About 6 years ago, my business coach gave me some advice that changed how I approached finance forever.
I remember we were on our fortnightly call.
In fact, I remember where I was – walking through Cherry Tree Woods in East Finchley (North London).
Weird how we remember the smallest details.
Anyway, I said to my coach:
“I just feel so much stress around finances.”
He started asking questions…
Digging deep…
What he uncovered was that I was managing all the finances myself:
- Paying invoices
- Doing payroll
- Answering bookkeeper queries
He said:
“No wonder you’re stressed… you shouldn’t be doing ANY of that!”
Then, he asked if I knew what our profitability was.
I didn’t know.
All I knew was we had cash in the bank, and that the number was generally getting bigger.
It’s embarrassing.
So, not only was I doing all the small stuff myself, I didn’t know any of the big numbers that actually matter in a business.
Then he asked me a pivotal question:
“If you had proper financial reporting, do you think you’d be able to grow the business by 10% with that information?”
Hell yes – more like 100%!
If I knew where the money was coming from, and where it was going, it would be a gamechanger!
“And would that 10% cover the cost of the person you need?”
Yeah.
And then some.
Result: No brainer.
I’d been putting off big decisions for years, because I didn’t know if I could afford them or not.
- People I hadn’t hired…
- Projects I was dithering on…
- Profits that hadn’t been reinvested…
I’d been chronically under-investing in the business, despite seeing tonnes of opportunities around me.
And all because:
- I didn’t know my numbers
- I didn’t have the right people in place
- I was clinging onto everything myself
But whatever…
This email isn’t even about financial reporting.
It’s about strategic thinking.
See, this was one of the first times I was forced to think strategically:
“If you had X, could you Y?”
It’s essentially a strategic bet.
(But that’s what business is – strategic bets, informed by the evidence you see around you.)
As a small business owner, I know you’re doing a whole bunch of finance stuff that you shouldn’t be:
- Handling invoices yourself
- Answering bookkeeper queries
- Paying yourself in an ad-hoc way
- Monitoring sales dashboards
And each of these small habits adds up to a massive amount of your attention and head space.
The crucial question is:
“If all these things were handled for you, could you grow your business by 10%?”
…could you be 10% happier?
…could you fund your retirement accounts?
You get the idea.
Namaste,
Olly