Perspective on Money

Like it or not, money is a subject that seems to be ever-present in the mind of the business owner. We talk about it, we think about it, we worry about it. We plan for what we'll do when we have plenty of it, and we reveal our fears, frustrations, and resourcefulness when we don't have enough of it.

Why is it then, with all this energy around money, so few of us ever seem to have it really handled? What is it about money that is so elusive, so complicated, so difficult to control?

All you need is a commitment to two simple things:

Understanding the relationship between money and your business activities
Creating and implementing, on a regular, on-going basis, a few money management tools and strategies.

Your Business Is More than a Money Machine

Some people view business in purely financial terms: business is nothing more than a way to create money. Everything else is superfluous. This approach can work, but it's a very limiting way of doing business. It squeezes the joy out of being a business owner. Some people are intimidated by the financial side of business and, therefore, avoid financial management. As long as the bills get paid, I don't worry about finances, is their casual disclaimer. This approach may work temporarily, but is also limiting because it ignores the potential that lies within the business and there is no ealry detection system for financil problems.

Each view by itself is shortsighted. Both approaches leave something of value out of the business equation. And both diminish the chances of achieving your Strategic Objective.

Business is about making your life better, not merely paying the bills. The financial view of your business as long as it's not your only view is an essential element of your management arsenal. The pursuit of money, when balanced with the other aspects of your life on the way to achieving your Primary Aim, is appropriate and should be one of your most important business objectives. In other words, always keep in mind that a successful business is one that fuels the path toward your Primary Aim. And the financial strength of your business is a key component to its success.

Money in Your Business is Value, Fuel, and Quantification

The value of any business is measured in monetary terms. That's not to say the only value of your business is its monetary value intangibles such as personal satisfaction, contribution to society, and relationships in the community all add to the perception of your business' value but the primary measure of the value of your business is its monetary value. Money is the indispensable fuel that powers your business. Everything your business does either uses or generates money in one form or another. If over the long haul your business uses more money than it generates, then you don't have a business at all at least not for long.

The E-Myth Point of View tells us that quantification is essential for business owners to know what results their businesses are producing. Understanding the monetary impact of what your business does is one of the best methods of quantification at your disposal. Since almost everything your business does directly or indirectly involves money, your business is already quantifying itself for you. To achieve contral you have to capture the financial information, make sense of it, and use it to manage your business.

I am an accountant and am involved in training business people in the areas of book-keeping and basic accounting which is balanced with what I describe as the "soft skills" of business.

I firmly believe that numbers are very important to the management of a business and as a scorecord for performance. As Professor Deeming said many years ago "what gets measured gets done"

Sadly in my experience too many non-accountants have a fear of numbers and don't appreciate what they can tell us about the business. The financial statements prepared for tax are usually too old to be of any management value. This provides an opportunity for and is where a good accountant can be of huge value to a business by getting involved in "management accounting". This is the "here and now" of the business and lets the operator see how well the business is running now and what it can expect in the short term and if the short term activities will take them toward or away from the strategic objectives.

If you are a business operator ask yourself when you last invited your accountant to help you interpret last months figures, calculate your breakeven point, analyse different product mixes and calculate the contribution margin for each product line. These are some examples of how an accountant can add value to your business.

Maybe he or she will even smile when you ask for these services.

Don't forget the soft side of business which is all about perceptions and emotions and the inte-ractions of people. These can also be measured and identifying critical success factors matched with appropriate key performance indicators and measures will help manage the business even better.

Numbers are just how we keep score and good accountants know that assets put money and value into a business and liabilities take them away. They can see beyond the traditional Balance Sheet, Profit and Loss and Cash Flow statements.

Remember money is an illusion, it is an artificial means of transferring and measuring wealth. It looms so large in our minds because no educational system in the world trains people that money is just a means of measurement. True wealth comes from ownership of assets and emotional freedom and by accepting this the financial scorecards become far more meaningful - they become tools not the result.

Management of your money by ensuring it is applied to asset creation is the key. If you don't have a very clear idea of what you will do with "the money" when you get it you probably never will get it. Keep your eye on the strategic objective you set yourself, be persistent and enjoy your success.

