There’s a thing called “The Score” at my company and in my dental practice. It’s a literal printout pulled from our secure server that is put up where my employees can see the business’s financial status. It’s a matter of transparency, and one that has been a continued source of motivation for my employees. They see what we make, what we spend, what we have to spend, and most important, that we’re not wasting money.
I’ve read too many articles and seen too many broadcasts about businesses going right down the toilet because the owner either neglected the financial numbers or put all of the responsibility to manage them in the hands of one person.
Yes, that includes when it’s the business owner handling all of the finances. We are humans and humans are nothing but talking monkeys, and guess what, talking monkeys make some pretty big mistakes. Don’t ever assume that one talking monkey is enough to handle all the finances of the business, especially if that talking monkey is you!
At my dental practice we make it a habit to review and balance all of our figures on a daily basis. We set aside weekly and monthly goals as well, and then measure how we did. Notice how I am not saying “I review and balance,” or “I measure how we did”? It’s a “we” thing and always should be.
The following excerpt is from my new book, “Uncomplicate Business: All It Takes Is People, Time, and Money.”
Excerpt: Think of how many well-known actors, musicians, and artists go bankrupt. Francis Ford Coppola, producer of the Godfather movies, nearly always came in over budget and ended up filing for Chapter 11. Sarah “Fergie” Ferguson, the Duchess of York, went into debt for more than $7 million. MC Hammer filed for bankruptcy and then put his multi-million-dollar, twenty-room mansion up for sale. Kim Basinger bought a town in Georgia and then was sued for breach of contract. Toni Braxton, a six-time Grammy winner who has sold millions of albums, has gone bankrupt—twice—after entering into raw deals with recording companies and tying up her own capital in unproven entertainment ventures.
Even Ulysses S. Grant, the highest ranking general in the Civil War and our country’s eighteenth president, went broke for living way above his means and entering into a mismanaged investment venture that sent his partner to prison and left Grant hundreds of thousands of dollars in debt. The only thing that saved his family from even more hardship was selling his memoirs for about $500,000.
Either these talented, accomplished individuals went broke because they were not watching the numbers, or the person they paid to watch the numbers looked away. …
If a business owner knows all of her numbers, she will have the information she needs to know when to speed up or slow down. Businesses get into trouble when they spend all of their time working on the product and not on the business.
Even those business owners who realize they need to do a better job of watching their numbers may turn their attention to them again for a week or so, but then go right back to doing whatever they were doing.
There is really one very simple trick to watching your numbers and that is simply:
WATCH YOUR NUMBERS!
Most entrepreneurs and business owners are excited about their newest service or the next transaction they’re going to make, but if I asked you what your revenues were last quarter, you’d probably shrug and say, “Let me get back to you.” I can’t stress this enough: You need to learn to love this part of your business as much as you love making your product or providing your service. Unless you do, it almost doesn’t matter what you’re making—especially if you don’t have the revenue to do it.
Require your staff to give you reports on a daily, weekly, and monthly basis and really look at them! Keeping your reports in a stack on your desk without looking at them is like holding a gym membership to your forehead and expecting to lose weight! It’s just not going to happen. Eighty percent of working out is simply showing up. The only bad workout is the one you didn’t do. It’s the same with business; you have to put the time and effort into reviewing your numbers. …
Three key factors make for a healthy financial environment within a business. First, no person in a position working with incoming and outgoing money should ever be allowed to perform all the duties themselves, no matter how long they have been employed or what relationship they may have with you. Just knowing that checks and balances are in place assures the staff that the person in charge of the money (in this case, me) has no room to do anything unethical or improper.
Second, the entire staff should know “the Score”: the business’s financial picture. We keep these numbers in public files on the company server to encourage open communication among the staff, give them the peace of mind of knowing where the company stands, and keep motivation high. Transparency with the numbers encourages staff to monitor expenses and enables us to work together in planning for future needs.
Last, a solid collection policy is critical to a healthy cash flow, especially come payroll time.