The Reluctant Entrepreneur: Turning Dreams into Profits

KEEP YOUR EYE ON THE NUMBERS

Your business is growing at a good rate. Every year, you boost it forward by creating one or several new product lines or divisions. One of these products becomes a favorite of yours. You like it so much, you want it to work. In fact, you want it to be massively successful.

There are little bits of evidence that your favorite project is not as good as you want to believe, but you ignore them. When someone criticizes it, you feel defensive. If you get marketing or financial reports that look bad, you insist that they are flawed. You ask to have them refigured. If the reports come back looking good, you are happy.

Love is blind—but you don’t want to turn a blind eye to your business.

There is only one way to keep from falling into this trap: No matter how much confidence you have in your superstars, make sure you devote some time each month to critically investigating all the numbers. Don’t accept glib answers or superficial explanations. If something doesn’t make perfect sense to you, keep asking questions till you get a satisfactory answer.

A second thing you can do: Keep tabs on the cash. Know how much cash you have on a daily basis. This applies even when your business becomes a large one.

Third, make sure you have an accurate idea of accounts payable and other balance-sheet items that might not appear on your profit statements.

And, finally, keep plugged into the sales and marketing activity of your business. When this is profitable, everything else ...