7 Deadly Sins
Nov 13, 2009
The Business Owner's "Seven Deadly Sins"
In a recent CNNMoney.com article, business owner Jay Goltz presented his "Seven Deadly Sins" for entrepreneurs to avoid. They are, as he puts it, business-killing traps.
So, they must have been all about sales and marketing, right? Well, no, actually, only one, POOR BRANDING, is all about marketing.
OK, then they must have been about the operational aspects of the business! Well, not exactly...again, only one, LACK OF STANDARDS, (in things like customer service, quality control, and the like) is operationally focused.
Well, then, they must have been about people issues, right? Well, you are getting warmer...two of the seven are people related: NAIVE HIRING and FEAR OF FIRING.
That leaves three sins, more than any other category, squarely in the realm of...finance and accounting!
First, Goltz lists SLOPPY ACCOUNTING as one of the killers. Without accurate financial statements it is impossible to diagnose what is going on inside a business...good or bad. Without accurate historical statements it is impossible to make educated projections about what is likely to happen in the future. That leaves management flying blind and unable to answer critical questions like "When will we run out of cash?"
The next sin is LACK OF CONTROLS. This includes appropriate internal controls over cash, inventory and other assets, but also controls over processes like granting wage increases, offering discounts and authorizing returns and allowances. Good controls have two important features: they are written down and compliance is monitored and measured.
Finally, UNREALISTIC PRICING joins the list. Realistic pricing starts with an understanding of real costs. It also requires the ability to distinguish between fixed costs and variable costs. Without such an understanding it is impossible to make intelligent decisions about things like: "How far can we reduce our price to match competition without losing money on the order?"
The partners of B2B CFO® can assess a firm's exposures in these areas, and can help implement the appropriate systems, procedures and controls to avoid these business-killing traps.
For more than 20 years the partners of B2B CFO® have helped emerging and middle market organizations with:
* Cash flow projections
* Banking relationships
* Profit Improvement
* Timely & accurate financial reporting
* Financial and strategic planning
* Exit strategies
Our services are provided on a flexible, as needed, cost-effective basis...with no need for a contract, since relationships with our clients are always on a hand shake basis.