Numbers are a vital part of business life. Whatever sector your business is in you need to understand how the numbers 'connect' and to make sure that your business peforms properly in all areas. It is no good maximising your sales if you kill your cashflow in the process - the lack of cash means you will probably have to seek extra funding outside your business, which may not always be possible. So speak to your accountant(yes I am one!) about your objectives and what you want to achieve with your business and if he/she can't help you understand the numbers and how they fit into the whole picture then find one who can.

Your business is too important for you to ignore one of the most essential elements of measuring the success or not of your systems. If its not working you need to know so that you can change what you are doing. If it is working you need to know why so that you can do it even better.

Accountants should not be used just to complete the statutory tax returns - use their skills to help develop the business plan for the future and measure the success of that plan. AS an accountant I can tell you its far more interesting than filling in an essential but boring government form. Go on try it - your accountant might just surprise you!

I sure can identify with the curse of experts. I worked very hard on my business plan in an entrepreneur program, but I was struggling with trying to figure out the financial part of the plan for my future business. So an expert convinced me I should hire him to do a better plan. What a mistake. The banks thought my numbers were way off when I asked for a loan. But I didn't understand the numbers, so I couldn't defend my request for a loan. The spreadsheets looked impressive, but it was just a bunch of numbers as far as I was concerned. I didn't own the financial information.

I would of been better off hiring a tutor to guide and edit me through my business plan, but not do the plan. Fortunately I was smart enough to see my error in thinking about using experts. The lesson did cost me a pile of money, but will probably saves me lots of $$ down the road the next time I think about hiring an expert.

Nancy

We need to get the issue of money out of the hands of the accountants! Financial statements are not intended to provide information to manage a business. They are great for analyzing how a business went under but they are in no way intended to help you navigate through today's problems. In fact, relying just on standard financial statements will lead you to making bad decisions.

Vince, I agree that it is necessary to get issues of money out of the hands of accountants and into the hands of business owners and managers. I do not agree with your assessment of there value! It is so important for managers to understand financial statements, especially cash flow statements, and then be able to interpret the impact on operations.

Robert, Thanks for your comment. I would be interested in hearing more about the structure of your relationship with your accountant. How are you able to get strategic value beyond the delivery of financial statements? Also, in your opinion what are the top 3-4 financial statements that best help you manage your business?

Historically I have relied on my CPA to give me the financial information I need to make decisions. I haven't been very proactive with questions regarding my financials (mainly my Income Statement and Balance Sheet). Usually I get the statements and ask, "Is there anything you feel I need to be aware of?" I know that's really scarey to depend on my CPA like that, but it's the truth. I use my financials to look if I'm in the positives and how my cash flow looks. With how busy and hectic business can be, I typically look to see if I can pay the bills this month and draw a salary. I don't understand what more I can do with it.
Esi Fassi

Hello Arit, The two documents are available as PDF documents and should be accessible using Acrobat Reader. You can download the latest version of Acrobat reader here: http://www.adobe.com/uk/products/acrobat/readstep2.html Please let me know if you are still having trouble. Thanks, Hasan hluongoATe-myth.com

Hello Hassan, thanks for your quick response. I've just downloaded the lastest version of Acrobat reader and still the documents won't open. What came up was "The file is damaged and could not be repaired.". If you have the docs, please send them to me. Thanks, Arit-rutharit@gmail.com

All good information - thank you.

It isn't our service or our product. There is a former employee of the company who has started his own firm - so he's gotten in there due to those relationships. This happens, I just have to be better than the competition.

I just received an email from the V.P. on one of the client projects that the competition has already had an issue at the client, so I may be good in the long run!

All of this was very helpful. I have a lot to learn and really thank you for your info. I don't think there are any bad answers here - just different approaches. I appreciate all of the feedback and thank you for your help!

Hello,

Well, something wasn't fulfilling this client, otherwise he/she would have no reason to leave you. I see this as an excellent opportunity to discover how you can deliver and fulfill your target market even better. Yet, do you know who your target market is?

