I’m no mentalist, that’s for sure, but there’s one question that every so often someone, new to business, asks which fills me with hope. Why? Because that one question is generally a reliable sign they’re going to do well in business. So what is that question?
The smartest question in business
For me, it’s quite simply “how much is mine?” What’s so special about the question? Well, it demonstrates someone seeking a deeper understanding of their business model and an unwillingness to rip all the money out of the business.
The danger of not knowing
Something that makes my gut clench is watching people race into business thinking it’s all about the easy bit; spending money! By the time they realise that business doesn’t come with an auto-entitlement to a company car, offices, flashy branding and weekly wages, it’s often too late.
How much is yours
But getting back to that question … how, exactly, do you know how much is yours? If you use thriving businesses as a guide, you’ll see that every day they get their ducks in a row, and you can too by following their simple system:
- Update xero daily.
- Verify every xero balance at the end of the month.
- Enter every single bill into xero when you receive it.
- Regularly check the amount customers owe you is showing correctly in xero.
Now you’re running your financials like a pro and all you need is a little expert help from an Accountant to make sense of it for you (by making provisions for tax, employee entitlements, ACC and inventory reserves etc). Then you’ll know exactly how much is yours and can start making smarter decisions.
P.S. My wife (a qualified accountant) does this for numerous clients every month but she takes it one step further for our business by cruelly slapping a report on my desk showing colourful graphs of how much is ours and the gains we’ve made (or losses, if I’m guilty of buying something fun which she refuses to classify as an investment!). It may sound horrific to you but there’s a reason top CEO’s do it and it’s actually a real motivator because after all, you can’t manage what you can’t measure.
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