So, what is most important in business? How many times do you hear business owners say:
“My sales have grown, my accountant tells me I have made a profit, but, where is all the money? I can’t see the profit in my bank account.”
Well, there are many variables that make the difference between profit and bank accounts. These can include, extra repayments of debt from previous periods, catching up on payables, falling behind in receivables, over-stocking, purchasing assets with cash funds, book entries such as depreciation and Fringe Benefits Tax, capitalisation of certain spending that was originally thought to be an expense, just to name a few. As a business owner, abdigating the understanding of this to outsiders is a dangerous game to play and it’s the role of the business owner, as a director of the company to become a true “generalist” and come to terms with the fact that they need to know these things. As a business coach, my role is to educate my clients and bridge the gap between accounting expertise and business owner knowledge.
So remember, your deck of cards is – Sales is Queen, Profit is King and Positive Cashflow is Ace.