Discover common traits that your target market has in common and start discovering ways in your organization that you fufill and not fufill. For example, you may discover that your target market is a jovial and casual group...So, one would think that your organizaiton would want to set up systems in the organizatio that promote and allow for that, jovial and casual. It would feel off to your target market if you were rigid and tight and strict--that is what makes them start looking for other companies to work with. Idenitfy you and what you are actually serving and then start digging around your organization to discover the systems that either support or don't support your discoveries and start re-innovating as necessary.

Wow, I think Carlos hates me. Anyway, let us know how it worked out with your client.

And about the Leadership Intensive, was it related to teach you how to improve your personal practices, i.e. how to motivate yourself, think better for strategic planning, etc., or was it more about how to be a leader so your employees will follow you?

Take the direct route. Just say "I am a little concerned that you are working with my competitor in addition to me, is there something I did wrong, and what can I do to correct it and continue our good relationship?" Then probe to find out where the competition rates from the customers viewpoint, and strategize how you can beat them in the future. By the way, I would like to hear from you exactly what happens in the Leadership Intensive, so I can decide if it would help me... Please give much detail...

Thank you, Steve. I do think we have a great relationship with the client - and I've done some research on the rates (they are the same). I have a meeting with the client on Saturday - I will take your advice and see what I can find out.
The Leadership Intensive was excellent. Discussion of the e-Myth principles in detail including exercises that helped me recognize some key issues in my business. It is about two days long and well worth the investment. Even if you have read the e-Myth book time and time again, the opportunity to sit with your peers dealing with similar issues - and discuss specific struggles with the e-Myth team - it was an excellent investment for my business. :)

Kathryn,

I’m afraid that if you approach your customer with "I am a little concerned that you are working with my competitor in addition to me, is there something I did wrong, and what can I do to correct it and continue our good relationship...?" you may loose all your credibility and any remaining contracts with them.

That approach sounds just as idiotic as it looks. Why would anyone “bother” to waste the opportunity of a sales call to “beg for the loyalty of a former customer?” when the most probable response you’ll get will be “why didn’t you give me such better service and lower prices from day one?”

Try a different approach. Find someone in your customer’s company that can fill you in, an indirect person that doesn’t have any direct ties to your relationship but who may know why the switch was made to your competitor. If this fails, go further, pretend to be a customer of the competitor and ask for several case studies or a list of customers that they work with, then contact each customer and ask them why they chose to do business with them. If you do it well enough, they’ll give you the real ins and outs of WHY your ex-client decided to go with their services and even better, you’ll learn why ALL their other customers chose them too. This knowledge will help you improve your services against the competition and if they continue taking your customers, maybe you’ll start to take some of theirs too for a change. ;)

Once you have all the information on hand, do your homework, prepare a proposal and then call that customer you originally lost and mention all your upcoming “new deals” which have an unbeatable price and more up-to-date technology. You will highlight your strengths and show them how they are being ripped off by your competitor. All in “one call”. :)

When making a business investment decision of this magnitude, you first need to define clearly and specifically what you want the software to do for your business. Write down what you want the software package to accomplish, in as much detail as possible. Next, prioritize your needs in the order of what you must have, what you would like to have, and what is unnecessary. Pay close attention to ease of use. You want to make sure that whoever will use the software can be taught HOW to use it quickly and easily. Keep in mind this maxim: when you buy new software, it takes more than a few mouse clicks to install the KNOWLEDGE necessary to USE the software! The cost of training and software maintenance are often the largest costs you will incur with any new software package, so weigh these factors carefully against the time you expect to save by using the software.
Next, you need to get the best expert advice you can find to help you make a quality decision. You need the expertise of a qualified professional here, one who is fully versed in the software packages that are the best matches for your business. Also, ask other business owners about their experience with the type of package you are considering. You need someone who uses this type of software on a regular basis.
Finally, pay attention to your RETURN ON INVESTMENT. How many additional leads and sales will you need to generate to make a worthwhile contribution to your fixed expenses (overhead) and profit?
It’s a lot to consider, but the additional time spent thinking and planning will pay off big time. Keep asking questions, analyze the possible results, and carefully evaluate the risks versus the rewards. These are the entrepreneurial traits that move you forward!

