did not start to fix the problem until I faced my own stories about what needed to be fixed. 

Once we face our stories it starts to become clear about what must be done.

So, if you’re still reading this it’s likely your poor attitude area lies with the accounting and finance processes.  

  • You do not value the importance of having solid accounting and financial reporting processes in place.
  • You view the bookkeeping as simply a task that must get done, much like janitorial work.
  • You utilize the “financial management by check account balance” system, and don’t understand how to use the financial data to help you build a stronger healthier business.
  • Your answer to poor cash flow and low or no profits is to simply spend more time on marketing and selling to drive top line sales.
  • As you push to grow top line sales, you have no understanding if this will equate to increased bottom line profits or increased cash flow. You’ve heard about businesses that grow themselves into bankruptcy but have no idea how that could happen.
  • You think that because you have a CPA who does your tax return you’ve got it covered.

I’m not saying these things to piss you off. Listen, I’ve had the same type of attitude problems towards my marketing and selling. I still battle to put in the hard work to fix it. 

I’m being so blunt to help you see the truth. 

Getting your accounting and finance house in order can help save your business, and build it for the long game.

You may also be thinking that you have a solid bookkeeper in place.  You might, but it’s unlikely she is closing the Gap. 

You may also be thinking that “my CPA is actually more involved and is providing me with reports.”  That’s great, but your bookkeeper or CPA may not be watching your back. They may be good and reconciling the accounts and producing a set of historical financial statements. But they typically are not focused on helping you interpret that financial data into improving the operational functionality of your business.

We have all seen the statistics. 20% of small businesses fail within the first year and 30% fail within two years. 50% fail within the first 5 years. 70% fail within the first 10 years. In my opinion if the business is failing within the first two years the entire business concept was seriously flawed. But if you have survived the first two years your business concept has validity. 

Now, how to you ensure long term success? One of the most important skills is your ability to turn financial data into improved operational functionality. I’m here to tell you, your “bookkeeper” does not have your back on that.

I’m not trying to depress you by focusing on the problems. It’s critical to first understand what the problems are, then focus on the exciting possibilities and how to cross the chasm between the two.  Stay tuned.