So You're Not Good at Finance...

I haven’t done a really good blog rant for awhile.  Here goes…

What would a world look like where mental health treatment made people worse rather than better?  Mass murderers would kill school children after receiving mental health treatment.  Soldiers returning from combat would shoot up army bases, kill their families, and commit suicide.  We’d sell deadly guns to nuts, because not selling to them would violate their constitutional rights.  The evidence suggests we inhabit that world.

Comedian Ron White  did a bit around the phrase, “You can’t fix stupid.”  Apparently, we can’t fix crazy either.  Why did WWII veterans come home and not shoot up military bases despite no mental health treatment, when veterans from Afghanistan shoot up bases after treatment?  Mental health “professionals” have some explaining to do.  Calling Dr. Phil.  Calling Dr. Phil.  I’m not getting an answer.  He’s too busy with Lindsay Lohan’s parents.  Now on to our regularly scheduled blog.

Business owners frequently tell me, “I’m not good with finances.”  Is not being good with money really an option for business owners?

Jan owned a multi-million dollar printing and marketing business.  She wasn’t good at finance so she paid a six figure salary to hire a chief financial officer.  She paid lots in taxes on her earnings, but never asked why the company bank accounts were always empty.  After all she’d hired a professional to manage that.

One day two banks called her and wouldn’t talk to her CFO.    They told her she was overdrawn in all the company accounts and needed to deposit $100K immediately.  She walked down the hall and confronted her CFO, who confessed to stealing $750K from the company.  He had covered his theft by kiting checks.  Check kiting is depositing checks from one overdrawn account to cover checks written on another overdrawn account.  Obviously, you can’t do this forever.  Back in the 1990’s, you could do this for a month or so, because checks cleared in about five days.  Don’t try this today since checks clear overnight.

Jan was bankrupt, despite having a successful business, because she wasn’t good at finance.  Business owners need two essential skills.  First, you have to be technically proficient at whatever service you offer.  If you own an auto repair shop, you’d better be able to change the oil in your car.

Second, you have to be good at business.  This is much harder than technical proficiency since it involves a lots of areas.  You need not be an expert in any of these areas.  You can hire experts,  but you must be capable of supervising your experts, which requires at least a degree of proficiency in many areas, such as finance, marketing, and management.  Please read Michael Gerber’s “E-Myth” series of books.  He writes that business success is about working on the business not in it.  Technicians work in the business.  You can hire them.  Business owners work on the business, which is much more difficult and requires entirely different skills.

But what about Steve Jobs and Bill Gates?  They were techie guys, not business people, weren’t they?  You are wrong on two counts.  First, pull your driver’s license out of your wallet.  What’s the name on the license?  Probably not Jobs or Gates.  People win the lottery, just not you.  Jobs and Gates are Michael Jordan to your Greg Jones.  Who’s Greg Jones?  I don’t freaking know either.  That’s the point.  You aren’t Jobs or Gates.  You’re Greg Jones, and nobody knows who you are.  I’m Greg Jones as well.  That doesn’t mean we can’t be successful – maybe not Apple successful, but successful nonetheless.

Second, both Jobs and Gates had incredible business skills in both marketing and finance.  Both had lesser known techie buddies, Steve Wozniak in Job’s case and Paul Allen in Gates’ case.  These sidekicks were the tech geniuses behind the initial success of Apple and Microsoft.  Jobs and Gates understood the technology, but more importantly understood the importance of the technology and how to sell it for a profit.  Their business skills were exponentially more important than their technical skills.

Thanks for reading!  As always, please visit the main S&K web site at www.skcpas.com and like the “How to Screw Up Your Small Business” Facebook page.

Until next time, let’s do it to them before they do it to us.