When I watch programmes like Dragons’ Den or The Apprentice, I do find myself cringing on a regular basis especially when someone comes in to the room asking for a ton of money without having a clue about what for. I know that it is all about making good television but I do expect these business people to at least know a few basics. It’s fine if they don’t, just so long as they are honest about it and get someone else to do all that addition and subtraction stuff.
Originally when I started going to Boardrooms (@EcademyBR) I have to confess being a little nervous about talking about the money aspects of any of my enterprising endeavours. I fully anticipated quaking in my boots as I faced an interrogation panel of Dragon entrepreneurs knowing that I didn’t have a good handle on what I viewed were essentials.
Suffice to say that anxiety was dispelled pretty rapidly as it wasn’t long before I registered that even some of the most savvy and experienced business people can struggle with getting their business numbers right.
There are one or two though who are an absolute whizz at business mathematics and can prove immensely useful when tackling a financial conundrum!!
I do believe though, that to succeed we do have to at least focus on some key equations and particular numbers. Question is, which are the most important to help you achieve the things that really matter?
Cash-flows, profit and loss accounts and balance sheets are often created to appease bank managers and to demonstrate that ‘hoop-jumping’ is a skill you have successfully acquired. Our businesses should be about us though – not those who sell us money!
To me, real cash-flow forecasts and careful financial analyses are vital tools that help us track and measure the efficacy of what we are doing. Boardrooms are very useful for that helping us to focus our efforts on the things that give us the return that we seek. Boardroom members don’t have a hidden agenda and offer feedback that is direct, to the point and laced with many years of business and personal experience. That kind of support is so much more valuable than hoop-jumping for bank managers don’t you think?
A series of questions for you to ponder upon.
Do you appreciate the difference between profit and turnover?
Have you got a grip on your fixed and variable costs?
Can you analyse your profit and loss account or your balance sheet?
Do you comprehend the significance of each of these – your gross and nett profits?
In other words – do you actually know your bottom-line from your elbow?
Another bottom-line for you – How do these questions make you feel?