Accounting: The Language Of Business

You probably already know that statistically most small businesses fail. In my experience, new business owners tend to be very cavalier about this (myself included) and it is quite scary how common this is. After experiencing small business failure due to lack of capital and poor management and planning, I used my experience to help other small business owners and employees make better decisions. Did it always work? Of course not. However, it has given me a fuller perspective. And to gain more knowledge on the subject, I turned to formal education (as I often do). While in a master’s degree program for Business Management, I had to take Financial Accounting. At this point, I had been a Business Consultant full-time for over a year and had already formed my philosophy for Intentional Professionals (Person, Rules, Operations). 

The first thing that I learned in this accounting course was that “accounting is the language of business”. That became an a-ha moment that quickly devolved into confusion and then great rage. Why? Because I realized that most of the clients that I (and my colleagues) consulted were not fluent in that language. Compound that with the fact that most businesses fail because of finances (lack thereof, poor management of, etc.), and we have a bit of a dumpster fire on our hands. You cannot manage what you do not measure. So..are you charging enough? How much working capital do you have? Can you retain employees? How many customers/clients can you serve? Can you add another product/service? How do you formulate projections? Can you afford a physical space? What is holding you accountable? Can you hire? How do you scale? What is holding your employees accountable? Can you buy equipment? When do you pivot? When can you expand? When should you lay off workers? Can you sell the business? How do you know the value of your business? It should be no surprise, but I am willing to bet that most owners do not make it their duty to learn said language. I have heard it with my own ears. The answer was usually to outsource the finances after the business was making more money or do nothing. Translation: We don’t think we need that right now and would prefer to put it off until a much later time because we have no idea how to resolve this issue and don’t plan on doing anything about it at the moment. I have heard owners ask what P&L stands for. I have worked with owners who were making widgets but did not know how much it cost to make them or that they needed to know. I have had service-based clients that did not know what their time was worth. I have seen former clients conflate revenue and profit. Some clients even paid online freelancers to write their business plans based on outrageous projections from different industries. A few sought and accepted help but most did not. The ones that did not simply figured that they needed more customers or sales or that I didn't know what I was talking about. By the way, these were notjust new start-ups. Also, these issues start with the business owner but eventually trickle down to employees and clients/customers, if left unresolved.

Cash flow is the lifeblood of a business. Without (enough of) it, it will die. But one has to know how much is available and how much is needed. Imagine knowing exactly what keeps a baby alive but refusing to learn how to care for it properly. The level of avoidance and deflection can create serious problems, but unfortunately this is not a popular conversation to have. These common situations are what led me to launch Intentional Professionals because it can make such a difference for business owners and/or their team members. As individuals, we deflect and avoid because we are ashamed of what we don’t know and are protecting our ego and image. We do not want to accept that it was our responsibility to learn what we needed to know and no one else’s. It isn’t healthy but the truth is that we will continue to stay in those circumstances until we make the decision to problem solve our way out of them. That will always require radical self-honesty and withstanding some pain to heal and bounce back better than before. A wonderful way to learn is to ask those who know. I always advise new business owners to talk to an accountant, a consultant and an attorney (before they open, if possible). I had to go through this process myself before I felt whole enough to pursue entrepreneurship again. For those of you that do not know, this has been a 10-year journey for me, and I finally feel how I want to feel about offering my talents and skills. I launched Intentional Professionals so that you can feel that way, too. I want to meet those of you who resonate with this message and are brave enough to seek me out. In the meantime, I’ll be here enjoying the view.

Sincerely,

-M