Simple Accountability

the biggest challenge i experience when i work with people or businesses about their fiscal, physical, networking and/or the temporal resources they have for life or business is the difficulty in being honest.  Really honest.  Honest not just in your head but “outloud” with others in your business, your wife, a trusted advisor.  There is a change in perspective when this information is no longer hidden.  It begins with honesty, with self or others.  You have to be honest about what has happened in the past, what is happening now, and what may happen in the future.  There seems to be a great deal of denial in many businesses in at least one of these areas.  Someone may be brilliant with the finances of the business but may be completely oblivious - or even worse - supporting a non-reality based perception of the amount of time they are spending on the business versus with their family.

i’m going to focus on the money side, but this process could and should be applied to the other resources as well (physical, relationship, time) and ideally, if you have access to support, you will find it and use it:

1. History Lesson: what has happened in the past, in the case of finances it would be an audit.
2. Current Situation: what is going on right now and what are the implications of those things continuing.
3. Future Casting: is that where you want to be? if not, what should change? how? and how much?

When it comes to our fiscal resources (money) I will frequently ask business owners to review their past as far back as they can go… with as much detail as they can easily uncover.  “Easily” is a relative term, so set a specific amount of time you will spend in this quest and stick to it.  The goal is to understand what has happened so you can better understand how you got where you are.  It is also to connect the dots between choices, behaviors, and results. This is not a complete audit of historic financials.

Typically, the first thing we look at is what is actually going out and coming in - what I would encourage you to do is to track everything, group it into categories.  Categories on both the “income” and the “outgo” side should be general at first and then refined as reality guides you into building standard categories.  Do this a couple of months in a row and get a real understanding of what your expenses and income really look like.  My clients are usually surprised at what they find.  Often, merely being aware of this information begins the foundation for long-term change.  If you are married, involve your spouse… if you are in a business, involve everyone who has impact on both sides of the balance sheet.  This process typically gives us an idea of areas that need some attention whether positively or negatively (do more and invest in vs. so less and don’t spend on)…

Next we look at where is it.  Where is the money? in a bank? invested? in your car?  your house? your equipment?  is it on a credit card? a line of credit?  a bank loan? - this is important.  Knowing where the money is sitting and where it is going helps you better understand what you can use for research and development or a vacation to the south Pacific.  It also helps you understand that IF you want to do something in addition to what is already happening you will have the opportunity to know where and how quickly you can become liquid.  And, by the way, if the money is a line of credit, a loan from someone or in a credit card, it isnt yours; you are borrowing it from your future earnings.  It is not a bad or a good thing… it may even be a necessary thing… but it is no less real.

Finally, we review what we should be spending money on in the coming months/quarter/year… we first map out the “must haves” - costs for the buildings, vehicles, and/or other equipment that we have to use to do the business; at the same time, the people related costs in order to conduct the business… there are other must haves that we map.  Everything else - the “non-must-haves” then get laid in IF there is money left OR if they are things we plan on investing in or doing IF enough money comes in.  These are all prioritized.

We also map the income side of the business using history and current situations in order to provide a best guess a the future.  An important but often missed aspect is “seasonality”… this can be “externally” imposed (ie: the federal government has a very distinct buying season; consumer goods and Christmas; elk season in Idaho - believe it or not; etc.) but they can also be “internally” imposed (staff retreats; company parties; sales trainings) - these are not necessarily “bad” things, BUT they do and should impact both your forecasted income and your forecasted expenses.

This is a very simplistic approach to looking at our resources.  If you commit to looking at your fiscal, physical, relationships, and time resources in a “real” and measurable way with support, you will be in a better position to know where when why and how you have hit both good and bad periods with your business or personal life and you will have some guide posts to help you stay on or get back on track.