Why do you want to understand your finances at all?
I know this seems like a pretty simple, maybe even stupid, question, but the fact is that managing finances takes a lot of work and a deep understanding of the inner workings of your business.
And not just the numbers that your accounting system or your accountant pop out.
Why do we want to put in the kind of effort that it requires of us to actually try to understand, even master, the finances of running our business?
Well, here at Newberry Consulting, we have two goals for everything that we do, including financial mastery, and they are Insight and Control.
Most people start a business because they have a passion about something. Entrepreneurial folks have a product, an idea, a childhood memory, or even a family recipe that's driven them, along with an enterprising spirit, into the business world.
Many times what happens is these folks develop their product and their branding, they find funding, they find an operating space, they open the door, and they’re off to the races.
They begin work and, hopefully, there’s money coming in. And then money's going out.
And then more money’s coming in and it's going out…
And suddenly they turn around and say to themselves “Wait, hold on. Am I making money? Why is it that I'm struggling to make ends meet at the end of the month? Why does my bank account go up and down so much?”
All of a sudden these entrepreneurs who put their heart and soul into their business find themselves struggling to understand their finances and, even worse, to make ends meet.
And it's not just about not having enough money in your bank account. The problems occur when a business owner lacks insight into and control over the movement of money within their business.
This can be really, really overwhelming.
What happens as a result of this situation is that we end up feeling like we’re out of control. We don't start businesses so that we can work 80 hours a week only to struggle to make ends meet. I didn't start Newberry Consulting so that I could work myself into the ground.
Instead, I have a vision for the lifestyle that I want for myself and for my wife. I started this business, probably much like yourself, with a goal of creating a better, happier life for myself and my family. But we can't do that without insight into and control over our finances.
I want to leave you today with the idea that what we are wanting to do, ultimately, is to create a business that's sustainable, that we have control over, and that provides a lifestyle that we want.
Today’s homework, then, is to start to get some clarity around your Big Why.Why did you start your business? What are your goals for your business? What kind of lifestyle do you want for yourself and/or your family?
Think of your Big Why as a compass heading for your ship. You wouldn’t set sail without a destination in mind, would you? While the destination may evolve over time, having a destination, or a goal, to work toward is the first step toward being able to get clarity around your business finances.
Running a business is a lot of work and we all need motivation to drive our hard work forward.
Ask yourself the following questions to begin understanding your Big Why.
- What problem or need am I trying to address?
- How do I envision my business improving life for me and my family?
- What impact do I want to have on my community?
- What does my chosen work say about my views on society?
Write these down and hold on to them. We’ll be talking about them later in this series.
If you’d like to, click below send me an email. I’d love to hear your thoughts on this and answer any questions you might have.
Thanks and I’ll be back soon with Day 2.