I feel your pain, Vince! It is interesting at how passionate and compartmentalized we can become when it comes to our own area of expertise! Accountants and lawyers are very good examples of that, but I'm sure there are many more. They tend to look at everything in terms of dollars and cents or legalities with little room for anything else. I'm a big believer in balance. I think it is essential to living a successful life and to running a successful business.

Why do these discussions always have to turn into a Mac vs. PC debate?

Apple makes fine products. I've had good customer service from them over the years and I might add very few issues with hardware, about 3 altogether in over 18 years of owning Macs.

Microsoft makes fine products as well. I use a few of them. Sometimes there are frustrations, but like anything designed and made by human beings, NOTHING IS PERFECT.

Try getting customer service from DELL. Yikes! They give the ultimate runaround. Try communicating with those lovely Indian folks. Nice people, but can't get past the accent. What about the SERVICE TAG. Can't do anything with DELL without that wonderful piece of info, which by the way, doesn't come on a monitor when you buy a DELL monitor all by itself. If the thing breaks and you must call customer service about it, forget about getting anywhere with those CS people in India.

Apple on the other hand keeps their records according to serial number and that is attached to my information. So when I call with a problem, they can see the relationship between hardware and customer instantly. What a concept?

Anyway, I think the original question was: Are you doing Everything You CAN to keep Your Customers? Not what is Apple or Microsoft or Dell doing to keep their customers.

Can anyone share about what they do with their product or service that the rest of us can learn from?

How do you produce your product or service?

What customer services do you offer to enhance the value of your product that are not an inherent part of the product itself?

I'd like to learn something from you all. We all know what the computer manufacturers do wrong or right, but what about you, the e-Mythers out there?

I am a service provider in a one man shop. i produce films and videos and often just do nothing more than provide my services to a single client at a time. What can I do to better serve my clients, to provide them with value and keep them coming back over and over again?

Words of wisdom are appreciated. Thanks.

I recall when personal computers first went mainstream. There were the "Windows" people and the "Mac" people. Similar in a way to "Ford" v. "Chevy", it was "Windows" v."Mac". Both sides swore by their choice and bad-mouthed the other. But Windows ended up leaving the Mac people in the dust due to their huge Marketing efforts, licensing agreements, and a wide range of software that could only be used with Windows. Meanwhile, Jobs rift with Apple went public and he was out the door. That was the death of any hope for Apple computers to compete with Microsoft.
But Jobs is back and they may have learned a few things over the years. In the past, Jobs concentrated on style, looks, and inovation but fell short on Marketing and distribution for software available for Apple computers. Now he has a new toy and seems to be covering all bases while enjoying the lead. I doubt Gates will catch up anytime soon because anything he comes up with will look like a copy-cat product. But we'll see...

I agree with both Michael and Wendy. Apple's strength and their weakness is Marketing. They push image image and image, it's no wonder graphic designers are the some of their biggest fans. I remember when the first titanium notebook came out and Jobs said in a big conference, "Isn't it beautiful?" Interestingly, Steve Jobs is also the CEO of Pixar, where he gets to put even more attention into making things look cool. I doesn't surprise me at all that Apple's support is weak, that would require substance behind the image and a lack of disparity between the two. On the other side of the fence, you can easily see Bill Gates' geekiness built into Microsoft products, where you basically have to have low level sysadmin skills to use them well. Maybe someday when the leaders of these kinds of major companies start dealing with their shadows we could have products that look good AND work well...think of the MK and LG costs they could save...in the meantime, maybe Microsoft make it so you can hit ctrl, alt and delete with one key. That'd be a big time saver! :)

I think Apple missed the boat in the area of Customer Service. Their software support for upgrades is AWFUL. Takes forever just to get them to admit there's a problem, and I had to comb through non-affiliated blogs to find a workable solution.

I think there are real opportunities for Rio and other competitors to win over customers with more useful service.

Your Business Is More than a Money Machine

Money in Your Business is Value, Fuel, and Quantification

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