Crunch or CROAK!!

Financial Management – Crunch or CROAK!!!

Jack and Jill own and run one of the many local coffee shops on the waterfront.

Over the past 5 years they have both traded their high profile exec jobs for the dream of being their own boss and not only being in control of their own time, but also their own “performance increases”.

They signed up for a business loan using their home as security to finance their “dream” and in the beginning things were really tough, but with allot of hard work and many weekends “at the shop” things picked up slowly.

When they first “opened shop” the bank requested a business plan where their accountant did a whole bunch of calculations, working out how many cups of coffee and plates of “cheesecake” they had to sell to make a profit and lots of other nonsense which they really didn’t understand.

It didn’t really matter to them; it was done for the bank so they would give them the loan and to Jack and Jill that’s all that mattered.

They used that information a little to get going, but once they got into the swing of things, they decided it was best to just follow their gut and go with what works for them.

They were in the game, what did the accountant know about Latte’s and Cheesecake anyway…..

The problem is that now after 5 years they feel really frustrated.

They have put in the long hours, the money, the holiday sacrifices and so much more, but feel they are not really getting on top of things.

They still work every weekend and now feel even more “Over worked and underpaid” than they ever did while working in Corporate. They can’t bail out; they have too much to lose….

They hire a really cute “bookkeeper” at a bargain price per hour who comes in every 3 months so they can complete their GST returns.

They traded their first accountant in for a “Business consultant” who cut their accountants year end bill by half.

They now spend half of what they did on accounting and bookkeeping fees and manage to keep the tax office happy with their quarterly GST returns and Annual Tax return.

Jack and Jill fall into the category of most small business owners, following their gut more than the numbers.

They don’t know:

  • How much to mark up their coffees and cakes by?
  • How many coffees and Cheesecakes they need to sell in a month to cover their rent?
  • Why they are always living from week to week to pay their bills?
  • How their customer rewards program affects their profits… does it actually feed or drain their profits?
  • When is the best time to order their supplies?
  • How much does the business actually cost them in wastage?

Basically…. they DONT know much!!

They are going to have to “CRUNCH before they CROAK!!”

Jack and Jill are spending NO time, money or effort “crunching their numbers” and understanding what makes their business tick.

Their bookkeeper is hired to balance the bank accounts and tell them how much GST they need to pay or are owed every 3 months.

Their non-existent “accountant” is hired to spend as little time as possible and just tell them how much tax to pay at the end of the year.

In between those 2 “accounting experts” there is huge void…a FINANCIAL MANAGEMENT void!  Any money that spent on Accounting is purely for the benefit of one man: THE TAX MAN!

Statistics show that 87% of small business failures are due to one reason: Lack of proper financial management.

Unfortunately without the “number crunching” Jack and Jill’s dream business is pretty much doomed to “CROAK”.

You see….. Financial management is not necessarily something that just accountants know and understand… It’s something ALL businesses review…or SHOULD review continuously.

The “Big guns” do it and that’s what keeps them going…. so why cant you?

What’s more exciting is it’s not necessarily rocket science!

Sure “number crunching” may come really easy to your local CPA – but to small business owners it’s something that helps them sleep at night…. no matter what extent they “CRUNCH”.

If Jack and Jill tracked their “coffee’s and cheesecakes” to start – they would have a better idea of what made money and what didn’t.

They would have a better understanding of when they started to make true profit and be empowered, motivated, star struck, excited and driven to keep going…. enjoying the real taste of Profit and positive cash flow.

With that comes freedom, freedom to take informed risks and what’s even better freedom to take a step back and enjoy the rewards of all that hard work.

No matter what industry you are in or what stage of business we can help you get started “CRUNCHING” your numbers.

You don’t have to be the Financial Management expert for ALL businesses, but you CAN become the “number understanding” expert for YOUR business.  This is the first step to a profitable and cash flow positive business.

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Comments

  1. You are right Tracey, this is all too common in small business. Then the owners reach breaking point and call a business broker like myself to sell their business. Unfortunatley, if the business isn’t making a decent profit then it is very difficult to sell. The owners never recoup any return on their monetary or time investment in the business. With your help and guidance they can create something saleable and have their “big pay day” when they sell. Keep up the good work!

  2. I have a business blog and affiliate site for small business owners to provide them with information about the financial aspects of their business. I found your video on YouTube and featured it in my most recent post. Your engaging manner and straightforward approach will win you followers. I liked “Crunch or Croak!” and the “They don’t know” list will make business owners recognize the importance of planning and how to avoid wasting money. In the 1980s I worked for my mother’s employment agency and I can’t tell you how much money was wasted on advertising and printing due rushed decision making. I needed to take more time to plan how I was spending the agency’s money. Luckily my mother did her own bookkeeping and I did the income tax, so we didn’t waste money there. I’ll visit your site again because you have a fresh approach to discussing small business financial management that’s easy to follow and doesn’t put me to sleep!

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