A s I reflect on my ice cream business operations now, I am pleasantly surprised at how I was doing everything right albeit I did not have the business acumen and experience. By end of the day, I knew the revenue, expenses, profit or loss, level of the stock etc. Depending on my sales, I could make pricing adjustments or offers, and make my stock orders. I was making the right decisions to enable me to make each of my trading days profitable based on my instinct and common sense.
Unlike my ice cream operation, today I have more that 20 companies and 200 employees working with me. Decision that I could make in minutes during my ice cream operation days, take days, or even weeks now. I found that I make less accurate decisions even though I have so much more business acumen and experience. .
The difference is the information required to make the decisions. During my ice cream operation days, I had the information in my head, and I could easily make the decisions needed to achieve desired results. In todays operations, I would need to speak to at least three people to get the same amount of information, and still I may not get it. One is on leave, one is busy, one is waiting on someone else to do something, and the list of reasons goes on.
One of my businesses provides accounting services for clients. As I interact with clients, I find the same phenomena happening with them. When we present to them the financial statements, we find obvious mistakes that impact their business’ profitability, and ask why did you allow this to happen? The answer is almost consistent... “I did not know”.
I believe the root cause of the inaccurate, late, or poor decisions of business owners and managers is due to their attitude towards accounting. Business owners and managers have the view that accounting or financial statements should merely help them file taxes and stay compliant with the government regulations.
The model is simple, if you want good results, you need to make good decisions. To make good decisions, you need accurate and timely information, and to get that you have to have the correct attitude as to why you need the accurate and timely decisions.
I believe people are gifted with common sense and if they are equipped with the accurate and timely information, they would make the correct decisions even if they do not have the experience or business acumen. This requires a change in the attitude business owners and managers have towards the accounting and finance management functions in the business.
The correct attitude is that regular accounting and financial statements enable you to make accurate and timely decisions to improve the profitability and efficiency of your organization.
By Ali Kasa