Owners, seek continuing financial education
When I was working on my undergraduate degree, taking night classes while working 60-plus hours per week at a staffing company, I remember taking a managerial accounting class that proved to be very challenging, one that would eventually set me up for success as I became an entrepreneur. During that semester, my company acquired a new client that brought with it a huge workload. At the time, work was already heavy and draining, as I had to deal with tons of new hires at the staffing company. By the time I got to my night class, my brain was fried; however, I knew I had to keep pushing and get a good grade because I was paying for school out-of-pocket. That class proved to be instrumental in getting to the next level with what I do today as a professional and as a business owner.
Assets, liabilities, owners’ equity, accelerated depreciation: these are all terms I was re- introduced to during that semester. As a business owner, you need to have a good understanding of what it all means. As your business grows, you must take time to educate yourself on accounting and finances, as things will continue to get more complex. Areas such as taxes will need much attention on your end to ensure you are taking your company in the right direction. Along with that, you want to make sure you are associating yourself and building a good relationship with a local financial institution.
Recently, I had a great conversation with Terry Grier, chief lending officer for First Commonwealth Federal Credit Union, a local financial institution that specializes in helping small business owners grow. We spoke about growth and scaling a business. His advice for business owners is to find a good financial institution that you can partner with to help your business as you continue to grow and scale your company, offering help and support to ensure overall financial health for your business. He also encourages business owners, regardless of their industry and size, to find a good mentor or mentors.
This involves a bit of humility as you look for people you trust and respect to listen to ideas, seek advice from and offer opinions to. These trusted advisors, he added, can provide invaluable information, transparency, and guidance as you make important business decisions to remain competitive and strong in an ever-changing market.
To ensure you are going in the right direction financially, a good exercise to do monthly as a business owner is to update your personal and business financial statements. By doing this, you are training you brain to develop a very important habit every entrepreneur must master (in my humble opinion); it gives you a snapshot of your personal and business finances. When reviewed regularly, it helps you have a good understanding of which areas need attention and which areas are performing well. Once this becomes a habit, you can clearly see your assets and liabilities, and you can see how to strategically make your next business move with the right facts at hand. Once I made this exercise a part of my monthly business routine, it helped me elevate my game to new levels. I can quickly make business decisions and take advantage of opportunities as well as avoid possible business pitfalls, all from having this information organized and readily available.
Believe me, accounting and finances are not a fun subject to talk about; however, as a business owner, we must learn to respect them and get a solid foundation on the important role they play in running a business. Thankfully, nowadays, there is plenty of online information that is easily available for those of us who would like to get better at business finances and accounting. You don’t need to be an expert at it, but you must have a general understanding of the basic principles that make accounting and finances work. To put this into perspective, remember that accounting and finances are to business the same as the nervous system and cardiovascular system are to the human body. You must get serious about understanding them if you are a business professional. Much success in everything you do.